UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LffiRARY 


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'OFCALI 


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COMMENTARIES 


LAW    OF    PARTNERSHIP, 


AS  A  BRANCH   OP 


COMMEECIAL  AND  MARITIME  JUEISPRUDENCE, 


OCCASIONAL    ILLUSTRATIONS     FROM    THE     CIVIL     AND 
FOREIGN    LAW. 


By  JOSEPH   STORY,  LL.D., 
♦•/ 

ONE  OF  THE  JUSTICES  OS  THE  SUPREME  COURT  OF  THE  UNITED   STATES,   AND  DANE 
PROFESSOR  OF  LAW  IN  HARVARD   UNIVERSITY. 


SIXTH    EDITION. 

By  JOHN   C.   GRAY,  Jr., 

OF   THE   BOSTON   BAR. 


"  In  Societatis  Contractibus  Fides  exuberet."  — Corf.  Lib.  4,  tit.  37, 1.  3. 

"  Semper  enim.  non  id,  quod  priyatim  interest  unius  ex  Sociis,  servari  solet,  scd  quod  Societati 
expedit."  —  Dig-.  Lib.  17,  tit.  2,  1.  65,  §  5. 

"Gaudeo  nostra  jura  ad  naturam  accommodari ;  Majoruiuque  Sapientia  adraodum  delector."  — 
Cic.  de  Legibus,  Lib.  2,  c.  25. 


BOSTON: 
LITTLE,  BROWN,  AND    COMPANY. 

1868. 


T 

St764p 


Entered  according  to  Act  of  Congress,  in  the  j^ear  1859,  by 

WILLIAM    W.    STOUY, 

in  the  Clerk's  Office  of  the  District  Court  of  the  District  of  Massachusetts. 


Entered  according  to  Act  of  Congress,  in  the  year  1S68,  by 

WILLIAM   W.    STUKY, 

in  the  Clerk's  Office  of  the  District  Court  of  the  District  of  Massachusetts. 


C!AMiiitin<;K  : 

I'llESB    OF    .lOIlN     W1J,SI>N    ANU    PON. 


PREFACE   TO   THE    SIXTH   EDITION. 


The  basis  of  this  edition  of  Stoiy  on  Partnership  is  tlie 
Second  Edition  ;  which  was  the  first  published  after  the  author's 
death,  and  is  said  in  the  preface  to  have  been  prepared  princi- 
pally from  his  private  copy.  Subsequent  additions  have  been 
placed  in  the  notes,  inclosed  in  brackets,  [  ]  ;  those  made  by 
the  present  editor  being  distinguished  by  including  them  in 
braces,  |  \ .  About  nine  hundred  cases  have  been  for  the  first 
time  added,  and  considera])le  pains  has  been  taken  to  verify 
and  correct  the  citations  made  by  the  author  and  by  previous 
editors.  The  later  works  on  the  subject  have  been  consulted ; 
and  acknowledgment  is  especially  due  to  Mr.  Lindley's  Treatise, 
and  to  the  notes  to  the  American  Leading  Cases  and  the  Lead- 
ing Cases  in  Equity. 

JOHN   C.    GRAY,  Jr. 

BosTOx,  June  Ist,  1868. 


6714B3 


TO  THE  HONORABLE 

SAMUEL   PUTNAM,   LL.D. 

one  of  the  justices  of  the  supreme  judicial  court 
of  massachusetts. 

Sir: 

It  is  with  great  satisfaction  that  I  dedicate  this  work  to  you. 
It  is  devoted  to  the  exposition  of  a  branch  of  that  great  Sys- 
tem of  Commercial  Law,  which  constituted  a  favorite  study  in 
your  early  professional  life,  and  which,  since  your  elevation  to 
the  bench,  you  have  administered  with  eminent  ability  and 
success.  No  one,  therefore,  is  better  qualified  than  yourself, 
to  appreciate  the  importance  and  difficulty  of  such  a  task,  and 
the  indulgent  consideration,  to  which  even  an  imperfect  exe- 
cution of  it  may  be  fairly  entitled.  But  I  desire,  also,  that 
this  Dedication  may  be  deemed,  on  my  part,  a  voluntary  trib- 
ute of  respect  to  your  personal  character,  adorned,  as  it  is,  by 
the  virtues,  which  support,  and  the  refinements,  which  grace 
the  unsullied  dignity  of  private  life.  I  recollect,  with  pride 
and  pleasure,  that  I  was  your  pupil  in  the  close  of  my  pre- 
paratory studies  for  the  Bar ;  and,  even  at  this  distance  of 
time,  I  entertain  the  most  lively  gratitude  for  the  various  in- 
struction, ready  aid,  and  uniform  kindness,  by  which  you 
smoothed  the  rugged  paths  of  juridical  learning,  m  mastering 
which,  an  American  student  might  then  well  feel  no  little  dis- 
couragement, since  his  own  country  scarcely  afforded  any 
means,  either  by  elementary  Treatises  or  Reports,  to  assist 


VI  DEDICATION. 

him  ill  ascertaining  what  portion  of  the  Common  Law 
was  here  in  force,  and  how  far  it  had  been  modified  by  local 
usages,  or  by  municipal  institutions,  or  by  positiYe  laws. 

I  trust  that  you  may  live  many  years  to  enjoy  the  honors  of 
your  present  high  station  ;  and  I  may  be  allowed  to  add,  that, 
out  of  the  circle  of  your  own  immediate  family,  no  one  will  be 
more  gratified  than  myself,  in  continuing  to  be  a  witness  of 
the  increasing  favor,  with  which  your  judicial  labors  are 
received  by  the  public,  and  of  your  possession  of  that  solid 
popularity,  which  (to  use  the  significant  language  of  Lord 
Mansfield)  follows,  and  is  not  run  after,  in  the  steady  adminis- 
tration of  civil  justice. 

I  am,  with  the  highest  respect,  truly 
Your  obliged  friend, 

JOSEPH   STORY. 

Cambridge,  Massachusetts, 
November,  1841. 


PREFACE. 


In  offering  another  volume  of  the  series  of  my  professional 
labors  to  the  indulgent  consideration  of  the  Profession,  I 
desire  to  say  a  few  words  in  explanation  of  the  plan  and  its 
execution.  The  subject  is  one  confessedly  of  a  complicated 
nature,  containing  many  details,  and  not  unattended  with 
difficulties  in  its  exposition,  sometimes  from  the  character  of 
the  abstruse  and  subtile  doctrines  belonging  to  it,  and  some- 
times from  the  occasional  conflict,  more  or  less  direct,  of 
various  adjudications  to  be  found  in  English  and  American 
Jurisprudence.  I  have  endeavored,  as  far  as  I  could,  to 
ascertain  and  state  the  true  result  of  the  authorities,  and  the 
reasoning,  by  which  they  are  respectively  supported ;  and  I 
have  added  explanatory  commentaries,  sometimes  briefly  in 
the  text,  but  in  general  more  largely  and  critically  in  the 
notes,  in  order  to  assist  the  student  in  his  inquiries,  and  to 
aid  the  younger  members  of  the  Profession,  who  may  be 
desirous  of  extending  their  researches  beyond  the  boundaries 
of  their  own  limited  libraries.  I  have  not  hesitated,  upon 
important  occasions,  to  make  large  extracts  in  the  notes  from 
the  opinions  of  eminent  Judges  and  elementary  writers,  be- 
lieving that  it  is  the  most  effectual  mode  of  making  the 
reasoning  upon  which  particular  doctrines  are  founded,  as 
well  as  the  learning  by  which  they  are  supported,  more  clear, 
exact,  and  satisfactory  than  the  necessary  brevity  of  the  text 
would  allow.     I  trust,  also,  that  I  shall  not  be  deemed  to  have 


^1U  PREFACE. 

misused  the  privilege  of  a  commentator,  by  occasionally  ques- 
tioning, in  the  notes,  the  authority  of  a  particular  case,  or  the 
soundness  of  a  particular  doctrine,  or  by  suggesting  the  im- 
portance of  a  more  critical  inquiry  into  the  true  bearing  and 
value  thereof.  Unambitious,  and  even  facile  and  superficial, 
as  this  portion  of  my  labors  may  seem,  it  has  been  attended 
with  much  embarrassment  and  exhaustion  of  time  and  thought ; 
far  more,  indeed,  than  a  careless  observer  might  suppose  could 
properly  belong  to  it. 

I  have  in  the  present,  as  in  my  former  works,  endeavored  to 
illustrate  the  principles  of  our  jurisprudence  by  a  comparison 
of  it  with  the  leading  doctrines  of  the  Roman  Law,  and  with 
those  of  the  systems  of  the  modern  commercial  States  of 
Continental  Europe,  and  especially  with  that  of  France,  which 
may  fairly  be  deemed  to  represent  and  embody  the  main  prin- 
ciples of  all  the  others  in  a  precise  and  elaborate  form.  Pothier 
and  Yalin,  among  the  earlier  Jurists,  and  Pardessus,  Boulay- 
Paty,  Duranton,  and  Duvergier,  among  the  later  Jurists,  in 
their  Comments  upon  the  Civil  and  Commercial  Codes  of 
France,  have  furnished  many  higlily  useful  materials.  Mr. 
Bell's  excellent  Commentaries  upon  the  Commercial  Law  of 
Scotland  are  at  once  learned,  comprehensive,  and  exhausting, 
and  have  afforded  me  very  great  assistance.  I  have  also  freely 
used  the  able  Treatises  of  Mr.  Watson,  Mr.  Gow,  and  Mr. 
Collyer  on  the  subject  of  Partnership,  and  have  everywhere 
cited  the  pages  of  the  latest  editions  of  their  works  in  the 
margin,  so  that  the  learned  reader  may  have  the  means  of 
verifying  the  citations,  and  of  extending  liis  own  researches 
by  the  further  lights  afforded  by  the  diligence  of  these  accom- 
plished authors.  Mr.  Chancellor  Kent's  Commentaries  have 
upon  this,  as  upon  all  other  occasions,  been  diHgcntly  con- 
sulted ])y  me ;  and  I  need  scarcely  add,  tliat  they  have  never 
failed  to  instruct  me,  as  well  as  to  lighten  my  labors. 


PREFACE.  IX 


The  Roman  Law  is  an  inexhaustible  treasure  of  various  and 
valualjle  learning ;  and  the  principles  applicable  to  the  Law  of 
Partnership  are  stated  with  uncommon  clearness  and  force  in 
the  leading  title  of  the  Listitutes  (De  Societate),  and  those  of 
the  Digest  and  the  Code  of  Justinian  (Pro  Socio),  and  in  the 
very  able  Commentaries  of  Yinnius,  Heineccius,  and  John 
Yoet  thereon.  A  slight  glance  at  them  will  at  once  show  the 
true  origin  and  basis  of  many  of  the  general  doctrines,  incor- 
porated into  the  modern  jurisprudence  of  Continental  Europe, 
as  well  as  into  that  of  the  Common  Law.  Indeed,  it  would  be 
matter  of  surprise,  if  the  Roman  Law,  which  may  be  truly 
said  to  be  the  production  of  the  aggregate  wisdom  and  experi- 
ence of  the  most  eminent  Jurists  of  a  vast  Empire,  did  not, 
upon  this  subject,  abound  with  principles,  not  only  founded  in 
natural  justice,  but  well  adapted  to  the  convenience  and  policy 
of  commercial  nations  in  all  ages.  It  is  curious  to  observe, 
how  distinctly  many  of  these  principles  may  be  traced  in  the 
early  ordinances  of  the  Maritime  States  of  modern  Europe, 
and  especially  in  that  venerable  collection  of  the  laws  and 
usages  of  the  sea,  the  Consolato  del  Mare. 

But,  after  all,  the  Law  of  Partnership  owes  its  present  com- 
parative perfection  and  comprehensive  character  and  enlight- 
ened liberality  mainly  to  the  learned  labors  of  the  English  Bar 
and  Bench.  America,  while  it  has  derived  from  the  parent 
country  all  the  elements  of  that  law,  has  also  contributed  its 
own  share  towards  expounding  and  enlarging  them,  so  as  to 
meet  the  new  exigencies  and  progressive  enterprises  of  a  widely 
extended  international  commerce. 

Cambridge,  Massachusetts, 
November,  18il. 


CONTENTS. 


Index  to  Cases  Cited p 


AGE  XV 


CHAPTER  I. 

Section 

Partnership  —  What  constitutes 1-6 


CHAPTER  II. 
"Who  may  be  Partners 7-14 

CHAPTER   III. 
Partnership  between  the  Parties —  Community  of  Interests     .  15-29 

CHAPTER  IV. 
Partnership  as  to  Third  Persons 30-70 

CHAPTER   V. 
Partnership  —  Different  sorts  of 71-87 

CHAPTER   VI. 

Rights  and  Interests  of  Partners  in  Partnership  Property    .     88-100 


XU  CONTENTS. 


CHAPTER  VII. 

Section 

Powers  and  Authorities  of  Partners 101-125 


CHAPTER  VIII. 

Liabilities  and  Exemptions  of  Partners  as  to  Third  Per- 
sons      126-168  a 


CHAPTER  IX. 

Rights,   Duties,   and   Obligations   of  Partners   between 

themselves 169-186 


CHAPTER  X. 

Rights,  Duties,  and  Obligations  of  Partners  under  the 

Articles  of  Partnership 187-215 

CHAPTER  XI. 
Remedies  between  Partners 216-233 

CHAPTER  XII. 
Remedies  by  Partners  against  Thii-d  Persons 234-264 

CHAPTER  XIII. 
Dissolution  of  Partnership 265-319 

CHAPTER  XIV. 

Effects  and  Consequences  of  a  Dissolution,  as  between  the 

Partners 820-356 


CONTENTS.  xiii 


CHAPTER   XV. 

Section 

Dissolution  —  Effects   and   Consequences   of,   as   to   the 

Rights  of  Creditors 357-411 


CHAPTER  XVI. 

Part-owners  of  Chattels  —  Rights,  Powers,  and  Liabilities  of  412-463 


Index page  723 


INDEX   TO    CASES   CITED. 


A. 


Abbot  V.  Bayley 

V.  Smith 

Abbott's  Appeal 
Abbott  V.  l)exter 

V.  Johnson 

Abel  V.  Sutton 
Abell,  Ex  parte 
Acherley  v.  Eoe 
Adam,  Ex  parte 
Adams,  Ex  parte, 

V.  Bankart 

V.  Liardet 

Adamson  v.  Jarvis 
Addaras  v.  Tutton 
Addison  v.  Overend 


Section 

10 

219,  222,  260 

93 

114 

125 

160 

376,  377,  379 

233 

388 

390,  394,  405 

114,  115 

288,  290 

220 

218 

256,  454 


Agace,  Ex  parte    102, 110,  132,  133, 154 
Agar  V.  Macklew  215 

Airey  v.  Borham  203 

Akhurst  V.Jackson  203 

Albrotcht  V.  Sussmann  240 

Alcoc'k  V.  Taylor  84 

Alder  V.  Fouracre  98,  331 

Alderson  v.  Pope  130 

V.  Temple  238 

Alexander  v.  Barker  241,  242,  243 

Allcott  V.  Strong  157,  253 

Allen  V.  Center  Valley  Company 

326,  358,  361 

V.  Davis  27 

V.  Kilbre  329,  339 

V.  Wells  261,  263,  311,  363 

Allhnsen  v.  Borries  275 

Alliance  Bank  v.  Tucker  102  a,  127 

American  Linen   Thread  Co.  v. 

Wortendyke  161 

Aniidown  v.  Osgood  161 

Anderson  v.  Anderson  225 

V.  Lemon  174 

V.  Maltby  163 

V.  Tompkins    92,  93, 101, 122, 

310 

V.  Wallace  212 

Andrew  v.  Boughey  155 

Andrews  v.  Brown  92,  93 


Section 
Andrews  v.  Keith  201,  263 

V.  Planters'  Bank  127 

Anon.  189 

Anon.  Z.  v.  X.  227,  229,  295,  297 

Anonymous  v.  Layfield  123 

Ansell  V.  Waterhouse  219 

Anthony  v.  Butler  120 

Apollo,  The  418,  428,  438 

Apsey,  Ex  parte  368 

Arden  v.  Sharpe  132 

Arlington  v.  Merricke  250 

Armsby  v.  Farnani  254 

Armstrong  v.  Armstrong  6 

V.  Fahnestock  373 

1".  Lewis  6 

V.  Robinson  114 

Arnold  v.  Brown  298,  305,  311,  313 

Arthur  v.  Dale  141 

Arton  V.  Booth  115 

Aspinall  v.  London  &  N.  W.  Rail- 
way Co.  115,  311 
Astle  V.  Wright  203 
Astley  V.  Weldon  215 
Atherton  v.  Tilton  47 
Atkins  V.  Hunt                                      150 

r.  Tredgold  328,  324  a 

Atkinson  v.  Laing  242 

V.  Mackreth  102  a,  108 

V.  Maling  416 

Attorney-Gen.  v.  Burges  106,  lt)7 

V.  Davy  125 

V.  Stannyforth  166 

Atwood  V.  Meredith  12,  261 

Aubin  V.  Holt  6 

Ault  V.  Goodrich  233,  328,  334,  358 

Austen  v.  Boys  99 

Austin  V.  Thomson  30 

Ayrault  v.  Chamberlin  152, 159 


B. 


Backus  V.  Fobes 

V.  Murjjhy 

Bagley  v.  Smith 


370 
860 
218 


XVI 


INDEX    TO    CASES    CITED. 


Section 

297 

234,  236,  237 

34,56 

228,  231 

338 

133 

65 

358 

106 

454 

324 

263 

455 

93 

107 

Ball  V.  Dunsterville  120 

Balmain  v.  Shore  93,  196, 199 

Bank  of  Australasia  v.  Breillat  126 

Bank  of  the    Commonwealth  v. 

Mudfrett  160 

Bank  v.  Towle  307 

Bank  of  X.  Y.  v.  Vanderhorst    319,  344 
Bank  of  Rochester  v.  Bowen  127 

V.  Monteath  142 

Bank  of  St.  Mary's  r.  St.  John  80 

Bank  of  Scotland  v.  Christie      157,  251 
Bank  of  Unite<l  States  v.  Binney 

(See  U.  S.  Bank  v.  Binney) 
Banlvs,  Ex  parte 
V.  Gibson 


Bagshaw  i-.  Parker 
Bailev  v.  Bancker 

V.  Clark 

V.  Ford 

V.  Vincent 

Baird  v.  Cochran 

1-.  Planque 

Baker's  Appeal 
Baker  v.  Ciiarlton 

r.  Jewell 

V.  Stackpoole 

V.  Wimpee 

Baldney  v.  Ritchie 
Baldwin  r.  Johnson 
V.  Leonard 


99, 
268, 


384 

100 

233 

264 

■  250 

101 

263 

63 

275,  290 

1 


Barber  t-.  Barber 

V.  Harrtbrd  Bank 

Barclay  v.  Lucas 
Barcroft  v.  Snodgrass 
Banlwell  v.  Perry 
Baring  r.  Crafts 

'■  V.  Dix 

V.  Lvman 

Barker  v.  Goodair  263,  264,  314,  337, 340 

V.  Highley  446 

V.  Parker  70,  2-30 

V.  Richardson  115,  252 

Barklie  i'.  Scott  70 

Barnardiston  c.  Chapman  449 

Barnewall,  Ex  parte  384 

Barr  v.  Speirs  290 

Barrett  v.  Swann  139 
Barrow,  Ex  parte                      5,  70,  307 

Barry  r.  Xesham  36 

Bartle  '-.  Xutt  6 

lianiett  v.  Jones  27,  41 
Barton  v.  Hanson                    58,  141,  154 

r.  Williams  101,  218 

Bass  V.  Bass  233 

V.  Tavlor  828 

Bate  V.  Robins  849 

Batcman  v.  I'iiider  824 

Hattlcy  V.  Lewis  146 

P.audier,  Er  parte  377 

B:i.\tor  V.  Mrown  93 

>•.  Conollv  99 

'•.  Rodina'n  42,  45 

V.  West  288 


Baylis  v.  Dineley 
Beach  v.  State  Bank 
Beacham  v.  Eckford  182, 

Beak  v.  Beak      [328,  331,  342, 
Beale  v.  Mouls 
Beard  v.  Webb 
Beatty  v.  Wray 
Beaumont  v.  ileredith 
Beck  V.  Kantorowicz 
Beckford  v.  Wade 
Beckham  v.  Drake 
V.  Knight 


Bedford  v.  Deakin 
Belknap  v.  Cram 
Bell  V.  Ansley 

V.  Humphries 

V.  Morrison 

V.  Nevin 

V.  Newman 

V.  Phyn 

Bellairs  ;•.  Ebsworth 
Belote  1-.  AYynne 
Benjamin  v.  Porteus 
Bennet,  Ex  parte 
Bennett  r.  Stickney 
Benson,  Ex  parte 

j;.Ela 

V.  Hadfield 

V.  Heathorn 

V.  Ketclium 


63, 
155, 


Bentley  v.  Bates 
V.  Craven 


Berkeley  r.  Hardy 
Berry  v.  Hawes 
Berthold  v.  Goldsmith 
Besch  V.  Frolich 
Bevan,  Ex  parte 
V.  Lewis 


Biddlecome  i'.  Bond 
Biddulph,  Ex  parte 
Bignold  V.  Waterhouse 
Bilton  V.  Blakely 
Binney  r.  Le  Gal 
Bird  I'.  Morrison 
Birdsall  r.  Colie 
Bisliop  V.  Breckles 

V.  Countess  of  Jersey 

V.  Hall 


liispham  v.  Price 
Black's  Ajjpcal 
Black  V.  Black 
Blair  v.  Agar 

r.  Bromley 

Blake's  Case 
Blake  r.  Dorgan 

?•.  Xutler 

Plakeiey's  Ex'rs,  .^.r  parte 
Hlakeney  v.  Dufaur 
Bland,  Ex  parte 

V.  Haselrig 

niansliaril,  In  re 
Hli'w  t'.  Wvatt 
Bligli  L\  Brent 


10 


Section 
7 

102,  108 
191,  349 
346,  349 

152 
10 
182,  331 
290 
174 
233 

103,  120 
103,  120 
158,  253 

'362 

242 

446 

107,  324 

195 

863 

93 

251 

324 

32,41 

208,  389 

114 

388 

263,  359 

155 

418 

41 

229 

175 

117 

264 

41.49 

295,  297 

386 

140, 263 

214 

108 

107, 130 

844 

114 

93 

330 

275 

168 

241 

233 

376 

92,  93 

232 

I,  108, 168 

268,  271 

288 

92,  93 

201  a 

228,  330 

455 

324 

417,  428 

158 

98 


INDEX    TO    CASES    CITED. 


XVll 


Blisset  V.  Daniel 
Bloxani  v.  Hubbard 
Bloxham  v.  Pell 
Blue  V.  Leathers 
Blundell  v.  Winsor 
Boardnian,  Ex  parte 

V.  Gore 

Bodenham  v.  Purcbas 
Boo;gett  V.  Frier 
Bolitho,  Ex  parte 
Bolton,  Ex  parte 

V.  Puller 

Bonbonus,  Ex  parte 
Bond,  Ex  parte 

V.  Aitkin 

V.  Hilton 

V.  Pittard 


Bonfield  v.  Smith 
Bonsteel  i-.  Vanderbilt 
Booth  V.  Parks 
Borden  v.  Cuyler 
Bosanquet,  Ex  parte 

V.  Wray 

Bottomiey  v.  Xuttall 
Bouldin  v.  Page 
Bourne  v.  Freeth 
Boussmaker,  Ex  parte 
Bovill  V.  Hammond 

V.  Wood 

Bowden,  Ex  parte 
Bower  v.  Douglass 
Bowie  V.  Maddox 
Bowker  v.  Burdekin 
Bowles's  (Lewis)  Case 
Bowman  v.  Bailey 
Bowyer  v.  Anderson 
Boyce  v.  Coster 
Boyd  V.  Emmerson 

V.  McCann 

Boydell  v  Drummond 
Boyers  v.  Elliott 
Boyington  v.  Boyington 
Bradbury  v.  Dickens 
Bradford  v.  Kimberly 
Bradley  v.  ChamberUn 

V.  White 

Braithwaite  v.  Britain 
V.  Skofield 


Section 

172,  2U,  275 

256,  449,  454 

68 

41,  46 

164 

376 

108 

253 

10 

106,  140,  142 

379 

154,  369,  376 

132,  133,  134,  388 

384,  385 

122 

454 

19,21,23,31,34,42,55, 

56,  59,  60,  61,  64,  69 

64,  134 

40 


150, 


198,  343 

384,  386 

117,  122 

221,  234 

155 

107 

151 

9 

219 

361 

389 

322 

65 

117 

422 

34,41 

41,  43 

92 

219 

161 

324 

93 

114 

99,  100 

182,  185,  331 

198,  331 

34,  41,  43,  49 

253,  323,  324  b 

150,  151 

41,  43 

208 


Briggs,  Ex  parte 

V.  Briggs 

Brigliam  v.  Dana 
Bright  V.  Hutton 
Brisban  v.  Boyd 
Brockway  v.  I3umap 
Brodie  v.  Howard 
Bromley  v.  Elliot 
Brooke  v.  Enderby 

V.  Washington 

Brooks  I'.  Martin 
Broom  v.  Broom 
Broome,  Ex  parte 
Broph}'  I'.  Holmes 
Brotherson  v.  Hodges 
Brown,  Ex  parte 

V.  Birdsall 

V.  Byers 

V.  De  Tastet 


V.  Douglas 
V.  Gordon 
V.  Leonard 
V.  Litton 


114. 


Braley  i-.  Goddard 
Brandon  r.  Robinson 

Brandram  i-.  Wharton  324 

Brassington  v.  Aidt  241 

Bray  v.  Fromont  70 

Breckinridge  v.  Shrieve  102  o 

Bredow  v.  Mut.  Savings  Inst.  344 

Brenan  v.  Preston  418,  428 

Brett  V.  Beckwith  30 
Brettel  v.  Williams              111,  113,  127 

Brewster  v.  Hamniet  263,  264 

Bridge  v.  McCullough  363,  376 

Bridges  v.  Mitchell  233 

Brierly  v.  Cripps  219 


Section 
68 
159 
34,45 
151 
107,  322,  324 
33 
421, 455 
27,  30,  49 
157,  253,  334 
63,  83,  93 
6 
93 
232 
27 
454 
140,  367,  390 
241 
102  a 
329,  341,  343, 
349 
362 
158,  324 
130,  160 
173,  233,  329,  343, 
348,  349 

V.  McFarland  182 

V.  Oakshot  93 

V.  Tapscott  219,  221 

V.  Tarkington  6 

Browne  v.  Gibbins  148 

Bruen  v.  Marquand  114,  115 

Brundred  v.  Muzzy  70 

Brutton  v.  Burton  114 

Brydges  v.  Branfill  108 

Bryson  v.  Whitehead  99 

Buchan  v.  Sumner  92,  93,  94 

Buchanan  r.  Curry  114 

Buchoz  V.  Grandjean  114 

Buck  V.  Burlingame  379 

V.  Winn  93 

Buckingham  v.  Hanna  86 

Buckley,  Ex  parte  148 

1-.  Barber  328,  342,  344 

V.  Buckley  93 

V.  Carter  290 

Bucknam  v.  Barnum  49 

V.  Brett  454 

Buckner  v.  Lee  68,  105,  106,  139 

Buftum  V.  Bufium  93 

;  But'ord  V.  Xeely  307 

Bulkley  ;•.  Dayton  115 

Bull  V.  Schuberth  47 

Bulien  V.  Sliarp  49,  60,  70 

Bullitt  V.  Meth.  Ep.  Church  358 

Bullock  v.  Crockett  203 

Burckle  v.  Eckart  41,  49 

Burden  v.  Burden  182,  185,  331, 

344,  349 
Burdon  v.  Barkus  93,  205 

Burfield  v.  Kouch  207 

Burgess  v.  Atkins  261 

! :  V.  Burgess  100 

!  Burke  i-.  Winkle  10 


xvm 


INDEX    TO    CASES    CITED. 


Burleigh  v.  Stott 
Burls  V.  Smith 
Burn  r.  Burn 
Burnell  v.  Hunt 
Burnley  v.  Rice 
Burnside  v.  Merrick 
Burrall  v.  Acker 
Burreil,  Ex  parte 
Burton,  Ex  jxirte 

V.  Greene 

V.  I>>sitt 

V.  Wijiley 

V.  Wookev 


175,  17" 


Burwcll  V.  Mandeville's  Ex'r 


■  V.  Springfield 
-.  Allen 
'•.  Steinman 


Bury 

Bush 
Bushell,  Ex  parte 
Butcliart  v.  Dresser 
Butler  V.  Stocking 
Buttcrficld,  Ex  parte 

I'.  Hemsley 

Buxton  V.  Lister 
Byers  v.  Van  Deusen 


Section 
107 
144 
120 
261 
243 
92,  93 
2(52 
390 
403 
261 
160 
215 

178,  348 

201  a, 

319  « 

132 

203,  233 
461 
132 
328 
127 
390 

122,  127  I 
189 

215,  300  I 


Section 

343 

88,  49,  58 

229 

379,  381 

231,  288 

246 

130 

261,  262,  263 

419,  446 

213,  231 

225,  227,  228, 

229,  231,  288 

27,  34,  36,  43 

241 

322 

Chavany  v.  Van  Sommer  275 

Cheap  1-.  Cramond  15,  16,  32,  34,  36,  41, 
44,  56,  59,  60,  61 


Chambers  v.  Howell 
Champion  v.  Bostwick 
Ciiancey  v.  May 
Chandler,  Ex  parte 
Chapman  v.  Beach 

V.  Beckinton 

V.  Devereux 

V.  Durant 

V.  Koops 


Chappell  V.  Bray 
Cliapple  V.  Cadell 
Charlton  v.  Poulter 

Chase  v.  Barrett 

V.  Deming 

V.  Kendall 


Caddick  v.  Skidmore 
Cadwallader  v.  Kroesen 
Cady  V.  Shepherd 
Cakiicott  v.  Griffiths 
Caldwell  i\  Leiher 

V.  Stileman 

Cam  mack  r.  Johnson 
Campliell  v.  Mullett 

r.  Steen 

r.  Thomson 

Candler  r.  Candjer 

Capen  v.  Burrows 

Card  V.  Hope 

Carlisle  v.  Mulhern 

Carr  v.  Smith 

Carrol  ??.  lilencow 

Carroll  v.  Waters 

Carron  Company  (Case  of  the) 

Carter  v.  Beaman 

V.  Home 

V.  Whallcy 


83,93 

113 

120,  122,  324 

144,  219 

182,  233,  331 

319 

263,  264,  393 

358,  359,  360,  362 

446 

24 

6 

218,  221,  233 

418,  428,  432 

93 

219 

10 

456 


Cheetham  r.  Ward 
Child  V.  Sands 
Chippendale,  Ex  jxirte 
Christian  i\  Ellis 
Christie,  Ex  parte 

V.  Craig 

Christy  v.  Sherman 
Chuck,  Ex  jiarte 
Church  V.  Knox 
V.  Sparrow 


168 

454 

113,  182 

263 

143,  442,  454 

428 

114 

45,  68,  69 

263,  264 

126,  140 

99,  100,  329 


Churton  v.  Douglas 

City  Bank  of  Brooklyn  v.  McChes 


ney 
Clagett  V.  Kilbourne 
Claiborne  v.  Creditors 
Clajjp  V.  Rogers 

-^ V.  Upson 

Clark  V.  Blackstock 

V.  Gilbert 

I'.  Leach 

Clarke,  Ex  parte 

,  In  re 

— — ^  V.  Bickers 

V.  Bradshaw 

V.  Price 


160,  161 
82.  263 

280,  290 
160 
161 
143 
47 
198 
376 
143 
362 
321 
224 
241 
106 


Carver  v.  Miller 
Castelli  v.  Cook 
Castle  I'.  Bullard 
Caswell  V.  Cooper 
Catesby,  Er  parte 
Catskill  Hank  r.  Gray 

V.  Stall 

Catt  V.  Howard 
Cecil  '•  .luxon 
Cliadbonrne  v.  Duncan 
Cliadscy  V.  Harrison 
Clianilicrlain  r.  Dow 
V.  Walker 


133 
174 
159,  160 
422 
428 
166 
219 
394 
14,  43,  49 
127 
152 
11 
4111 
21 '.I 
l.V.i 
219 


Clarkson  v.  Carter 

Clavering  v.  Westley 

Clay,  Ex  jnirte     363,  376,  377,  379,  380 

V.  Cottrell  132 

Clegg  V.  Fish  wick  174,  331 

Clegliorn  v.  Insurance  Bank  377 

Clement  »'.  Brush  117 

V.  Hadlock  27,  32 

Clements  v.  Hall  174,  331 

Clemontson  v.  IMessig  9,  315 

Cleveland  r.  Woodward  134 

Cleworth  r.  Picktbrd  114 

Clough  1-.  Ratclifie  290 

t-lowes,  ICx  parte  370 

Cobliam,  Ex  parte  377,  379 

(^)(kburn  r.  Thompson  229 

("ockerell  r.  Aucomptc  144 

Cocks  V.  Nasli  168 

1  Coder  v.  Huling  98 


i:SDEX    TO    CASES    CITED. 


XIX 


Coffee  V.  Brian 
Coffin  V.  Jenkins 
Cof'ton  (-.  Horner 
Colbeck,  In  re 
Coleman  v.  Coleman 
Coles  V.  Coles 

1-.  Trecothick 

Collamer  v.  Foster 
Collins  V.  Barrett 

V.  Jackson 

V.  Warren 


Collumb  V.  Read 
Colt  r.  Woollaston 
Combs  V.  Boswell 
Commercial  Bank    of  Lake 
I'.  AYestern  Reserve  Bank 
Commercial  Bank  v.  Warren 

V.  Wiikins 

Commonwealth  v.  Smith 


Section 

219 

42 

225 

69 

219 

92,  93,  94,  98 

117 

219 

257 

24 

93 

93 

285 

328 


Erie 


363 
133 
263 
14 
27,49 
322 


Conklin  v.  Barton 

V.  Og^born  

Conkling  v.  AVashington  University  14, 

70 
Connecticut  River  Bank  v.  French  131 
Conro  V.  Port  Henry  Iron  Co.  334 


Conroy  v.  Woods 
Const  V.  Harris 
Converse  v.  Ferre 

V.  Symmes 

Cook,  Ex  parte 

V.  Arthur 

^ V.  Batchellor 

' V.  Beecli 

V.  Catchpole 

V.  Collingridge 

Cooke,  Ex  parte 

V.  Cooke 

V.  Seeley 

Cookson  V.  Cookson 
Coomer  v.  Bromley 
Coope  V.  Eyre  3, 

Cooper  V.  Hood 

V.  Watlington 

Coover's  Appeal 
Copeman  v.  Gallant 
Copland,  Ex  parte 

V.  Toulmin 

Coppard  v.  Page 
Corbett  v.  Poelnitz 
Corpe  1-.  Overton 
Coryton  v.  Litliebye 
Cosio  r.  De  Bernales 
Coslake  v.  Till 
Coster  V.  Clarke 

V.  Murray 

Cothay  v.  Fennell 
Cottam  V.  Partridge 
Cotton  V.  Evans 
Couch  V.  Mills 
Course  v.  Prince 
Coursen  v.  Hamlin 
Coventry  v.  Barclay 


363, 


241 


Cowell  V.  Sikes 
Watt 


Cox  V.  Delano 

V.  Hickman 

V.  McBurney 

V.  Peters 

v.  Reid 

Coxwell  V.  Bromet 
Crallan  v.  Oulton 
Crane  i'.  French 
Crawford  v.  Hamilton 

V.  Stirling 

Cra\vfurd  v.  Baum 
Crawshay  i'.  Collins     99, 
198,  233,  313,  322,  325, 
342,  343,  348,  348  a 
V.  Maule 


359 

123,  192 

422 

454 

76 

264 

257 

358 

215 

99,  207,  349,  350, 

351 

208 

215 

243 

82,  93,  207 

168 

19,  30,  45,  63,  147  | 

99 

210 

263 

372 

377 

24,  157,  253 

42,  59 

101 

7 

257,  258 

10,  239  ! 

99 

93 

233 

242,  243 

:>33 

114 

168 

219 

182 

192,  206 


195,  196,  201,  231,  269, 
292,  317,  318,  322,  325, 

Cregler  v.  Durham 
Cremer  v.  Higginson 
Crisp,  Ex  parte 
Crockett  v.  Grain 
Crofi  V.  Pyke 
Crooker  v.  Crooker 
Cronne  v.  Bivens 
Gross  V.  Cheshire 
Crosthwait  v.  Ross 
Grottes  v.  Frigerio 
Cruikshank  v.  M'Vicar 
Crusader,  The 
Cruttwell  V.  Lye 
GuUum  V.  Bloodgood 
Gumming  v.  Forester 
Cummings  v.  INIills 
Parish 


Cumpston  v.  McXair 
Gunningliam  v.  Bragg 
Curling  v.  Robertson 
Currier  v.  Rowe 

V.  AYebster 

Gushing  v.  Marston 
Gust,  Ex  parte 
Gustance  v.  Bradshaw 
Gutbush  V.  Cutbush 
Cutler  V.  AYinsor 
Gutter  V.  Fanning 


D. 


Section 

253,  363 

83 

30,  49 

1,  49.  70 

92,  93 

330 

455 

349 

324  a,  360 

263 

195 

127 

263 

100,  175,  191, 

329,  331,  341, 

,  349,  350.  351 

]2,  84.  93,  189, 

273,  275,  277, 

329,  330,  346, 

350,  351,  356 

159 

245 

379 

263 

97 

93,  370 

359 

219 

102  a 

219 

221,  325 

42 

99 

101 

242 

21 

117 

280 

322 

421 

219 

219 

254 

392 

93 

201  a 

34,  41,  44,  45 

166 


Dacie  v.  John 

329,  330 

Dale  V.  Hamilton 

15,  82,  83,  93 

Dana  v.  Lull 

101,  310 

0.  Stearns 

7 

Dance  v.  Girdler 

250 

Daniel  r.  Gross 

158 

,.  T^-^.-.^.» 

122 

Darbey  v.  AA'hitaker 

215 

Darbv  o.  Baines 

428 

,.      l^.-...!,,. 

82,  93 

Darling  v.  31arch 

133,  322 

XX 


INDEX    TO    CASES    CITED. 


Section 
Dartmouth  College,  Trustees  of  v. 

Woodward  76 

Davenport  r.  Rackstraw  241 

Davev  r.  Freiulergrass  248 

David  r.  EUice  155,  156,  253,  370 


V.  Eloi 


Davies  v.  Hawkins 

V.  Hodgson 

Davis  &  Desauque,  Estate  of 
Davis  V.  Allen 

V.  Anier 

V.  Christian 

V.  Evans 

V.  Johnston 

V.  Jones 

V.  Tiie  Seneca 

V.  White 

Davison  v.  Robertson 
Deal  V.  Bogue 
Dean  v.  McFaul 
De  Begnis  i'.  Arniistead 
De  Berenger  v.  Hainmel 
De  Berkoni  v.  Smith 
Deckert  v.  Filbert 
Deford  v.  Reynolds 
De  Gaillon  v.  L'Aigle 
De  Jarnette  r.  McQueen 
Delauney  r.  Strickland 
Delmonico  v.  Guillaume 
Deloney  v.  Hutciieson 
De  Lovio  v.  Boit 
De  Mautort  v.  Saunders 
Deming  v.  Colt 
Denny  v.  Cabot 

V.  Metcalf 

Dent  V.  Turpin 

Denton  v.  Rodie 

De  Kibeyre  r.  Barclay 

Deslia  r.  Smith 

De  Tastet  v.  Bordenave 

V.  Shaw 

Devay  nes  v.  Noble  108, 150, 157, 253, 362 
Deveau  y.  Fowler  32'J 

Dewey  v.  Dewey  93 

Dexter  v.  Arnold  182 

Dickerson  v.  Wheeler  117 

Dickinson  v.  Dickinson  207 

V.  Gninger  219 

V.  Legare  101 

I,-.  Valpy    65,  102  «,  113,  12n, 

150,  151 

55 

93,  122 

93 

35H 

215 
'.):', 

194 
41,  45,  56,  61 

422 


456 

125 

99 

322,  328 

160 

329,  330 

93,  201  a 

147,  150 

428,  446 

194 

437,  439 
261 
106 

261,  263 

159 

6 

288 

132 

101 

80,  159 

10 

219 

144 

92,  93 

93 

438,  439 
134 
101 

34,  41,  46,  49 

234 

99,  100 

140,  154 

108 

182 

329,  330 

221,  234 


Digby,  Ex  parte 
Dillon  !».  Brown 
Dilworth  '•.  Mayfield 
Dimon  v.  IIa>:ard 
DiniMiale  r.  Robertson 
Divine  '••  Mitcimm 
Dix  V.  Otis 
Dixon  V.  Coo|)er 
Duane  v.  Badger 
Do!)  V.  Halsey  15,  27,  32,  36.  43,  56,  5H, 
127,  132,  133 
Doddington  t-.  Ilallet  417,  412,  441 


Section 
Doe  V.  Miles  268,  271 

Dolman  v.  Orchard  160 

Dommett  v.  Bedford      .  208 

Donald  v.  Hewitt  446 

Donaldson  v.  Williams  128 

Donelson  i\  Posey  24 

Doner  ;;.  Staufler  263 

Donnally  r.  Ryan  148 

Doremus  v.  McCormick  108 

Doty  V.  Bates  102 

Doubleday  v.  Muskett  150 

Dougherty  v.  Van  Nostrand       99,  174, 

185,  331 
Douglas  V.  Winslow  263 

Dow  V.  Savward  261 

Downs  V.  Collins  189,  199,  201,  224 

Drake,  Ex  parte  407 

V.  Beckham  120 

V.  Ramey  70 

V.  Rogers  101 

Drumright  r.  Philpot  122 

Drurv  v.  Rolierts  328,  330 

Dry  V.  Boswell       19,  32,  34,  41,  44,  45, 

46,  56 

V.  Davy  245,  247,  248,  249 

Dubois'  Appeal  122 

Dudgeon  v.  O'Connell  .117 

Dufft'.  East  India  Company  403 

Duhring  v.  Duliriiig  93 

Dumont  v.  Ruepprecht  285 

Duncan  v.  Lewis  147 

V.  Lowndes  111,  127,  133 

V.  Lycm  218,  222' 

Dunham  v.  Jarvis  417,  444 

V.  Murdock  263 

V.  Rogers  43,  46,  49 

Dupuy  V.  Leavenworth  93 

Durbin  v.  Barber  285 

Duryea  v.  Whitcomb  30 

Duryee  v.  Elkins  42 

Dutton  V.  Morrison  260,  261,  262,  263, 
311,  314,  337,  340,  377,  379 

V.  Woo(lman  64 

Dwight  V.  IVIudge  370 

Dwinel  r.  Stone  27,30,44 

Dyer  v.  Clark  92,  93 


E. 

Eager  v.  Barnes 
Eccleston  /•.  Clipsham 
Edens  r.  Williams 
Kdmondson  r.  Davis 
Edwards,  /,'/•  purlr 

r.  .McFall 

— ; V.  I'ilzer 

V.  Stevens 

c.  University 

I'ygberts  V.  Wood 
El<Ier  V.  Hood 
I'.  Larrabee 


108 
454 
219 
167 
384 
159 
114 
12 
233 
101 
219 
421,  455 


INDEX    TO    CASES    CITED. 


XXI 


Section 
Elgie  V.  Webster  219 

Elizabetli  and  Jane,  The  428,  434, 

435,  437,  439 
EUicott  V.  Nichols  323 

Elliot  V.  Davis  119 

V.  Stevens  372,  393 

Elliott  V.  Brown  93,  98,  331 

V.  Holbrook  114 

V.  Roj'al  Exch.  Ass.  Co.         215 

Ellison  y.  Dezell  115 

Ellsworth  V.  Pomeroy  30,  41 

V.  Tartt  40 

Elton,  Ex  parte  365,  376,  377,  379 

Ely  V.  Hair  122 

Emanuel  v.  Bird  363 

V.  Draughn  61 

Emiy,  Ex  parte  134,  140,  367 

V.  Lye  136,  140,  154 

Enderbv,  Ex  parte  371,  403,  404 

England  v.  Curling  178,  189,  192, 

227,  229 
Ensign  u.  Briggs  93 

Erwin's  Appeal  93 

Essell  V.  Hayward  275 

Essex  V.  Essex  93,  198 

Estwick  V.  Conningsby  344 

Etheridge  v.  Binney      63,  105,  106,  139 
Evans  v.  Coventry  330 

V.  Drumraond  155,  156,  158, 

159,  334,  370 

V.  Evans  328,  344,  346,  347 

V.  Gibson  263 

V.  Philadelphia  Club  214 

V.  Silverlock  254 

Everett  v.  Coe  55,  58 

Everit  v.  Strong  122 

V.  Watts  12 

Everitt  v.  Chapman  27,  31,  58 

Evernghim  v.  Ensworth  132,  133 

Ewing  V.  Osbaldiston  6 

Exeter  Bank  v.  Sullivan  324 

Eyre,  Ex  parte  166,  168 


F. 


Fairlie,  Ex  parte 

V.  Hastings 

Fairtliorne  v.  Weston 
Faith  V.  Richmond 


370 
323 
229 
102,  136,  142, 
202,  243 
Fall  River  Union  Bank  v.  Sturtevant  132 

Whaling  Co.  v.  Borden     82, 

83,  92,  93 
Fanning  v.  Chadwick  .  219 

Farlow,  Ex  parte  377 

Farmers'  Bank  v.  Bayless  138, 140,  142 
Farnum  v.  Boutelle  253 

Farr  v.  Johnson  24 

V.  Pearce  99 

Farrar  v.  Beswick  24 

V.  Deflinne  156, 159 

. —  V.  Hutchinson  110,  132 


Section 

304 

114 

27 

174,  232 

Featherstone  v.  Hunt  158 

Featherstonhaugh  v.  Fenwick      84,  98, 

99,  174,  176,  198,  2U7, 

269,  279,  351 


Fauntleroy  (Case  of) 
Faver  v.  Briggs 
Fawcett  v.  Osborn 

Whiteliouse 


■  V.  Turner 


Felichy  v.  Hamilton 
Fell,  Ex  parte 

Fellows  V.  Wyman 
Felton  V.  Reid 
Fenn  v.  Harrison 
Fennings  v.  Lord  Grenville 
Fereday  v.  Hordern 
V.  Wightwick 


Fern  v.  Cushing 
Person  v.  Monroe 
Field,  Ex  parte 
Figes  V.  Cutler 
Filley  v.  Piielps 
Finckle  v.  Stacey 
Fisher  v.  Minot 

V.  Murray 

V.  Pender 

V.  Tayler 


Fisk  V.  Herrick 
Fitch  V.  Hall 

Harrington 


182,  203, 
275, 343 
18,  147 
326,  358,  359,  ;,60, 
401,  402,  403 
238,  272,  280,  321 
346 
132 
42 
23,  45,  68 
82,  93,  231, 
350,  407 
340 
358,  359 
376 
215 
261 
18,  30,  59 
367,  372 
101 
119 
102,  122  a 
264 
41 
49,65 
7' 
144 
377 
372 
288 
107,  140 
,127,  133 
101 
65 
93 
101 
■       222 
151 
83,  93 
257 
102  a 
93 
218,  219 
848 
233 
446 
93 
322 
Fox  V.  Clifton  64,  150,  151 

V.  Ilanburv    94, 126,  261,  311,  313, 

314,  328,  339,  351 

V.  Norton  122 

V.  Rose  256 

Frankland  i'.  McGusty  133 

Franklin  v.  Lord  Brownlow        336,  338 


Fitts  V.  Hall 
Flemyng  v.  Hector 
Flintum,  Ex  parte 
Flyn,  Ex  parte 
Fogg  V.  Johnston 
Folk  V.  Wilson 
Foot  V.  Sabin 
Forbes  v.  Scannell 
Ford  V.  Whitmarsh 
Forde  v.  Herron 
Forkner  i'.  Stuart 
Fornian  v.  Homiray 
Forrester  v.  Bell 
Forster  v.  Hale 

V.  Lawson 

V.  Mackreth 


Forsyth  v.  Clark 
Foster  v.  Allanson 

V.  Donald 

V.  Hodgson 

V.  U.  S.  Ins. 


Co. 


Fowler  t'.  Bailley 

V.  Richardson 


XXll 


INDEX    TO    CASES    CITED. 


Franklin  r.  Robinson 

,  The 

Franklyn  v.  Thomas 
Eraser  v.  Kershaw 
Frederick  v.  Cooper 
Freeland  v.  Stansfeld 
Freeman,  Er  parte 

V.  Carhart 

V.  Carpenter 

French  v.  Backhouse 

V.  Chase 

r.  Rowe 

V.  Stvring 

Friendschaft",  The 
Friendship,  The 
Frink  c.  Branei; 
Fromont  i\  Coupland 
Frost  V.  Moulton 
Fry,  Ex  parte 
Furnival  v.  Weston 
Furze  i'.  Sharwood 


G. 


182, 


Section 

185,  331 

9,  316 

264 

339 

93 

203,  341 

359,  368,  370,  394 

114 

113 

446 

263 

108 

,  30,  219 

316 

454 

93 

,  58,  219 

277 

370 

114,  115 

106,  139 


Section 
Gilpin  V.  Enderbey  23,  55,  60,  61, 

68,69 
Glasscock  i-.  Smith  344 

Glassington  r.  Thwaites     178, 179,  209, 
213,  222,  227,  231,  288 


Glossop  V.  Colman 
Glover  r.  Tuck 
Goddard  v.  Pratt 
Godfrey  v.  TurnbuU 
Godson  r.  Good 
Goldsmid,  Er  parte 

i\  Cazenove 

Goodburn  v.  Stevens 


27,  57, 


103, 


Gabriel  v.  Evill 
Gage  V.  Rollins 
Gaines  r.  Catron 
Gainsborough  r.  Stork 
Gaibraith  i-.  Gedge 
Gale  V.  Leckie 

V.  Miller 

Gal  way  (Lord)  v.  Matthew 

Gannett  i\  Cunningham 
Gansevoort  v.  Williams 
Garbett  v.  Vealc 
Gardiner  r.  Childs 
Gardner  v.  McCutcheon 
Gardom,  E.r  parte 
Garey  v.  Pyke 
Garland,  Ex  jmrte 
Garret  i:  Taylor 
Garrctson  r.  Weaver 
Garrett  v.  Handley 
Gartli  V.  Howard 
Gay  V.  Bowen 

(•.  Johnson 

Geddes  v.  Wallace 

Gellar,  Ex  parte 
Geller,  Ex  parte 
Geortner  ?'.  Trustees  of  Canajoha- 

rie  322,  325 

German  Mining  Co.,  In  re  182 

Gibbons  v.  Wilcox  41 

Gibson  V.  Lupton  3,  30,  145 

V.  Moore  219 

r.  Stevens  70,  2C1,  2<;3 

?'.  Stone  67 

(iililersleeve  v.  Mahony  I.'*:! 

(fill  r.  (Jeyer  349 

(iillespie  v.  Hamilton  317 


150 

241  i 

92' 

190  I 

92,  93 

219 

133 

102,  123, 

130,  143  ! 

328 

132,  133 

263 

147,  149 

174 

111,  126,  127 

32 

70,  201  o,  319  (/ 

155 

231 

242,  243 

323 

324 

263 

30,32,  59,  61.  63, 

191,  192,  219 

27,  59 

389 


241 
218 
159 
65.  160 
361 
388 
388 
93,  343 

Goode  V.  Harrison  7,  64,  255 

Goodman,  Ex  parte  389 

V.  Whitcomb      181,  218,  225, 

229,  231,  287,  288,  356 
Goodwin  v.  Richardson  93 

Gordon  r.  Bankard  107 

V.  Howden  6 

Gorham  v.  Thompson  160 

Gough  V.  Davis  158 

Gould  V.  Gould  24 

V.  Horner  198 

Goulding,  Ex  parte  132,  133 

Gouthwaite  v.  Duckworth        147,  148, 

150 
Gowan  v.  Jeffries  330 

Grace  v.  Smith 


19,  36,  48,  49,  56,  58, 
59,  60,  61,  66,  67,  68 
Graham  v.  Hope  65,  160 

V.  Robertson  219,  338 

Gram  v.  Caldwell  132 

V.  Seton  120,  122 

Granger  v.  McGilvra  328 

Grant  v.  Austen  254 

Graser  v.  Steihvagen  101 

Gratz  V.  Bayard        195, 196,  201  a,  288 


Gray  v.  Chiswell 

V.  Ward 

Grazebrook,  Ex  parte 
Greatrex  v.  Greatrex 
Greeley  v.  Wycth 
Green  v.  Barrett 

V.  Beals 

V.  Beesley 


V.  Briggs 

1'.  Chapman 

V.  Dcakin 

V.  Miller 

1'.  Tanner 

V.  Waring 

Greene  v.  (Jraham 

: I'.  Greene 

Greenham  i-.  (Jray 
Greenslade  v.  Dower 

Greenwood's  Case 
Ciregory  v.  I'anl 
(iridley  v.  Dole 
Griffith  ;;.  Buffum 
Grindley  v.  Barker 


362,  363 

102  a 

406 

227 

238 

232,  285 

117 

19,  30,  41,  42,  45, 

55,  57,  58,  60 

441, 442 

234 

132,  133 

125 

134,  140 

215,  301 

93 

93 

27 

102  rt,  126,  147, 

148 

130,  164 

10 

219 

63,  64 

.  125 


INDEX    TO    CASES    CITED. 


XXIU 


Section  | 
Gnswold  i\  Haven  108 

V.  Waddineton         9,  65,  240, 

269,  280,  281, 290,  295,  303,  305, 
306,  312,  313,  315,  316,  336  j 
Grosvenor  v.  Lloyd  159  | 

Grove  v.  Dubois  242 

Guidon  v.  Robson  65,  241,  242  , 

Gulick  V.  Gulick  21^ 


H. 

Habershon  v.  Blurton  311 

Hackley  i-.  Patrick  324 

Hagar  v.  Stone  134 

Hagedorn  v.  Oiiverson  242 

Hague  V.  RoUeston  314,  339 

Hale  V.  Hale  330 

V.  Henrie  83,  93 

V.  Plunimer  93 

Half  hide  v.  Fenning  215 

Halkett,  Ex  parte  416 

Hall,  Ex  parte  406 

,  Re  150 

V.  Barrows  99,  100 

V.  Digby  90 

V.  Hall  99,  227,  229,  231,  272 

V.  Huffam  342 

V.  Leigh  3,  27,  30 

V.  Smith  102,  143,  242 

Hallack  f.  March  114 

Hallet  V.  Desban  41,  49 

Hallett  V.  DowdaU  164 

Halls  V.  Coe  132 

Halsey  v.  Whitney  115,  120 

Haly  V.  Goodson  428 
Hambidge  ;;.  De  la  Croue'e         114,  115 

Hamersley  v.  Lambert  362 

Hamil  v.  Stokes  232 

Hamill  v.  Purvis  127 

Hamilton  v.  Hamilton  219 
Hammond  v.  Douglas  99, 100, 343,  349 
Hamper,  Ex  parte         27,  32,  35,  36,  38, 

45,  69,  261,  263,  372 

Hanff  ?;.  Howard  83,  93 

Hankey  v.  Garratt  362 

V.  Hammock  201  a 

Hanna  i'.  Flint  41 

Hannay  v.  Stewart  323 

Harding  v.  Foxcroft  80,  45 

V.  Glover  329,  330 

Hardy  v.  Sproule  421,  455 

Hargrave  r.  Smee  248 

Hargreaves,  Ex  parte  394 

Harman  v.  Fishar  238 

V.  Johnson  102  a,  108 

Harmon  v.  Clark         359,  360,  372,  389 

Harrington  I?.  Higham  114 
B.SiVvis'l  Ex  parte          130,  390,  391,  392, 

403,  442 

V.  Bevington  256 

V.  FarweU  155,  156,  158 

V.  Harris  219 


Section 
Harris  v.  Lindsay  155,  158,  254 

Harrison  v.  Armitage  222,  229,  231 

V.  Gardner  99,  211 

V.  Jackson  114,  117,  119,  122, 

126 

V.  Sterrv  24,  101,  122 

V.  Tennant  280 

Hart  V.  Alexander  155,  156, 158 

Hart  V.  Clarke  272 

V.  Fitzgerald  454 

Hartley  v.  Manton  168 

Hartz  V.  Schrader  231,  344,  347 

Harvey  v.  Crickett  221,  263,  314,  328, 

339,  341,  342 

V.  Kay  150,  234 

Harwood  i-.  Edwards  114 

Hasbrouck  v.  ChUds  24,  25,  26 

Hasell,  Ex  parte  233 

Haskell  v.  Adams  219 

Haskins  v.  Everett  261,  263 

Hasleham  v.  Young  111,  127 

Hastings  v.  Hopkinson  128 

Hatch  V.  Wood  241 

Hatton  V.  Royle  114 

Haven  v.  Goodel  322 

Havens  r.  Hussey  101,  310 

Hawes  v.  Tillinghast  46,  408 

V.  Waltham  264 

Hawken  v.  Bourne  101,  126 

Ha\\(iiins  v.  Appleby  108 

V.  Hawkins  344,  373 

Hawkshaw  v.  Parkins  115, 119,  252,  264 
Hawtayne  v.  Bourne  113, 126 

Hay,  Ex  parte  370 

Haydon,  Ex  parte  Bll 

Hayes  v.  Heyer  101 

Haynes  v.  Seachrest  93,  122 

Haythorn  v.  Lawson  257 

Haywood  v.  Harmon  107 

Hazard  v.  Hazard  30,  32,  35,  55 

Heap  V.  Dobson  30 

Heath  v.  Hall  387 

V.  Hubbard  449,  454 

V.  Sansom  159, 160,  269,272,  299, 

300,  308,  334 
Heathcote  v.  Hulme  329,  330,  331,  343 
Heberton  v.  Jepherson  322,  344 

Hedley  v.  Bainbridge  102  a 

Heenan  v.  Nash  102 

Heimstreet  v.  Howland  41 

Helme  u.  Smith  219 

Helsby  v.  Mears  107, 152 

Henderson  v.  Hudson  93 

Henecy,  Ex  parte  208 

Henley  v.  Soper  219 

Henn  v.  Walsh  231 

Hennessy  v.  Western  Bank  101 

Henry  v.  Gates  117 

Herbert  v.  Hanrick  122 

V.  Odlin  107 

Hercy  v.  Birch  89 

Herrick  v.  Ames  178 

Herris  v.  Jamieson  260 


XXIV 


INDEX    TO    CASES    CITED. 


Section 
Hesham,  Ex  parte  304 

Hesketh  v.  Bianchard  16,  27,  32,  40,  43, 
45,  53,  57,  58,  63 
Ilewett  I'.  Buck  446 

Heydon  v.  Heydon  261 

Hevhoe  v.  Biirge  34 

Hiard  v.  Big?  141, 154 

Hibbert  V.  Hibbert  189 

Hicbens  v.  Congreve  174,  220 

Hickerson  v.  McFaddin  329 

Hickman  v.  Cox  70 

Higgins,  Ex  parte  155,  370 

Higinbotiiam  v.  Holme  20S 

Hill,  Ex  parte       208,  377,  380,  388,  442 

V.  Beach  406,  407 

V.  Bumham  349 

V.  King  182 

V.  Voorhies  63,  155 

V.  Wiggin  261 

Hinton,  Ex  parte  208 

Hitcbcock  V.  St.  John  101,  310 

Hitcbings  v.  Ellis  27,  46 

Hoare  v.  Dawes    3,  19,  30,  53,  55,  63, 
64,  80,  138 
Hobyt,'.  Roebuck  153 

Hodi^es  V.  Parker  182 

Hodgkinson,  Ex  parte  32,  53,  55,  56,  370 


Hodgman  v.  Smith 
Hodgson,  Ex  parte 
Hogg  V.  Kirby 

V.  Skeen 

Holbrook  v.  Lackey 
Holdane  v.  Biitterworth 
Ilolilen  V.  M'Makin 
Holderness  v.  Shackels 


30 

208,  377,  379 

4*259 

133 

346 

160,  161 

99 

326,  337,  360, 


400,  407,  408,  441,  442 
Holland  v.  Fuller  93 

V.  King  201 

Holloway  v.  Holloway  100 

Holmes  v.  Blogg  7 

V.  Hawos  329 

r.  Higgins  219,221 

r.  Mentze  261,  2f)3 

Old  Colony  R.  R.  Co.     43,49 


r.  Porter 

V.  Unit.  Ins.  Co. 

V.  Williamson 

Ilolroyd  v.  Ilolroyd 

Holt  /•.  Kernodle 

lloltoii  V.  Ilolton 

Holyliiml  V.  De  Mendez 

llolyoke  v.  Mayo 

iloiner  v.  VVooil 

Ilomlray  v.  Kotborgill 

llonorc  i\  (.'olmesnil 

Hood  /'.  iVston 

Hooj),  Tlie 

Hooper  v.  Lushy 

Hope  '■.  CuHt        102,  111,  127,  132^  13:', 

Hopkins  w.  Forsyth  417 

V.  Ken't  241 

V.  Watt  172 

Jlopkinson  ?).  Marquis  of  ICxotcr        214 


139 

3,  30,  55,  56 

219 

93 

47 

376 

68 

218,  219 

238 

207 

1K2 

227,  259 

315,  316 

102,4  16 


Ipo 


Hopkinson  v.  Smith 
Hornblower  v.  Proud 
Horneffer  v.  Duress 
Horrell  v.  Witts 
Horton  v.  Saver 
V.  Wikle 


Horton's  Appeal 
Hosack  V.  Rogers 
Houghton  V.  Houghton 
House  V.  Thompson 
Houseal's  Appeal 
Houser  v.  Irvine 
Houston  V.  Darling 
Howard  v.  Priest 
Howden,  Ex  parte 
Howe  V.  Lawrence 
Howell  V.  Brodie 
Hoxie  IK  Carr 
Hubbard,  Ex  parte 

V.  Curtis 

V.  Guild 

Hubbell  V.  Woolf 
Hughes  I'.  Ellison 
Human  v.  Cuniffe 
Hume  V.  Bolland 
Hunt  V.  Benson 

V.  Bridghara 

Hunter,  Ex  parte 
V.  Parker 


Huntington  v.  Potter 
Hurst  V.  Hill 
Ilutcheson  v.  Smith 
Hutclunson  v.  Smith 
Hutton  v.  Thompson 
Hjat  V.  Hare 
Hyleing  t'.  Hastings 
Hynes  v.  Stewart 


Ide  V.  Ingraham 
Indian  Cliicf,  The 
Inglis  V.  Haigh 
Innes  v.  Dunlop 
Irvin  V.  Conklin 
Irvine  v.  Forbes 
Isler  V.  Baker 
Ives  V.  Miller 


Jacaud  v.  French 
Jackson,  Ex  pitrte 

,  lie 

V.  Alexander 

V.  Cornell 

)'.  Fairbank 

r.  Jackson 

;'.  Robinson 

IK  Scilgwick 

IK  Stanford 

V.  Stoplicrd 


140, 
120, 


Section 

59 

403 

12 

344 

125 

114 

307 

255 

93 

364 

394 

322,  323,  324,  328 

42 

92,  93 

102 

358,  380 

150,  151 

82,  92,  93,  339 

381 

263,  264 

341 

139 

101 

122 

108 

93 

324 

367,  390 

121,  122 

328 

322 

182 

344 

151 

126 

324 

285 


324,  328 
9,  316 
238 
244 
65 
164 
295 
219 


236,  252 

152,  368 

6 

241 

376 

324 

90,  92,  93,  98,  215 

3,  30 

191,  192,  213,  349 

<»4 

219 


INDEX    TO    CASES    CITED. 


XXV 


Section 

Jackson  v.  Woolley  324  u 

Jacky  V.  Butler  261 

Jaconib  v.  Harwood  3(32 

Jaggers  v.  Binnings  453 

James  v.  Bixby  455 

Janes  v.  Whitbread  70 

Janson,  Ex  parte  363,  380 

Jaques  v.  Marquand  140,  142 

Jarman  r.  Ellis  ■             119 

Jarvis  v.  Brooks      92,  93,  263,  359,  376 

V.  Noyes  449 

Jebb  V.  McKierman  219 

Jeffereys  v.  Small  90,  93.  342 

Jefferys  v.  Smith  82,  150,  183,  231 

Jennings  v.  Baddeley  290 

Jervis  v.  White  227,  259 

Jestons  f.  Brooke  18 

John  and  Siegniund,  The  445 

John  of  London,  The  428 

Johns,  Ex  parte  894,  405 

V.  Battin  122 

Johnson  v.  Byerly  238 

V.  Evans  263 

V.  Helleley  99 

V.  King  264 

V.  Miller  46 

V.  Peck  238 

Johnston  v.  Button  123 

Jones  V.  Clayton  260 

V.  Dwyer  399 

V.  Gibbons  403 

V.  Jones  182 

V.  Lusk  358 

V.  Maund  253 

V.  McMichael  27,  83 

V.  Moore  324 

V.  Neale  82,  92,  93,  373 

V.  Noy  292,  295,  297 

V.  Yates  221,  23^,  234,  238 

Jonge  Pieter,  The  9 

Tobias,  The  447 

Jordan  v.  Wilkins  31,  61 

Joseph  V.  Pebrer  164 

Judson  V.  Adams  41,  43,  46 

Juggeewundas   Keeka  Shah   v. 

Ramdas  Brijbooken  Das  93 

Julia,  The  9,  240,  315 

Julio  V.  Ingalls  27,  30,  44 


K. 

Karthaus  v.  Ferrer  114 

Kay  V.  Duchesse  de  Pienne  10 

Keating!'.  Marsh  108 

Keane  v.  Boycott  7 

Keble  v.  Thompson  368 

Kell  V.  Nainbv  241,  242,  255 

Kelley  v.  Hurlburt  138 

Kellogg  V.  Griswold  46 

Kelluni  V.  Emerson  449 

Kemble  v.  Kean  224 

Kemeys  v.  Richards  132 


Section 

101 

322 

253,360,361,362, 

364,  405 

380 

99 

Kensington,  Ex  parte  245,  363,  377,  380 


Kemp  V.  Carnley 

V.  Coffin 

Kendall,  Ex  parte 

Kennedy,  Ex  parte 
V.  Lee 


Kent,  The 

Kershaw  o.  Mathews 
.Ketcham  v.  Clark 
Ketchum  v.  Durkee 
Kieran  v.  Sanders 
Kiffin  V.  Willis 
Kilby  V.  Wilson 
Kilgour  V.  Finlyson 
Kill  V.  HoUister 
Kilshaw  v.  Jukes 
Kimball  v.  Blanc 

V.  Hamilton  Ins 

V.  Thompson 

Whitney 


166, 
160,  322, 


Co. 


Kimberley  v.  Jennings 
Kimbro  v.  Bullitt 
Kmg  V.  Chuck 

V.  Faber 

V.  Hamilton 

V.  Lowry 

V.  Wartelle 

V.  Smith 

(The)  V.  Beeston 

V.  Collector 


Customs 
Kingman  v.  Spurr 
Kirby  v.  Carr 

—  V.  Ingersoll 

V.  Schoonmaker 

Kirk  V.  Blurton 

V.  Hodgson 

Kirkham  v.  Newstead 
Kirkley  v.  Hodgson 
Kirkman  v.  Booth 

V.  Snodgrass 

Kirwan  v.  Kirwan 
Knebell  v.  White 
Knight  V.  Coates 

I'.  Marjoribanks 

Knott  V.  Morgan 
Knowles  v.  Houghton 
Knox  V.  Summers 
Kramer  u.  Arthurs 
Kuhne  v.  Law 


L. 

Lacy  V.  Hall 

V.  McNeile 

V.  Woolcott 

La  Forest,  Ex  parte 
Lake  v.  Craddock 

V.  Duke  of  Argyll 

V.  Gibson 

Lamb  v.  Durant 


445 

201 

160,  272,  307,  308 

134,  146,  153,  358 

241 

168 

238 

396 

215 

49 

456 

101 

358 

362 

224 

102  a 

198 

138 

182 

455 

233 

254 

125 

the 

342,  417 


of 


B07 

295,  297 

101 

97,  326 

102,  142 
123 
155 

403,  404 

201a 

161 

152,  155 

222,  229 
449 
172 

100,  259 

229 

263 

82,93 

263,  376 


93 
107 

336,  339 

388 

92,  93 

65,  150 

342 

416 


XXVI 


INDEX    TO    CASES    CITED. 


Lamb  v.  Grover 
Lambden  v.  Sbarp 
Lanipbir  i-.  Crcod 
Lancaster  Bank  v. 
Lane  ;•.  Williams 
Lang  V.  Waring 
Langan  v.  Hewett 
Langdale,  Ex  parte 


Myley 


Lange  r.  Kennedy 
Lansing  r.  Gaine 
Latham  i\  Simmons 
Laughlin  v.  Lorenz's  Adm'r 
Laverty  v.  Burr 
Law,  /i.r  parte 

V.  Ford 

Lawrence  v.  Taylor 

V.  Trustees   of   Orphau 


Section 

46 

122 

11 

82,  92,  263 

362 

92,  93,  132 

127 

19,  32,  35,  36,  56, 

60,  61,  64 

322. 

127,  133,  160 

263 

199,  201  a 

127 


139 

330 

93 


House 
Lawson  v.  Bank  of  London 

V.  Morgan 

■  Layfield, v. 

Leacli  ;-'.  Leach 


Leaf,  Ex  parte 

V.  Coles 

Lean  v.  Schutz 
Leary  v.  Shout 
Lee,  In  re 

V.  Laslibrooke 

V.  Page 

Lees  V.  Lat'orest 
Le  Fanu  v.  Malcomson  257 

Lefever  v.  Underwood  169 

Leicestershire  Banking  Co.,  Ex 

parte,  889 

Leighton  v.  Wales  218 

Leonard  r.  Huntington  455 

Le  Boy  v.  Johnson      102,  126,  130, 134, 

160 


362 
100 
227 
123 
331 
380 

295,  351 

10 

288 

377,  380 
182 

203,  215 
331 


Leveck  v.  Shaftoe 
Leverson  i'.  Lane 
Levi  V.  Carrick 
Levy  V.  Cadet 
Lewis  V.  Chapman 

V.  Langdon 

V.  MoHc'tt 

Heilly 


241 
133 
182,  349 
3-4 
257 
6,100,  202,  329,  346 
182 


Liardet  v.  Adams 
Linger!  v.  Simpson 
Linton  v.  Hurley 
Little  V.  Clarke 

('.  Ilazzaril 

Littlewood  v.  Caldwell 


Livingston 


TJoyd,  h'x  jiorlr 

r.  Archliowle 

V.  Aslihy 


322 
288 
329 
166 
161 
122 
227,  288 
81 
127,  133 
125 
Pittsburgh  K.K.  Co.    113 
Ralli  215 

Koosevelt     102,126,127, 
132,  133 
93 
241 
153 


V.  Cox 
V.  Ilastie 
V.  Lynch 


Lloyd  V.  Bellis 

V.  Freshfield 

V.  Loaring 


Lobb,  Ex  parte 
Lock  V.  Lynam 

V.  Pardon 

Locke,  V.  Stearns 
Lockwood  i\  Comstock 
Lockyer  v.  Savage 
Lodge,  Ex  parte 

V.  Dicas 

V.  Prichard 

Logan  V.  Mason 


Section 

166 

130,  133, 134, 140 

123,  125 


370 
178 
218 
108 
322 
208 
390 
155,  156,  253 
363,  376 
157 
London  Assm-ance  Co.  v.  Bold  251 


Long  V.  Majestre 
Longman  v.  Pole 
Loomis  V.  Marshall 
Lord  V.  Baldwin 

V.  Davison 

V.  Parker 

Loscombe  v.  Russell 

Loudon  Society  v.  Hagerstown  Bank 

113 
263 
120 
458 
93 
122 
449 
107 
264 

Lucena  v.  Craufurd  242 

Ludlow  V.  Cooper  82,  92,  93 

Lumberman's  Bank  v.  Pratt  322 

Lusk  V.  Smith  322 

Lyman  v.  Lyman  72,  182,  331 

Lyndon  v.  Gorhara  264 

Lyon  V.  Johnson  160 

V.  Knowles  34,  43 

Lyth  V.  Ault  155, 156 


Lovejoy  v.  Bowers 
Lovelace's  (Lord)  Case 
Low  V.  IMumford 
Lowe  V.  Alexander 
Lowery  v.  Drew 
Lowthorp  V.  Smitli 
Lucas  V.  De  la  Cour 
. V.  Laws 


178 

238,  256 

34,  35,  45,  49 

241,  263 

12 

12 

222,  229,  288 


9S 


M. 

Mabbett  v.  Winto 
Mackay  v.  Bloodgood 
Mackenzie  v.  Poolcy 
Maclae  v.  Sutherland 
Macy  V.  Combs 
V.  De  Wolf 


V.  Wheeler 


Maddeford  v.  Austwick 
Madgwick  r.  Wimble 
Mainwaring  /•.  Newman 
Mair  v.  Glennie  27, 

Major  V.  Ilawkes 
Malt  by  r.  N.  W.  Va.  R.  R. 
Maiidel  v.  Peay 
Manning  r.  Wadsworth 
Manuf.  and  Mech.  Rank  v. 


101 

120 

455 

143 

41 

417,  421,  441, 

444,  455 

455 

172 

201,  231,  844 
221 

30,  32,  41.  42, 
46,  56 
328 
113 
868 
189 
108 


Co. 


Gore 


V.  Winship  106 


INDEX    TO    CASES    CITED. 


XXVI 1 


Section 

March  v.  Ward  143 

Marcliine;ton  v.  Vernon  242 

Marengo,  The  428,  449 

Marine  Bank  v.  Ogden  14 

Markliain  v.  Merrett  93 

Maries  v.  Hill  358 

Marlett  v.  Jackman  319,  336 
Marquand  v.  N.  Y.  Mannf.  Co.   269, 272, 
275,  307,  308,  313 

V.  "Webb  455 

Marsh  v.  Hutchinson  10 

r.  Robinson  242 

Marshall  v.  Colnian      202,  226, 229, 288 

V.  Marshall  277 

V.  Watson  227,  329 

Marten  v.  Van  Schaick  99,  330 

Martin,  Ex  parte  403 

i:  Crompe  342,  346 

V.  Heathcote  233 

Martyn  v.  Gray  64 

Marwick,  In  re  380 

Mason  v.  Potter  46 

V.  Rumsey  102 

Massey  v.  Tingle  233 
Master  i'.  Kirton                   227,  269,  288 

Matliewson  v.  Clark  5 

Matlack  v.  James  93 

Matlock  V.  Matlock  93 

Maude,  Ex  pcnie  394,  406 

Mawman  v.  Gillett  241 

Mayhew  v.  Merrick  218 

Maynard  v.  Fellows  264 

McAlister  v.  Montgomery  93 

IMcAllester  v.  Sprague  168 

M'Alpine  v.  Mangnall  70 

McClelland  v.  Remsen  101 

M'CoU  r.  Oliver  219 

M'Connell  v.  Hector  240,  316 

McCormick  v.  Gray  372 

McCreadj'  v.  WoodhuU  446 

M'Cullough  V.  Sommerville  101 

M'Dermot  v.  Laurence  93 

McDonald  v.  Eggleston  117,  122 

V.  Millaudon  67 

McDougald  v.  Banks  192 

McGill  V.  McGill  344 

M'Gregor  v.  Bainbrigge  24 

McGuire  v.  Ramsey  92 
M'lver  V.  Humble                     36,  55,  64 

McKnight  v.  Ratcliff  166 

M'Lanahan  v.  Ellery  254,  255 

McMahon  v.  Davidson  416 

McNaughten  v.  Partridge  117,  155 

McNeillie  v.  Acton  201  a 

McNutt  V.  Strayhorn  360 

McPherson  v.  Pemberton  6,  263 

McQuewans  v.  Hamlin  114,  127 

Meaghan,  In  re  208 
Mealier  v.  Cox                       27,  288,  290 

Mechanics'  Bank  v.  Hildreth  358 

V.  Livingston         160 

Mellersh  v.  Keen  99,  272,  297 

IMerrick  v.  Brainard  307 


Section 

Merrick  v.  Gordon  34,  40,  58  a 

Merrill  v.  Bartlett  444 

Merryweather  v.  Nixan  6,  219,  220 

Metcalf  V.  Bruin  250 

V.  Taylor  416 

Metcalfe  v.  Rycroft  115,  119,  244 
MetropoHtan  Omnibus  Co.  v.  Haw- 
kins ■  257 
Meyer  v.  Sharpe  15,  27,  41,  55,  56,  57 
Meyers  v.  Field  30 
Mifflin  V.  Smith  106,  138,  139, 

198  279 

Milbank  v.  Revett  228,'  231 

Milburn  v.  Codd  219 

r.  Guyther  449 

Miles  V.  Thomas         202,  224,  225,  227, 

229  269 

Millar  v.  Craig  180,'  182 

Millaudon  v.  Sylvestre  182 

Miller  v.  Bartlet  35,  41,  45,  49 

V.  Hughes  30 

V.  Mackay  418 

V.  Price  238 

V.  Sims  7 

Milliken  v.  Loring  328 

Millington  v.  Fox  100,  259 

Mills  V.  Barber  101 

Milne  V.  Bartlet  295 

Milton  V.  Mosher  122 

Minchin,  Ex  parte  376 

Minnit  v.  Whinery  123,  130 

Mitchell  V.  Dall  80 

V.  Tarbutt  166 

Mitcheson  v.  Oliver  455 
Mobley  v.  Lombat  264 
Moderwell  v.  MuUison  93 
Moffatt  V.  Farquharson  449 
V.  Van  Millingen  221,  234 


Mohawk  &  Hudson  R.  R.  Co.  v.  Niles 

41,  58  a 
Moline  Water  Power  Co.  v.  Web- 
ster 363 
Moller  V.  Lambert  250 
Molton  V.  Camroux  7 
Monro,  Ex  parte  403 
Moody  V.  Buck  449 

V.  Payne  263,  264,  311 

Moor  V.  Hill  244 

Moore,  Ex  parte  406 

V.  Bare  24 

V.  Pennell  263 

V.  Sample  264 

V.  Smith  41,  46 

Moran  v.  Palmer  93 

Moravia  v.  Levy  219 

Moreau  v.  Saifarans  92,  93 

Moreton  v.  Hardern  166 

Morgan  v.  Marquis  339 

V.Richardson  114 

V.  Tarbell  253 

Morison  v.  Moat  227,  344 
Morley  v.  Gaisford  166 
V.  Newman  215 


XXVlll 


INDEX    TO    CASES    CITED. 


Morris,  Ex  parte 

V.  Allen 

r.  Barrett 

r.  Colman 

V.  Harrison 

V.  Kearsley 

Morrison  v.  Blodgett 
^lorrow  V.  Riley 
Morse  v.  Wilson 
Morton  v.  Blodgett 
Motley  V.  Downinan 
Muirliead  v.  Salter 
Muldon  V.  Whitlock 
jVIuUany  v.  Keenan 
Mullett  V.  Hufhinson 
Mumt'ord  v.  Xlcoll 
Munson  v.  Sears 
Murphy,  In  re 
Murray  v.  Bogert 

V.  Mumford 

V.  Murray 

V.  Somerville 

Murrill  v.  Xeill 
Musier  v.  Trompbour 
Mutual  Savings  Inst.  v. 
Muzzy  i;.  Whitney 
Myers  v.  Edge 

V.  Standart 

V.  Willis 


Section  ' 
876 
182 
92,  y.s 
224 
201 
93  I 
261,  262,  263 
219  : 
69  [ 
2631 
100,  259 
61 
455 
218 
126 
59,  M4  = 
30 
208 
307  i 
325,  328  I 
339,  341,  363  i 
134; 
263,  376 [ 
27,  31 
Enslin  344 

32,  43,  45  ! 
245 
324 
455 


Norfolk,  Ex  parte 
North  V.  Bloss 
V.  Mudse 


Section 

393 

80,  241 

114 


North  Bank  of  Kentucky  i".  Keizer  376 
Northern  Coal  Mining  Co.,  In  re  201  a 
Northern  Penn.  Coal  Co.'s  Appeal  93 
Norway  v.  Rowe  231,  288 

Nottidge  V.  Prichard  115 

Noyes  v.  Cushman  2,  8,  4 

V.  N.  H.,  N.  L.,  &  Stonington 

R.R.  Co.  115,123 


N. 

Napier  v.  Catron 

V.  MeLeod 

National  Bank  v.  Norton 
Natusch  V.  Irving         125, 
Neal  V.  SiieaflBeld 
Neale  v.  Turton 
Nerot  V.  Burnand 
Nesbitt  V.  Meyer 
New  Draper,  The 
Newell  V.  Humphrey 
Newhall  v.  Buckingham 
Newman  v.  Bagley 

V.  Bean 

New  march  v.  Clay 
Newsome  v.  Coles 
Newton  v.  Belcher 

I'.  Boodle 

New  York  Fire  Ins.  Co. 

nett 
Niciiolson  I'.  Ricketts 
Nicoll  i;.  Glennie 
V.  Mumford 

V.  f)Kden 

Niday  v.  Harvey 
Niven  v.  Spickerman 
Nixon  i».  Nash 
Nockel.t  V.  Crosby 
Nokes,  Ex  parte 
Nolle,  Ex  parte 


117,  122 

115 

322,  334 

193,  222,  325 

117 

219,  221,  234 

269,  306,  356 

189 

445 

331 

261,  264 

263 

41,  262 

155, 157,  159 

160 

151 

102,  142,  202 

V.  Ben- 

127,  130 

102  a,  142 

166 

261,  263,  307, 

311,417 

98 

155 

221 

2r,3 

219 

84 

111,  127 


o. 

Oakford  v.  Eur.  &  Am, 

Co. 
Oakley  v.  Pasheller 
Ocean,  The 
Ogden  V.  Aster 
Ogle,  Ex  parte 
Old  V.  Eagle  Ins.  Co. 
Olcott  V.  Wing 
Oldaker  v.  Lavender 
Oldknow,  Ex  parte 
Oliphant  v.  Mathews 
Oliver  v.  Gray 

V.  Hamilton 


Ord  V.  Portal 
Ordiorne  v.  Woodman 
Orleans  (Steamboat)  v. 
Orr  V.  Chase 
Osborne  v.  Harper 
V.  JuUiun 


Ostrom  V.  Jacobs 
Otis  V.  Sill 
Ouston  V.  Hebden 
Owen,  Ex  piaiie 

V.  Body 

V.  Van  Uster 

Owens  I'.  Collins 
Owston  V.  Ogle 
Oxley,  Ex  parte 


P. 

Page,  Ex  parte 

V.  Brant 

V.  Carpenter 

V.  Cox 

Paldman  t'.  Graves 
Paine  v.  Thachcr 
Palmer  v.  Dodge 

V.  Myers 

V.  Stephens 

Pariente  v.  Lubbock 
Park  I'.  Wooten 
Parker,  Ex  jKirte 

V.  Barker 

V.  Cousins 

V.  Gossage 


Steamship 

158 

156,  158,  370 

449 

343 

376 

416,  417 

88 

206,  232 

377 

139 

30 

228,  231 

244 

219 

Phoebus  427,428 

119 

244 

150 

142,  324 

98 

437,  438 

372 

70 

86,  143,  151 

93 

449 

208 


377 
161,  241 
262 
201 
368 
219 
322 
101 
142 
245,  249 
159 
390 
64 
322 
214 


INDEX   TO    CASES    CITED. 


XXIX 


Parker  v.  IMacomber 

V.  Monell 

V.  Muggridge 

V.  Pistor 

V.  Ranisbottom 

Parkhurst  i".  Muir 
Parkin  v.  Carruthers 

Parr,  Ex  parte 
Parry,  Ex  parte 
Parsons  v.  Crosby 

V.  Ha V ward 

Patch  V.  Wheatland 
Patten  v.  Gurnej' 
Patterson  i-.  Blake 

V.  Brewster 

V.  Gandasequi 

V.  Silliman 

Pattison  v.  Blanchard   3,  34,  40,  58,  219 
Payne  v.  Hornby  346 

V.  Ives  127 

V.  Matthews  363 

V.  State  324 

Peacock,  Ex  parte  389 

V.  Peacock    15,  24,  32,  59,  84, 

181,  231,  269,  275,  322,  325 
Peake,  Ex  parte  163,  358,  377,  380 

Pearce  v.  Chamberlain       195,  196,  295, 


Section 
321,  322 
823 
341 
263,  264 
163 
228 
65,  140,  160, 
334, 335 
887,  389 
444 
241 
198 
102 
458 
93 
362 
455 
214 


83, 


V.  Lindsay 
V.  Piper 


Pearpoint  v.  Graham 
Pearson  v.  Skelton 


Pease  v.  Hewitt 

V.  Hirst 

Peck  V.  Fisher 

Peel  V.  Thomas 

Peele,  Ex  parte 

Pemberton  v.  Oakes 

Penninian  v.  Munson 

Penny  v.  Black 

Perens  v.  Johnson        172,  263 

Perren  r.  Keene 

Perrine  v.  Hankinson 


316,  317 

272 

290 

101,  275,  310 

34,  61,  219,  220 

222,  408 

203 

244,  248 

92,  93 

151,  164 

152,  359,  368,  370 

246,  253 


311 


Perrott  v.  Bryant 
Perry  v.  Butt 

V.  Jackson 

Petit  V.  Chevelier 
Pettee  v.  Orser 
Pettes  V.  Spalding 
Pettyt  V.  Janeson 
Peyton  r.  Lewis 
Phelps  V.  Brewer 
Philips  V.  Philips 
Phillips  r.  Ames 

V.  Atkinson 

V.  Clagett 

I'.  Cook 

r.  Phillips 

Pickard  v.  Sears 
Pierce  v.  Jackson 
V.  Trigg 


41 

205 

331 

322 

38,  43 


41,  42,  55,  59 

15,  30 

252 

225 

101 

264 

191,  349 

15b 

114 

344 

369 

344 

114 

261,  264 

98 

.  398 

261,  263 

93 


Pierce  v.  Wood 
Pierson  v.  Hooker 

Steinmeyer 


30, 


Pigott  V.  Bagley 
Pine,  Ex  parte 
Pinkney  v.  Hall 
Piper  V.  Smith 
Pitchford  v.  Davis 
Pitkin  V.  Pitkin 
Pitt,  The 
Pittam  r.  Poster 
Pitts  V.  Waugh 
Place  V.  Sweetzer 
Plumer  v.  Lord 
Plummer,  In  re 
Pollock  V.  Paterson 
Pond  V.  Clark 
Ponton  V.  Dunn 
Pope  V.  Haman 

V.  Risley 

Porter  v.  M'Clure 
Porter  v.  Wheeler 
Post  V.  Kimberly 

Potter  V.  Greene 

V.  McCoy 

V.  Moses 

Pott  V.  Evton 
Potts  V.  Bell 

r.  BlackweU 

Powell  V.  Messer 
Pow^les  V.  Page 
Pratt  V.  Langdon 

V.  Page 

Prentice  v.  Prentice 
Preston  v.  Strutton 

V.  Tamplin 

Price  V.  Barker 

V.  Groom 

V.  Williams 

Pugh  V.  Currie 
Purdy  V.  Powers 
Purple  V.  Cook 
Purviance  r.  IM'Clintee 

1-.  Sutherland 

Putnam  v.  Dobbins 


V.  Wise 


Section 

108 
115 
33,  49,  67 
201 
390 
132 
93,  182 
150 
201  a,  319  a 
428 
107 
83,  93,  138 
264 
12 
376,  385,  387,  389 
295 
182 
200 
261 
107,  160,  161 
3,  45 
331 
45,  56,  61,  147, 
280 
64 
120, 155 
277 
86,  41,  43 
9,315 
358 
133 
160,  164 
49 
160 
351 
219 
418,  455 
168 
70 
215 
93 
138 
263,  376 
49 
122 
93 
5,43 


R. 


Raba  v.  Ryland 
Rackstraw  r.  Imber 
Radclif^e  v.  Rushworth 
Radenhurst  v.  Bates 
Randall  v.  Randall 
Randolph  v.  Daly 
Ransom  v.  Van  Deventer 
Rapid,  The 
Rapp  V.  Latham 
Rathbone  v.  Drakeford 
Rawlins  v.  Wickham 
Rawlinson  i;.  Clarke  ! 


107 


126 

268 

30 

244,  254 

82,  93 

260 

358 

9,  315 

108,  166 

114 

232 

41,  43,  47, 

49,  221 


XXX 


INDEX    TO    CASES    CITED. 


Raynard  i'.  Chase 
Read  v.  Bowers 
Reade  c.  Bentley 
Reboul  V.  Chalker 
Reed  v.  Howard 

V.  Hussey 

V.  Sliepardson 


Section 
6 
231 
277 
194 
261 
42 
261,  263 


V.  White       155,  156,  158,  870,  455 
Reeve,  Ex  parte    376,  390,  405, 406.  407 

V.  Parkins  290 

Reeves  c.  Avers  93 

Reid,  Ex  pake  392,  393 

r.  HoUinshead  15,  66,  27,  126 

Reiliy  v.  Smith  161 

Reinheimer  v.  Hemingway        261,  263 
Remington  v.  Cummiugs  117 

Rentan  i-.  Chaplain  263,  311,  330 

Reppert  v.  Colvin  324 

Revens  v.  Lewis  421,  428 


Robbins  v.  Fuller 
Robertson  v.  Baker 

V.  Lockie 

r.  Quiddington 


166 
122 
166 
166 
166 
151 
404 
49,  70 
182 
34,  44,  56 
362 
41,  42,  43.  45,  261 
72,  92,  93,  360,  381 
343,  362 
454 
455 
222,  229,  231 
254 
361 
Richardson,  Ex  jxirte      201  a,  319  a,  399 

V.   Bank   of   England 

229,  348  a 

r.  Farmer 

V.  Hastings 

V.  Moics 

f.Tobey 

Riflimond  v.  Heapy 
Ricketts  v.  Beiuiett 


Rex  V.  Almon 

V.  Inliab.  of  Austrey 

V.  Marsh 

V.  Pearce 

i-'.  Tophara 

Reynell  v.  Lewis 
Reynolds  v.  Bowley 

V.  Hicks 

V.  Mardis 

V.  Toppan 

Rice,  In  re 

V.  Austin 

V.  Ijaniard 

V.  Gordon 

V.  Siiute 

Rich  I'.  Coe 
Richards  v.  Davies 

V.  Fisher 

V.  Heather 


Ridgely  v.  Carey 
Riilgway's  Appeal 
Ridgway  r.  Clare 
Ridley  v.  Taylor 
Rigilen  i;.  Pierce 
Ring,  Ex  piirle 
liipley  V.  Cronker 

V.  Watorworth 

Ritchie  v.  Coupor 
Roa(;h  v.  Perry 
Roberts  v.  Ebcrhardt 

V.  Fitlcr 

V.  McCarty 

r.  I{()bcrt8 

'•.  Strang 

]{obb  V.  Mudge 


138 
229 
160 
358 
238 
126 

97 
92,  93 
363 
133 
207,  350 
394 
449 

98 
418 

24 

93,  231,  330 

219 

92 

263 

16« 

321,  322,  359 


Robbins  v.  Laswell 
Robinson,  Ex  parte 

I'.  Aldridge 

V.  Alexander 

V.  Anderson 

V.  Crowder 

V.  Gregory 

V.  Marchant 

V.  Taylor 

V.  Wilkinson 


Section 

328 

93 

297 

99,  100 

23,27 

339 

133 

233 

24 

101 

101 

256,  257 

322,  328 

138,  158 

24 

243,  244,  249 

219 


Robley  v.  Brooke 

Robson  V.  Druramond 

Rockwell  V.  Wilder 

Rodgers  i-.  Meranda     363,  365,  376,  390 

Rodriguez  v.  Hefl'ernan  272,  307,  311 

Roe  V.  Galliers  208 

Rogers  v.  Batchelor  132,  133 

I'.  Harvey  93 

V.  Kichline  241 

Rolfe  V.  Flower  152,  389 

Rolleston  v.  Hibbert  416 

Rollins  V.  Stevens  127 

Roosevelt  v.  Mark  '   324 

Pvooth  V.  Quin  123 

Ross  V.  Decy  241 

V.  Drinker  45 

Roth  V.  Colvin  133 

Roth  well  r.  Humphreys  126 

Rowe  r.  Wood  181 

Rowland,  In  re  372 

V.  Boozer  93 

Rowlands  t*.  Evans  295 

Rowlandson,  Ex  parte  35,  45,  53,  55, 

56,  358,  384,  385,  402 

Rowley  v.  Adams  93 

Roxby,  Ex  parte  370,  385 

Ruddock's  Case  115 

Ruffin,  Ex  parte    97,  260,  263,  325,  326, 

342,  347,  358,  359,  360,  361,  362,  372, 

373,  401,  403 

Russ  r.  Fay  263 

Russell  V.  Austwick  174 

V.  Leland  272 

i\  Pelligrini  215 

I'.  Perkins  247 


Rutland's  (Countess  of)  Case     268,  271 
l?yall  r.  Rowlos  403 

Ryan  v.  Mackmath  329 


S. 


Sadler,  Ex  parte 

V.  Lee 

V.  Nixon 


Sage  V.  Ciiollar 

(».  Ensign 

V.  Sherman 


363,  380 

108,  168  a,  207 

219 

358 

162,  324 

82,  92,  103 


INDEX   TO    CASES    CITED. 


XXXI 


St.  Aubvn  V.  Smart 
St.  Barbe 

Sale  V.  Disliman's  Ex'rs 
Salmon  v.  Davis 
Sander  v.  Sander 
Sandilands  v.  Marsh 


Section 
108 

394,  405 
122 
115 

295,  297 


Sawyer  v.  Freeman 

V.  Goodwin 

Sayer  v.  Bennet 
Sciieiffelin  v.  Stevens 
Sclieraeliorn  v.  Loines 
Scholefield  v.  Eichelberger 


V.  Heafield 


102,  103,- 111 

127,  131 

San  Jose  Indiano,  The  316 

Saville  v.  Kobertson      34,  56,  138,  14G, 

147,  148 

446 

108 

295,  316 

161 

455 

9,  195, 

201  a,  315,  317 

346 

215 

215 

6 

233 

263 

7 

241 

370 

219 

256,  454 

445 

231 

127 

93 

437,  439 

231 


Fulton  Bank 


Scott  V.  Avery 

V.  Liverpool 

V.  Miller 

V.  Milne 

Scudder  r.  Delashmut 

Seaver  v.  Phelps 

Secor  V.  Keller 

Seddon,  Ex  parte 

Sedgwick  v.  Daniell 

Sedgwortli  v.  Overend 

See  Renter,  The 

Seeley  v.  Boehm 

Selden  v.  Bank  of  Commerce 

Selkrig  v.  Davies 

Seneca,  The 

Senhouse  ?•.  Christian 

Servante  v.  James 

Sexton  V.  Sexton 

Shackle  v.  Baker 

Sharon  Canal  Co. 

Sharp  V.  Milligan 

V.  Warren 

Shattuck  i\  Lawson 

Shedd  r.  Bank  of  Brattleboro 

V.  Wilson 

Shelly  r.  Hiatt 
Shelton  v.  Cocke 
Shepperd  v.  <  )xenford 
Sheridan  v.  Medara 
Shipton  V.  Thornton 
Shirreff  y.  Wilks  127 

Shoemaker  v.  Benedict 
Shott  V.  Strealfield 
Sichel  V.  Mosenthal 
Siegel  V.  Chidsey 
Sifikin  V.  Walker 
Sigourney  v.  Munn 
Sikes  V.  Work 
Silk  V.  Prime 
Sillitoe,  Ex  parte 
Simpson's  Case 
Simpson  v.  Chapman 

V.  Feltz 

V.  Geddes 

Sims  V.  Brittain 


449 

172 

99 

14 

93 

219 

219 

114 

263 

343 

324 

231,  330 

67,  69 

202 

132,  133,  152 

324 

65 

189 

313,  358 


136, 


140,  154 

:,  93,  351 

30,  219 

363 

390,  394 

316 

343 

182 

324 

418 


Sims  V.  Brutton 

V.  AVilling 

Simson  r.  Cooke 
V.  Ingham 


Section 

108 

27,  30,  145 

247,  250,  251 

157,  250,  253 

416 

264 


Sisters,  The 

vSitler  V.  Walker 

Skinner  v.  Dayton      117,  119,  120,  122, 

275 

V.  Stocks  241,  242,  454 

V.  Tinker  275 

Skii)p  V.  Harwood        97,  261,  263,  264, 

311 
Skirving  v.  Williams  199 

Skrine  v.  The  Sloop  Hope  439 

Slater,  Ex  parte  370 

V.  Lawson  324  a 

Sloan  1-.  Moore  101,  231 

Smead  v.  Lacey  152 

Smith,  Ex  parte  205,  313,  314,  399 

,  In  re  261,  263,  264 

— ■ V.  Barrow  219 

V.  Black  155 

V.  Burnham  88,  93,  138 

I'.  Cooker  257 

V.  Craven  142,  147 

V.  Danvers  92 

V.  De  Silva  441,  444 

V.  Emerson  261 

V.  Everett  99,  100 

r.  Fromont  229,  231 

V.  Hill  59 

V.  Jackson  93 

V.  Jameson  868 

V.  Jeyes  191,  227,  231,  288 

V.  Kerr  122 

V.  Lay  418 

V.  Ludlow  324 

V.  :\Iules  214,  288,  351 

V.  Mulock  275 

V.  Oriell  328,  342 

V.  Rogers  158 

V.  Smith  68,  64,  93,  205 

V.  Tarlton  83,  93 

V.  Watson       27,  30,  40,  41,  42.  56 

V.  Wigley  157 

V.  Winter  120,  160 

V.  Wright  3,  30,  32 

Snaith  v.  Burridge  132 

Snodgrass'  Appeal  263 

Snow  r.  Howard  143 

Snvder  v.  May  117 

Solly  V.  Forbes  168 

Somerset  Works  v.  Minot  380 

Somerville  v.  Mackay  233 

Soule'  i\  Hayward  27 

Southard  v.  Steele  114 

South  Carolina  Bank  v.  Case  102, 

106,  139,  140,  142 
South  worth  v.  Smith  428 

Sparrow  r.  Carruthers  10 

V.  Chisman  237 

Spaulding  v.  Ludlow  Woollen  Mill    107 
Speake  v.  White  323 


XXXll 


INDEX    TO    CASES    CITED. 


Section 

211) 

228,  330 

245 

373 

233 

143 

65 

128 

134 

70 

157,  199,  201  a 

419,  441,  449 

107 

307 

114, 115 

427,  428 
346 
421,  455 
121 
155 
153 
157,  233 
6 
249 
27,  166 
439 
203 
24,  191,  192 
6 
455 
249,  254,  444 
Stockdale  v.  Ullery  227 

Stocken  v.  Dawson     180,  182,  331,  343, 

360,  372 
Stocker  v.  Brockelbank  27,  32,  41, 

45,  56 
Stockton  V.  Frey  166 

Stock  well  V.  Diilingliatn  139 

Stoddard  r.  Wood  221 

Stone  1-.  Marsh  108,  166 

Storer  v.  Hunter  399 

Storrs  c.  Barker  398 

Story  c.  L(jrd  Winsor  82,  231 

Stoughton  V.  Lynch  173,  176,  178, 

182,  233,  329 
Strange  ".  Lee  246,  247,  250 

Strangtbrd  n.  Green  114 

Street  r.  Highy  215,  299 

Sunitney  v.  I'atton  93 

Sumner  v.  Ilampson  93 

V.  I'Mwell  362 

SutclilU-  r.  Dohrtnan  261 

Sutton  /•.  Irwine  127 

V.  Buck  416 

Swan  /'.  Stechnan  122 

V.  Steele         "   102,  103,  106,  126. 

133 
Sweetscr  v.  rrencii  127 

Sweetzer  r.  Mead  122 

Sylray  v.  Wiiite  219 

Syhx'bter  v.  Smith  134 


Spear  v.  Newell 
Speiglits  V.  Peters 
Spiers  c.  Houston 
Sprague,  Ex  parte 
Spring  V.  Gray 
Staats  v.  Howlett 
Stables  r.  Eley 
Stainer  v.  Tysen 
Stansfeld  v.  Levy 
Stanton  Iron  Co.,  Re 
Stanwood  v.  Owen 
Starbuck  v.  Shaw 
State  v.  Linaweaver 

V.  Quick 

Stead  V.  Salt 
Steamboat  Orleans  v. 

Phoebus 
Stearns  r.  Houghton 
Stedman  r.  Feidler 
Steiglitz  v.  Eggington 
Stephens  v.  Tliompson 
Sternburg  v.  Callanan 
Sterndale  v.  Ilankinson 
Sterry  v.  Clifton 
Stevens  v.  Benning 

;•.  Faucet 

V.  The  Sandwich 

V.  Yeatman 

Stewart  v.  Forbes 

V.  Gibson 

V.  Hall 

i".  Iiosrers 


T. 

Taft  V.  Buffum 
Taggard  i'.  Loring 
Taitt,  Ex  jxiite 
Tapley  v.  Butterfield 
Tappan  v.  Bailey 

V.  Blaisdell 

V.  Kimball 


Tasker  v.  Bartlett 
V.  Sheplierd 


Tassey  i\  Church 
Tatam  v.  Williams 
Tate,  Ex  parte 

Tattersall  v.  Groote  , 

Taunton  Iron  Co.  v.  Eichmond 
Taylor,  Ex  parte 

V.  Church 

V.  Coryell 

('.  Davies 

V.  Davis 

V.  Fields 

u.  Hillyer 

V.  Jones 

V.  Kicliards 

V.  Salmon 

V.  Terme 

Teague  v.  Hubbard 
Teed  v.  Baring 

V.  Elworthy 

Temple  v.  Seaver 
Tenant  v.  Gold  win 
Tench  v.  Roberts 
Tenney  v.  Johnson 
Terrell,  Ex  parte 
Terrett  v.  Taylor 
Thicknesse  v.  Bromilow 
Thomas  ;;.  Minot 
Thouiason 


Section 

307 

41,  44,  416 

377,  379,  381, 383 

93,  101,  122,  310 

102  rt 

263 

162,  324 

122 

249 

323,  324 

233 

378 

215,  232,  285 

324 

7 

257 

114 

229 

227 

261,  263,  264,  407 

133 

166 

428 

229 

49 

219,  221,  234 

455 

241,  255 

322 

422 

6,  32,  56,  59,  61 

263,  359 

407 

76 

106,  126 

376 


Frere  314,  336,  337,  338, 
3:;9 
Thompson  r.  Andrews  201  a,  319  a 

c.  Franks  113 

V.  Frist  264 

V.  Waithman  324  a 

Thomson  r.  Campbell's  Trustees        24 

V.  Davenport  138,  455 

V.  Finden  455 

V.  Iloskins  454 

V.  Lay  7 

V.  Lewis  263,  264 

V.  Percival  155,  156,  158,  253, 

255.  370 


V.  Snow 

V.  Williamson 

Thornbury  v.  Be v ill 
Thornton  v.  Di.xon 

I',  lllingworth 

V.  Proctor 


Thori)e,  Ex  parte 

(,'.  Jackson 

Til)l)atts  V.  Tibl)atts 
Tiernan  r.  Jackson 
'i'ilford  i\  l{amsey 
Tillingliast  v.  Champlin 


34,45 

24 

6 

93 

255 

182,  185,  831 

132 

362 

46 

244,  254 

13:!,  142 

93,  263,  360 


INDEX    TO    CASES    CITED. 


XXXUl 


Tobias  v.  Blin 
Todd  V.  Emly 

Tombeckbee  Bank  v.  Dumell 
Tonilin  v.  Lawrence 
Toombs  V.  Hill 
Towle  V.  Meserve 
Towne  v.  Leach 
Townend  v.  Townend 
Townsend  v.  Devaj'nes 
Townshend  v.  Towusliend 
Travis  v.  Milne 
Treadwell  v.  Brown 

V.  "Williams 

Tredwen  v.  Bourne 
Tremlett  v.  Hooper 
Trougliton  v.  Hunter 
Trowbridge  v.  Cushman 
Trueman  v.  Loder 
Trull  V.  Trull 
Tucker  v.  Moreland 
Oxley 


Section 

41 

144 

160,  322 

252 

363,  376 

221 

264 

180,  343 

98 

233 

343 

261,  264,  376 

93 

126,  151 

367 

162 

263 

134,  142 

368 

7,255 

363 

439,  449 

126 

122 


Tunno  v.  The  Betsina 
Tupper  V.  Haythorne 
Turbeville  v.  Ryan 
Turner  v.  BisseU  32,  34,  35,  36,  41,  42, 
43,  45,  46 
V.  Major 


Tutt  V.  Adams 
Twiss  V.  Massey 
Tyng  V.  Thayer 
Tyrell  v.  Washburn 


99 
127 

363,  376,  379 

349 

(  317 


u. 

Union  Bank  v.  Knapp  233 

United  States  i>.  Astley  117 

United  States  Bank  v.  Binney    63,  72, 
80, 101, 102,  103,  105, 106,  126, 138, 
139,  140, 198,  278,  279 
University  of  Cambridge  v.  Bald- 
win 250 
Upham  V.  Naylor  264 
Usborne,  Ex  parte                               403 


V. 

Van  Amringe  v.  EUmaker  219 

Vance  v.  Blair  219 

V.  Cowing  362 

Vanderburgh  v.  Hull  47 
Van  Keuren  v.  Parmelee  324 
Van  Kuren  v.  Trenton  Co.  14 
Van  Ness  v.  Forrest  219 
Van  Sandau  v.  Moore  189 
Van  Valen  v.  Russell  263,  393 
Van  Valkenburgh  v.  Bradley  322 
Venable  v.  Levick  132 
Venning  v.  Leckie  219 
Venus,  The  316 
Vere  Ex  parte  208 
V.  Ashby                              152,  153 


Section 

Vice  V.  Anson 

151 

V.  Fleming 

123 

Victoria,  The 

445 

Vigers  v.  Pike 

133  rt 

Vigilantia,  The 

316 

Voguel,  Ex  parte 

377 

Voorhees  v.  Jones 

43,  49 

Vulliamy  v.  Noble 

162,  195, 

253,  317, 

319 

336,343 

w. 


Wade  V.  Jenkins 
Wadsworth  v.  Manning 
Waggoner  v.  Gray 
Wait,  In  re 

V.  Brewster 

V.  Dodge 

Waite  V.  Foster 
Waithman  v.  Miles 
Waland  v.  Elkins 
Walburn  v.  Ingilby 
Walden  v.  Sherburne 
Walker,  Ex  parte 

V.  Duberry 

V.  Eyth 

V.  House 

V.  Trott 

Balcom 


99 
27 

182 
261,  262,  337,  340 

161 


80,  241 
160 
271 
58 
164,  229 
59,  324 
388 
324 
363 
231,  344 
330 
67 
264 
115,  121,  238 
215 
222,  228,  229 
115 
261 
391 
242,  243 
324 
27,44 
227 
160 
24 
75,  83,  93,  142,  202 
159 
131 
219 
Washburn   v.  Bank  of  Bellows 

Falls  263,  360,  376 

V.  Goodman  319,  331,  343 

Waterman  r.  Hunt  358 

Waters  r.  Taylor         228,  231,  262,  263, 
275,  288,  290,  292,  295 


Wall  V 
Wallace  v.  Hull 

?'.  JvelsaU 

Wallis  V.  Hirsch 
Walhvorth  v.  Holt 
Walmsley  ?■.  Cooper 
Walsh  V.  Adams 
Walton  V.  Butler 

V.  Dodson 

V.  Robinson 


Ward  V.  Thompson 
Warder  v.  Stilwell 
Wardwell  v.  Haiglit 
Warner  v.  Smith 
Warren,  In  re 

V.  Ball 

V.  French 

V.  Wheelock 


Watney  v.  Wells 
Watson,  Ex  parte 

V.  Fletcher 


182,  288,  329,  349 
32,  35,  36,  41,  45, 
64,  251,  368,  393 
6 
154 
2,  15,  16,  18,  30, 
32,  34,  36,  48,  49,  53,  55,  58,  59, 
60,  61,  64,  66,  67,  68,  147 
Way  V.  Bassett  324  a,  324  6 

Waydell«.  Luer  155 


Watt  V.  Kirby 
Waugh  V.  Carver 


XXXIY 


INDEX    TO    CASES    CITED. 


Section 
Weaver  v.  Rogers  238 

V.  Weaver  380 

Webster  v.  Brav  24 

V.  Webster     100,  202,  319,  329 

WecMerbiirnr.Weclderburn  99, 180,343 
Welch  V.  Knott  100 

Weller  r.  Baker  258 

Welles  r.  March  101 

Wellington  v.  jNIcIntosh  215 

102 
107 
114 
90,  97,  261,  401 
175 
455 
219 


Wells  V.  Masterman 

V.  Turner 

Wesson  v.  Newton 
West  V.  Skip 
Westc'ott  V.  Tyson 
AVesterdell  v.  Dale 
Westerlo  v.  Evertson 
AVestern  Bank  of  Scotland  v. 

Needell 
Western  Stage  Co.  v.  Walker 
Weston  r.  Barton 
Wetniore  ?•.  Baker 
Weyer  v.  Thornburgh 
WlioMtcrot't  r.  Hickman 
Wheatley  i'.  Calhoun 
Wheeler  v.  Rice 
Sage 


159 

123 

246,  247 

58 

363,  376,  380 

70 

93 

133 

174 

454 

132 

107,  323,  324 

218 


Wheelwright  v.  Depeyster 
Whitaker  v.  Brown 
Whitc'omb  r.  Whiting 
White  V.  Ansdell 

V.  Harlow  219 

V.  Jones  261 

V.  Smith  167 

V.  Tudor  322 

V.  Woodward  264 

Whitehead  v.  Chadwell's  Adm'r        376 

Whitewright  v.  Stirapson  228 
Whitley  I'.  Lowe                       233,324  a 

Whitman  r.  B.  &  M.  R.  R.  Co.  93 

V.  Leonard  65,  298,  305,  322 

V.  Robinson  330 

Whitmore,  Rr  parte  152,  370 

Whitnev  r.  Dutch  255 

V.  Ladd  261 

V.  Munroe  264 

Whittenton  Mills  v.  Upton  14 
Whittle  V.  M'Farlane          182,  185.  331 

Whitwell  V.  Perrin  455 

Whifworth  r.  Harris  189 

Wickham  r.  Wickliam  107,388 

Wiggin  /•.  Cumings  219 

V.  Tudor  168 

Wightman  v.  Townroe  70 

Will.raham  r.  Snow  263 

Wilcox  r.  Ivellogg  361 

r.  Wilcox  93 

Wild  /•.  Dean  370 

'•.  Mihic  «■')() 

Wilde  V.  Keep  142 

NN'ildcs  I'.  (,'hai)maii  35') 

Wildes  V.  FesHcndeii  155 

Wildman,  Kr  jmrli'  KH5 

Wilkins  V.  iVarcv  103 


Wilkinson  v.  Frasier 

r.  Henderson 

V.  Page 


Wilks  V.  Davis 
Willett.f.  Blanford 
V.  Chambers 


William  Bagaley,  The 
Williams,  Ex  jiarte 


Section 

82,42 

253,  362 

215 

215 

329,  343,  349 

74,  75,  108, 

132 

453 

97,  263,  322, 


325,  326,  346,  358,  359,  360, 
361,  362,  368,  370,  372, 
394,  401,  402,  403 
Attenborough  82,  231 


Barton 

V.  Bingley 

V.  Branihall 

V.  Brimhall 

V.  Butler 

V.  Everett 

1\  Henshaw 

V.  Jones 

V.  Keats 

V.  Love 

V.  Soutter 

V.  Williams 

V.  Wilson 

Williamson  v.  Fox 
r.  Johnson 


Wilhngs  V.  Blight 
Wilhs  V.  Dyson 
Freeman 


Willison  V.  Patteson 
Wilmer  v.  Currey 
Wilsford  V.  Wood 
Wilson  V.  Conine 
V.  Cutting 

V.  Dickson 

i'.  Fitchter 

V.  Greenwood 


218 

227 

132 

395 

86 

254 

219 

6,  146,  152,  194 

160,  335 

93 

67 

212 

99 

161 

142 

428,  434 

123,  130 

93,  268 

9 

862 

244,  254 

261 

219,  449 

453 

330 

207,  208,  228, 


229,  231,  313,  322,  325,  329, 
330,  346,  396 


V.  Hunter 

V.  Reed 

V.  Robertson 

V.  So])er 

V.  Wallace 

V.  Whitehead 

V.  Williams 

Winch  V.  Keeley 
Winship  v.  Bank  of  U.  S. 


93,  122 

449 

358 

101,  346 

241 

148,  149 

127,  132,  133 

372 

55,  63, 


Winsor  v.  Cutts 
Savage 


Winter  v.  Imies 

r.  White 

Wintle  r.  Crowther 
Wish  r.  Small 
Withington  r.  Herring 
Wiflmell  r.  (Jartham 
Wider  V.  Richards 
Woddrop  V.  Ward 
AVolliiTt  I'.  Harris 
Wood,  h'.r  jHirte 


102,  103,  105 
44 
182 
158,  253,  323,  ?24  b 
219 
133 
32,  41,  45 
41,46 
126 
263 
376 
228 
371,  376,404 


INDEX    TO    CASES    CITED. 


XXXV 


Wood  V.  Braddick 

V.  Duke  of  Argyll 

V.  Gault 

V.  Holbeck 

V.  Merritt 

V.  O'Kelley 

V.  Pennell 

V.  Robson 

V.  Rutland  Ins.  Co. 

V.  Scoles 

V.  Shepherd 

V.  A^allette 

V.  Wilson 

Woodbridge  v.  Swann 
Woodward  v.  Cowing 
Wooldridge  v.  Wilkins 
Worrall  v.  Grayson 
Wray  v.  Hutchinson  218 


V.  Milestone 


Wren  v.  Kirton 
Wrexham  v.  Huddleston 


Section 

324,  344 

65,  1.50 

268 

133 

449 

241 

65 

215 

254 

182 

114 

38,  49,  67 

215 

328,  342 

75,  89,  94 

93 

219 

219,  287, 

288,  292 

218,  219 

82 

292,  295 


Wright  V.  Cumpsty 
V.  Hiuiter 

V.  Michie 

I'.  Pulliara 

Russell 


Wrightson  v.  Pullan 
Wyatt  V.  Marquis  of  Hertford 
WycofFt'.  Purnell 
Wylie  V.  Wylie 


250, 


Section 
219 
454 
219 
160 
251 
160 
455 
219 
93 


Yale  V.  Eames 
Yarnell  v.  Anderson 
Yates  V.  Bell 
Yeatman  v.  Woods 
Yonge,  Ex  parte 
Young,  Ex  parte 


208, 


V.  Axtell 
V.  Hunter 


160 

158 

254 

93 

181,  892,  406 

348,  417,  442, 

443,  444 

61,  64,  65,  68 

147,  150,  387 


LAW    OF    PARTNERSHIP. 


COMMENTARIES 


PARTNERSHIP. 


CHAPTEK    I. 

PARTNERSHIP WHAT    CONSTITUTES. 

{  §  1.  Partnership  and  agency. 

2.  Definition  of  partnership. 

3.  Partnership  founded  in  contract. 

4.  Roman  law. 

5.  Delectus  personarum. 

6.  Partnership  must  be  founded  in  good  faith,  and  for  a  lawful  purpose.} 

§  1.  Having  completed  our  Review  of  the  Law  of 
Agency,  we  are  naturally  conducted,  in  the  next  place, 
to  the  consideration  of  the  Law  of  Partnership  ;  for 
every  Partner  is  an  agent  of  the  Partnership  ;  and  his 
rights,  powers,  duties,  and  obligations,  are  in  many  re- 
spects governed  by  the  same  rules  and  principles,  as 
those  of  an  agent.  A  partner,  indeed,  virtually  em- 
braces the  character  both  of  a  principal  and  of  an 
agent. ^  So  far  as  he  acts  for  himself  and  his  own  inter- 
est in  the  common  concerns  of  the  partnership,  he  may 

^  {  "  The  law  as  to  partnership  is  undoubtedly  a  branch  of  the  law  of  prin- 
cipal and  agent;  and  it  would  tend  to  simplify  ajid  make  more  easy  of 
solution  the  questions  which  arise  on  this  subject,  if  this  true  principle  were 
more  constantly  kept  in  view.  Mr.  Justice  Story  lays  it  down  in  the  first 
section  of  his  work  on  Partnership."  Per  Lord  Wensleydale,  in  Cox  v. 
Hickman,  8  II.  L.   Cas.  268,  312.} 


4  PARTNERSHIP.  [cHAP.    1. 

properly  be  deemed  a  principal ;  and  so  far  as  lie  acts 
for  his  partners  he  may  as  properly  be  deemed  an 
agent/  The  principal  distinction  between  him  and  a 
mere  agent  is,  that  he  has  a  community  of  interest  with 
the  other  partners  in  the  whole  property  and  business 
and  responsibilities  of  the  partnership  ;  whereas  an 
agent,  as  such,  has  no  interest  in  either.  Pothier  con- 
siders partnership,  as  but  a  species  of  mandate,  saying : 
Contractus  societatis,  non  seats  ac  contractus  man- 
datl.^ 

§  2.  Partnership,  often  called  copartnership,  is  usu- 
ally defined  to  be  a  voluntary  contract  between  two  or 
more  competent  persons  to  place  their  money,  effects, 
labor,  and  skill,  or  some  or  all  of  them,  in  lawful  com- 
merce or  business,  with  the  understanding,  that  there 
shall  be  a  communion  of  the  profits  thereof  between 
them,^  Pufendorf  has  given  a  definition  substantially 
the  same.  Contractus  societatis  est,  quo  duo  pluresve 
inter  se  pecuniam,  res,  aui  operas  conferunt,  eo  fine,  ut 
quod  inde  redit  lucri  inter  singulos  pro  rata  dividatur^ 
Pothier  says,  that  partnership  is  a  contract,  whereby  two 
or  more  persons  put,  or  contract  to  put,  something  in 
common  to  make  a  lawful  profit  in  common,  and  recip- 
rocally engage  with  each  other  to  render  an  account 
thereof:^  or,  as  he  has  expressed  it  in  another  place, 
Societas  est  contractus  de  conferendis  bona  fide  rebus 
aut  02')eris,  animo  lucri  quod  lionestum  sit  ac  licitum 
in  cornmwie  faciendi.^      Domat  says,  that  partnership 

'  Baring  v.  Lyman,  1  Story,  390.  "  Poth.  Pand.  17,  2,  Intr. 

'  3  Kent,  23,  24 ;  Wats,  on  P.  1,  2d  ed. ;  Gow  on  P.  1,  3d  ed. ;  Coll.  on 
P.  B.  1,  c.  1,  p.  2,  2d  ed.;  Mont,  on  P.  B.  1,  Pt.  1,  p.  1,  2d  ed.  [Noyes  v. 
Cushnian,  25  Vt.  390.] 

♦  Puf.  Law  of  Nat.  B.  5,  c.  8,  §  1  ;  Wats,  on  P.  2,  2d  ed. ;  Gow  on  P.  c.  1, 
p.  1,  3d  i;d.;  Waugh  v.  Carver,  2  IL  Bl.  235,  240. 

'  Poth.  de  Soc.  art.  prel.  n.  1.  «  Poth.  Paud.  17,  2. 


CHAP.    I.]  WHAT   CONSTITUTES.  5 

is  a  contract  between  two  or  more  persons,  by  which 
they  join  in  common  either  their  whole  substance  or 
a  part  of  it,  or  unite  in  carrying  on  some  commerce, 
or  some  work,  or  some  other  business,  that  they  may 
share  among  them  all  the  profit  or  loss,  which  they  may 
have  by  the  joint  stock,  which  they  have  put  into  part- 
nership.^ Vinnius  says  :  Societas  est  contractus,  quo  in- 
ter aliquos  res  aut  o^^erce  commimiccmtur,  lucri  in  com- 
mune faciendi  gratia.^  The  Civil  Code  of  France  defines 
it  thus :  Partnershi])  is  a  contract,  by  which  two  or  more 
persons  agree  to  put  something  in  common,  with  a  view 
of  dividing  the  benefit  which  may  result  from  it.^  Lan- 
guage nearly  equivalent  has  been  adopted  by  many  other 
foreign  writers."^ 

§  3.  Let  us  consider  some  of  the  more  important  ingre- 
dients, which  are  involved  in  this  definition  or  description 
of  partnership,  and  may  be  said  to  constitute  its  essence. 
In  the  first  place,  it  is  founded  in  the  voluntary  contract 
of  the  parties,  as  contradistinguished  from  the  relations 
which  may  arise  between  the  parties  by  mere  operation 
of  law,  independent  of  such  contract.^  Vinnius  on  this 
point  says :  Societas  est  consortium  voluntarlum ;  nisi 
enhn  consensu  et  tractatu  de  ea  re  hahito  communio  sus- 
cepta  sit,  non  est  societas.^  There  are  many  cases  in  which 

'  Domat,  Civ.  Law,  1,  8,  1,  art.  prel.         -  Vinn.  ad  Inst.  3,  2G,  Intr. 
^  Code  Civil,  art.  1832. 

*  J.  Voet,  Coram.  17,  2,  §  1 ;  Ersk.  Inst.  B.  3,  tit.  3,  §  18  ;  Tapia,  Elem. 
de  Jur.  Merc.  p.  86,  §  1,  ed.  Madrid,  1829  ;  5  Duvergier,  Droit  Civil  Franc, 
tit.  9;  Contr.  de  Soc.  c.  1,  n.  17,  p.  31,  32;  Persil,  des  Soc.  Coram,  n.  2, 
p.  6,  7;  2  Bell,  Coram.  B.  7,  p.  611,  5th  ed. ;  -1  Pardessus,  Droit  Comra.  art. 
966  ;  Van  Leeuwen's  Coram,  c.  23,  §  1  ;  Asso  &  Manuel,  Inst,  of  Laws  of 
Spain,  B.  2,  tit.  15. 

*  4  Pardessus,  Droit  Comra.  art.  969,  973;  5  Duvergier,  de  Soc.  n.  33, 
39,  40,  65;  17  Duranton,  Droit  Franc,  Liv.  3,  tit.  9,  art.  320;  Coll. 
on  P.  B.  1,  c.  1,  §  1,  p.  4,  2d  ed. ;  Wats,  on  P.  c.  1,  p.  5,  6,  2d  ed. ; 
Id.  27. 

«  Vinn.  ad  Inst.  3,  2G,  Intr. 


6  PARTNERSHIP.  [cHAP.    I, 

a  community  of  interest  is  created  by  law  between  par- 
ties, as,  for  example,  in  cases  of  joint  tenancy  or  tenancy 
in  common  in  lands,  or  goods,  or  chattels,  under  devises 
and  bequests  in  last  wills  and  testaments,  and  deeds  and 
donations  inter  vivos,  and  inheritances  and  successions. 
But  no  partnership  arises  therefrom ;  for  they  are  not 
strictly  founded  in  contract,  although  they  may  exist  by 
the  original  or  subsequent  consent  of  the  parties  who  re- 
ceive the  benefit  thereof.^  It  has  been  well  said  by 
Pothier,  that  partnership  and  community  are  not  the 
same  thing.  La  societe  et  la  co7nmunaute  7ie  sont  pas 
nieme  chose.^  The  first  is  founded  upon  the  contract  of 
the  parties,  which  thus  creates  the  community ;  the  last 
may  exist  independent  of  any  contract  whatsoever.  And 
Pothier  goes  on  to  illustrate  the  distinction  by  putting  the 
cases  of  joint  heirs  and  joint  legatees,  where  there  is 
a  community  of  interest,  but  there  is  no  partnership.^ 
Another  illustration  may  be  seen  in  the  case  of  the  part- 
owners  of  a  ship,  who  are  treated  as  tenants  in  common 
thereof,  each  having  a  distinct  although  an  undivided  in- 
terest in  the  whole.  They  thus  may  properly  be  said  to 
have  an  undivided  interest  in  the  ship  ;  and  yet  that  inter- 
est does  not  make  them  partners.'^  So,  if  two  joint  own- 
ers of  the  merchandise  should  consign  it  for  sale  abroad 
to  the  same  consignee,  giving  him  separate  instructions, 
each  for  his  own  share,  their  interests  are  several,  and 


'  See  2  Bl.  Comm.  180-188  ;  Id.  399,  400;  Com.  Dig.  Estates,  K.  1,  K. 
6  ;  Story  on  Ag.  §  39  ;  Wats,  on  P.  c.  1,  p.  5,  G,  2d  ed. ;  3  Kent,  25. 

*  Poth.  de  Soc.  n.  2.  See  5  Duvergier,  de  Soo.  n.  33-35,  40 ;  4  Par- 
dessus,  Droit  Comm.  art.  969  ;  17  Duranton,  Droit  Fi-anc.  art.  320. 

3  Poth.  de  Soc.  n.  2,  n.  182-184;  Voet,  ad  Pand.  17,  2,  n.  2,  Tom. 
1,  p.  748. 

*  Abbott  on  Ship.  Pt.  1,  c.  3,  p.  68,  ed.  1829  ;  Wats,  on  P.  c.  1,  p.  5,  6; 
Id.  c.  2,  p.  67,  2d  ed.;  3  Kent,  25  ;  Ersk.  Inst.  B.  3,  tit.  3,  §  18  ;  2  Bell, 
Comm.  p.  655,  5th  ed. ;  1  Stair,  Inst.  B.  1,  tit.  16,  §  1,  p.  156 ;  Porter  v.  M'- 
Clure,  15  Wend.  187.     [Noyes  v.  Cushman,  25  Vt.  390.] 


CHAP.  I.]  WHAT    CONSTITUTES.  7 

they  are  not  to  be  treated  as  partners  in  the  adven- 
ture.^ The  same  result  takes  place,  where  a  purchase 
is  made  for  several  distinct  persons  by  a  broker  or  other 
agent  of  certain  goods,  each  being  to  take  a  certain  por- 
tion, or  quantity,  but  they  are  not  to  be  sold  for  their 
joint  account  or  profit.  In  such  a  case  no  partnership 
exists,  although  there  is  a  community  of  interest  in  the 
goods  purchased.^  In  short,  every  partnership  is  founded 
in  a  community  of  interest ;  but  every  community  of  in- 
terest does  not  constitute  a  partnership  ;  or,  as  Duranton 
expresses  it :  La  sociefe  aussi  produit  une  communaute  ; 
en  un  mot,  toute  soeiete  est  bien  une  communaute  ;  mais 
toute  communaute  n'est  point  une  soeiete.  Ilfaut  pour 
cela  la  volonte  des  parties? 

§  4.  The  Roman  Law  has  recognized  the  same  distmc- 
tion :  Ut  sit  pro  socio  actio,  societatem  intercedere  oportet; 
nee  enim  sufficit  rem  esse  communem,  nisi  societas  inter- 
cedit.  Communiter  auteon  res  agi  jjotest  etiam  citra  socie- 
tatem ;  ut  puta,  cum  non  affectione  societatis  iyicidimus  in 
communionem,  ut  evenit  in  re  duohus  legata;  item  si  a 
duohus  simul  empta  res  sit ;  aut  si  hereditas  vel  donatio 
communiter  nobis  obvenit ;  aut  si  a  duobus  separati7n 
emimus p)artes  eorum,non  sociifuturi}  JSfam  cum  trac- 
tatu  hahiio  societas  co'ita  est,  j^ro  socio  actio  est;  cum 
sine  tractatu  in  re  ipsa  et  negotio,  communiter  gestum 


'  Hall  V.  Leigh,  8  Cranch,  50  ;  Jackson  v.  Robinson,  3  Mason,  138.  {See 
§  27,  30. 1  [So,  where  two  persons  agree  to  divide  the  profit  and  loss  upon 
the  purchases  and  sales  of  certain  articles  of  merchandise,  each  person  to 
make  his  own  purchases  and  sales,  and  entirely  with  his  own  funds,  and  in 
his  own  name,  they  are  not  partners  either  to  third  persons,  or  inter  sese. 
Smith  V.  Wright,  5  Sand.  113.     And  see  Pattison  v.  Blanchard,  1  Seld.  186.] 

*  Hoare  v.  Dawes,  Doug.  371 ;  Coope  v.  Eyre,  1  H.  Bl.  37 ;  3  Kent,  25  ; 
Gibson  v.  Lupton,  9  Bing.  29  7;  Holmes  v.  Unit.  Ins.  Co.  2  Johns.  Cas. 
329,  331. 

*  17  Duranton,  Droit  Franc,  art.  320;  Potli.  de  Soc.  n.  2. 

*  D.  17,  2,  31  ;  Poth.  Pand.  17,  2,  n.  30  ;  Vinn.  ad  Inst.  3,  26,  lutr. 


8  PARTNERSHIP.  [cHAP.  I. 

videiur}  And  again:  Qui  nolunt  inter  se  contendere, 
Solent  per  nuntium  rem  emere  in  commune,  quod  a  socie- 
tate  longe  remotum  est.^ 

§  5.  Hence  it  is  an  established  principle  of  the  com- 
mon law,  that  as  a  partnership  can  commence  only  by 
the  voluntary  contract  of  the  parties,  so,  when  it  is  once 
formed,  no  third  person  can  be  afterwards  introduced  into 
the  firm,  as  a  partner,  without  the  concurrence  of  all  the 
partners,  who  compose  the  original  firm.^  It  is  not  suffi- 
cient to  constitute  the  new  relation,  that  one  or  more  of 
the  firm  shall  have  assented  to  his  introduction  ;  for  the 
dissent  of  a  single  partner  will  exclude  him,  since  it 
would,  in  effect,  otherwise  amount  to  a  right  of  one  or 
more  of  the  partners  to  change  the  nature,  and  terms, 
and  obligations  of  the  original  contract,  and  to  take  away 
the  delectus  personce,  which  is  essential  to  the  constitu- 
tion of  a  partnership.^  So  stubborn  indeed  is  this  rule, 
that  even  the  executors  and  other  personal  representa- 
tives of  a  partner  do  not,  in  that  capacity,  succeed  to  the 
state  and  condition  of  that  partner.^  The  Roman  law  is 
direct  to  the  same  purpose.  Qui  admittitur  socius,  ei 
tantum  socius  est,  qui  adynisit;  et  recte;  cum  enim  sod- 
etas  consensu  contrahatur,  socius  mihi  esse  non  potest, 
quem  ego  socium  esse  nolui.  Quid  ergo,  si  socius  mens 
eum  admisit  f     Ei  soli  socius  est.^     It  even  pressed  the 

'   D.  1 7,  2,  32  ;  Poth.  Pand.  1 7,  2,  n.  30.     See  also  1  Swans.  609,  note  (a). 

^  D.  1  7,  2,  33. 

'  I  See  §  307-309,  and  note  at  end  of  chap.  iv. }  [But  if  the  term  of  the 
partnership  has  expired,  the  interest  of  one  partner  therein  may  be  assigned 
to  a  stranger,  and  such  assignee  may  maintain  a  bill  for  an  account  against 
the  other  partners.     Mathewson  v.  Clarke,  6  How.  122.] 

*  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  4,  5,  2d  ed. ;  Ex  parte  Barrow,  2  Rose,  252, 
255 ;  Crawshay  v.  Maule,  1  Swans.  50S,  509,  and  the  learned  note  of  the 
Reporter,  n.  (a),  p.  509  ;  Putnam  v.  Wise,  1  Hill,  (N.  Y.)  234. 

s  Ibid. 

«  D.  17,  2,  19  ;  Poth.  Pand.  17,  2,  n.  28 ;  1  Domat,  1,  8,  2,  art.  5;  Poth. 
de  Soc.  n.  145.     See  1  Swans.  509,  note  (a). 


CHAP.  I.]  WHAT    CONSTITUTES.  9 

rule  to  a  still  further  extent,  and  held,  that  a  positive 
stipulation  between  the  partners  at  the  commencement 
of  the  partnership,  that  the  heir  or  personal  representa- 
tive of  a  partner  should  succeed  him  in  the  partnership, 
was  inoperative  and  incapable  of  being  enforced.  Adeo 
morte  soc'ii  solvUur  societas,  ut  nee  ah  initio pacisci  pos- 
sumus,  lit  heres  succedat  societcUi.  Nemo  potest  societa- 
tem  heredl  sico  sic  parere,  ut  ip)se  heres  socius  sit}  The 
common  law,  however,  treats  such  a  stipulation  as  valid 
and  obligatory.^  This  also,  according  to  Pothier,  was 
the  doctrine  of  the  old  French  law ;  ^  and  the  modern 
code  of  France  has  expressly  adopted  it,  in  opposition 
to  the  Roman  law.^  Such  also  is  the  law  of  Scotland.-^ 
§  6.  It  is  also  upon  the  like  ground,  that  partnership 
is  a  contract  founded  purely  upon  the  consent  of  the 
parties,  that  jurists  are  accustomed  to  attach  to  it  the 
ordinary  incidents  and  attributes  of  contracts.  It  is  ac- 
cordingly treated  by  them,  as  in  its  very  nature  and 
character  a  contract  arising  from  and  governed  by  the 
principles  of  natural  law  and  justice.^  Accordingly  it 
must,  in  the  first  place,  be  founded  in  good  faith  and  the 
positive  consent  of  the  parties ;  secondly,  it  must  be  for 
a  lawful  object  and  purpose  ;  and  thirdly,  it  must  be 
between  parties  sui  juris  and  competent  to  enter  into 
such  a  contract.  John  Voet  therefore  affirms :  Societas 
est  contractus  juris  gentium,  home  Jidei,  consensu  con- 
sta7is,  super  re  honesta,  de  lucri  et  damni  commimione  ; 
quam    inire   possunt    omnes    libeixini   hahentes   rerum 

»  D.  1 7,  2,  59  ;  Id.  1 7, 235 ;  Poth.  Panel.  1 7,  2,  n.  56,  35 ;  1  Domat,  1 ,  8,  2,  art.  4. 
2  Coll.  on   P.   B.   1,   c.   1,  §   1,  p.  5,   6,   2d   ed.  ;    2    Bell,   Comm.   G34, 
5th  ed.     {See  §196.} 

*  Poth.  de  Soc.  n.  145. 

*  1  Locre,  Esprit  du  Code  de  Comm.  tit.  3,  art.  18,  n.  3,  p,  10&;  Code 
Civil,  art.  1868;  17  Duranton,  Droit  Franc,  de  Soc.  n.  471;  5  Duvergier, 
Droit  Civil  Franc,  de  Soc.  n.  433,  444. 

*  2  Bell,  Comm.  620,  5th  ed.  «  Poth.  de  Soc.  n.  4. 


10  PARTNERSHIP.  [cHAP.  I. 

suarum  adminisirationem}  Hence,  if  the  contract  be 
founded  in  fraud  or  imposition,  either  upon  one  of  the 
parties,  or  upon  third  persons,  it  is  utterly  void.-  And 
on  this  point  the  Roman  law  speaks  the  general  sense 
of  nations.  Societas,  si  dolo  mcdo,  cad  frcmdandi  causa 
co'ita  sit,  ipso  jure  mdlius  momenti  est;  qida  fides  bona 
contraria  est  fraudi  et  dolo.^  And  again:  Qida  nee 
societas  aid  mandatum  flagitiosce  rei  ullas  vires  hahet^ 
The  same  rule  applies  to  cases,  where  the  partnership 
is  for  immoral  or  illegal  purposes,"  or  is  in  contravention 
of  the  positive  law,^  or  of  the  public  policy  of  the 
country.  Thus,  if  the  partnership  be  for  illegal  gaming,' 
or  illegal  insurances,  or  wagers,  or  to  carry  on  contra- 
band trade,  or  to  support  a  house  of  ill-fame  or  de- 
bauchery ;  in  these  and  the  like  cases,  the  contract  will 
be  deemed  a  mere  nullity,  and  is  equally  denounced,  as 
such,  by  the  Roman  law,  and  the  foreign  law,  and  the 
common  law.^     The  Roman  law  is  very  expressive  on 

'  1  Voet,  Comm.  1 7,  2,  §  1 .     See  also  Poth.  de  Soc.  n.  4. 
^  1  Story,  Eq.  Jur.  §  222-240.     {See  §  285.} 
3  D.  17,  2,  3,  3;  Poth.  Pand.  17,  2,  n.  1. 

*  D.  18,  1,  35,  2;  Poth.  Pand.  18,  1,  n.  15;  Id.  17,  2,  n.  5 ;  1  Voet,  ad 
Pand.  17,  2,  n.  7,  p.  750. 

*  [See  McPherson  v.  Pemberton,  1  Jones,  (N.  C.)  378.] 
«  [Gordon  v.  Howden,  12  CI.  &  Fin.  237.] 

'  [See  AVatson  v.  Fletcher,  7  Gratt.  1.] 

8  Gow  on  P.  c.  1,  p.  4,  5,  ed.  1837  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  29-54, 
2d  ed. ;  Wats,  on  P.  c.  1,  p.  35-46  ;  3  Kent,  28  ;  Poth.  de  Soc.  n.  14;  Storj-, 
Confl.  of  Laws,  §  2-14-260;  1  Bell,  Comm.  p.  297-306,  5th  ed. ;  Code  Civil 
of  France,  art.  1833;  17  Duranton,  Droit  Civil  Franc,  de  Soc.  tit.  9,  c.  1,  §  1, 
n.  327;  5  Duvergier,  Droit  Civil  Franc.  9,  de  Soc.  c.  1,  n.  24,  25,  {  See 
Lind.  on  P.  136-162.  A  traditionary  case  of  a  bill  in  equity  brought  by  one 
highwayman  against  another  for  an  account  is  given  in  2  Poth.  on  Obi. 
(Evans'  ed.)  3,  n.  The  use  of  a  fictitious  name  is  not  illegal.  Aubin  v.  Holt, 
2  Kay  &  J.  66;  Lewis  v.  Langdon,  7  Sim.  421.  But  see  Thornbury  v. 
Bevill,  1  You.  &  C.  C.  C.  554.  Under  a  statute  requiring  every  person  car- 
rying on  the  business  of  pawnbroking  to  have  his  name  printed  over  the  door 
of  his  shop,  an  agreement  for  a  pawnbroking  partnership  with  dormant  mem- 
bers was  held  illegal.      Armstrong  v.  Armstrong,  3  Myl.  &  K.  45,  53  ;    Arm- 


CHAP.  I.]  WHAT    CONSTITUTES.  11 

this  point.  Nee  enim  ulla  socieias  7nalejiciorum^  vel 
communicatio  justa  damni  ex  malejicio  est}  Again: 
Quod  autem  ex  furto  vel  ex  alio  malejicio  qumsitum 
est,  in  societatem  non  opo7'tere  conferri,  2Jcdam  est ;  quia 
delictorum  tiirpis  atque  fceda  commwiio  e'st.^ 

strong  V.  Lewis,  2  Cr.  &  M.  274.  Under  a  statute  forbidding  any  person, 
not  duly  qualified,  from  acting  as  an  attorney,  it  has  been  held,  that  an 
unqualified  person  may  receive  a  share  of  an  attorney's  profits,  if  he  does  not 
receive  them  in  consideration  of  acting  as  an  attorney,  e.  g.  if  such  person  is 
the  widow  of  a  deceased  partner.  Candler  v.  Candler,  Jac.  225 ;  Sterry  v. 
Clifton,  9  C.  B.  110;  Scott  v.  Miller,  H.  R.  V.  Johns.  220.  See  Raynard  v. 
Chase,  1  Buit.  2.  But  an  agreement  between  a  qualified  and  an  unqual- 
ified person  to  carry  on  the  business  of  attorneys  is  illegal ;  Williams  t'.  Jones, 
5  B.  &  C.  108,  even  if  the  agreement  be  that  the  unqualified  person  shall  re- 
ceive a  share  of  the  profits  as  salary,  and  shall  not  be  a  partner.  Tench  v. 
Roberts,  6  Madd.  145;  Re  Jackson,  1  B.  &  C.  270.  On  the  question 
whether  joint  stock  companies  are  illegal,  see  §  164. 

The  members  of  an  illegal  partnership  have  no  remedies  against  each 
other  in  respect  to  the  illegal  transactions;  either  at  law,  De  Begnis  v. 
Armistead,  10  Bing.  107;  or  in  equity,  Stewart  v.  Gibson,  7  CI.  &  Fin.  707; 
Ewing  V.  Osbaldiston,  2  Myl.  &  C.  53  ;  Bartle  v.  Nutt,  4  Pet.  184.  How  far 
this  rule  applies  to  collateral  transactions  the  immediate  consideration  of 
which  is  not  illegal  seems  not  clearly  settled.  Metcalf  on  Contr.  262-269. 
Merry  weather  v.  Nixan,  and  notes,  2  Sm.  Lead.  Cas.  456.  See  Brooks  v. 
Martin,  2  Wallace,  70;  Brown  v.  Tarkington,  3  Wallace,  377.} 

'  D.  27,  3,  1,  14  ;  Poth.  Pand.  17,  2,  n.  5. 
D.  17,  2,  53  ;  Poth.  Pand.  17,  2,  n.  18. 


12  PARTNERSHIP.  [CHAP.  II. 


CHAPTEE    II. 

WHO    MAY    BE    PARTNERS. 

{  §    7.  Infants  and  lunatics. 

8.  Foreign  law. 

9.  Aliens. 

10.  Rights  of  married  women  at  law. 

11.  In  equity. 

12.  Whether  a  married  woman  can  be  a  partner. 

13.  Roman  law. 

14.  Foreign  law. 
Note.  —  Corporations.  | 

§  7.  In  the  next  place,  as  to  the  persons  who  are 
capable  of  entering  into  a  partnership.  The  general 
rule  of  the  common  law  is,  that  every  person  of  sound 
mind,  sui  jiiris,^  and  not  otherwise  restrained  by  law, 
may  enter  into  a  contract  of  partnership.^  As  to  infants, 
they  are  not  by  the  common  law  incapable  of  enter- 
ing into  a  partnership,  since  it  cannot  be  universally 
affirmed,  that  it  may  not  be  for  their  benefit.^  And 
here  we  have  another  illustration  of  the  analogy  between 
partnership  and  other  common  contracts  ;  for  although 
the   contract  of  partnership  by  an  infant  is  not  abso- 

'  {  A  partnership  is  not  dissolved  by  the  lunacy  of  a  partner,  see  §  295- 
297;  therefore  a  lunatic  may  he  a  partner.  Whether  a  contract  by  a  lunatic 
to  become  a  partner  can  in  all  cases  be  avoided  by  him,  is  perhaps  unsettled. 
In  England  it  is  held,  that  if  one  contracts  with  a  lunatic,  not  knowing  him  to 
be  so,  and  the  contract  is  executed,  the  lunatic  cannot  avoid  it.  Molton  v. 
Camroux,  2  Exch.  487;  s.  c.  4  Exch.  17;  but  this  doctrine  has  not  been 
universally  adopted  in  America.     Seaver  v.  Phelps,  11  Pick.  304.} 

2  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  8,  2d  ed. ;  Gow  on  P.  c.  1,  p.  1,  2,  3d  ed. 
1837;  1  Story,  Eq.  Jur.  §  222-239. 

*  See  Goode  v.  Harrison,  5  B.  &  Aid.  14  7,  156-159;  1  Story,  Eq.  Jur. 
§  240-243  ;  [Dana  i'.  Stearns,  3  Cush.  3  7 2. J 


CHAP.  11.]        WHO  MAY  BE  PARTNERS.  13 

lutely  void ;  yet  it  is  not,  on  the  other  hand,  positively 
binding  upon  him,  but  is  voidable,  and  may  be  avoided 
by  him,  when  he  comes  of  age,  according  to  the  known 
distinction,  so  well  stated  by  Lord  Chief  Justice  Eyre, 
that  such  contracts  made  by  an  infant,  as  the  Court  may 
pronounce  to  be  to  his  prejudice,  are  merely  void ;  such 
as  are  of  an  uncertain  nature  as  to  the  benefit  or  pre- 
judice, are  voidable  only,  and  it  is  at  the  election  of  the 
infant  to  affirm  them  or  not ;  and  such  as  are  clearly 
for  his  benefit  (as  a  contract  for  necessaries),  are  valid 
and  obligatory.^  If  an  infant,  however,  engages  in  a 
partnership,  he  must  at  or  within  a  reasonable  time 
after  his  arrival  of  age  notif}^  his  disaffirmance  thereof, 
otherwise  he  will  be  deemed  to  have  confirmed  it,  and 
will  be  bound  by  subsequent  contracts  made  on  the 
credit  of  the  partnership.^  If,  upon  his  arrival  of  age, 
he  elects  to  continue  the  partnership,  and  does  continue 
it,  he  will  be  then  held  liable  as  a  partner.^  Indeed, 
if  an  infant  should  hold  himself  out  as  a  partner  during 
his  infancy,  although  in  reality  not  so,  and  should  not 
after  his  arrival  of  age  notify  his  disaffirmance  thereof, 
he  would  be  liable  to  third  persons,  trusting  the  part- 
nership, to  the  same  extent,  as  if  he  were  actually  a 
partner;  for  his  conduct  would,  under  such  circum- 
stances, amount  to  a  delusion  or  deceit  upon  such  third 

'  Keane  v.  Boycott,  2  H.  Bl.  511,  514,  515;  Comyns,  Dig.  Enfant,  B.  5, 
6,  C.  1-4,  9  ;  Holmes  v.  Blogg,  8  Taunt.  35 ;  Id.  508  ;  1  Story,  Eq.  Jur.  § 
240-242;  Baylis  v.  DIneley,  3  M.  &  S.  477;  Tucker  v.  Moreland,  10  Pet.  58, 
66-70  ;  2  Kent,  233-245. 

*  {If  an  infant  pays  a  premium  on  entering  a  partnership,  and  before  com- 
ing of  age  disaffirms  the  contract,  he  cannot  recover  the  premium  back.  Ex 
parte  Taylor,  8  De  G.  M.  &  G.  254.  But  see  Corpe  v.  Overton,  10  Bing. 
252.} 

3  Goode  V.  Harrison,  5  B.  &  Aid.  147,  156-160;  Holmes  v.  Blogg,  8 
Taunt.  35  ;  Thompson  v.  Lay,  4  Pick.  48  ;  2  Kent,  233-245  ;  [Miller  v.  Sims, 
2  Hill,  (S.  C.)  479.] 


14  PARTNERSHIP.  [cHAP.  II. 

persons ;  and  where  one  of  two  innocent  parties  must 
suffer,  he  ought  to  do  so,  whose  negligence  or  misconduct 
has  occasioned  the  loss.^ 

§  8.  The  like  principle  will  be  found  recognized  in 
the  foreign  law.  The  essence  of  the  contract  of  part- 
nership, like  that  of  other  contracts,  consisting  in  con- 
sent, it  follows,  that  if  a  person  is  incapable  of  giving 
his  consent,  he  is  not  bound  by  the  contract.^  And 
Pothier  says,  that  this  rule  equally  applies  to  cases  of 
partnership,  as  to  other  cases  of  contract.^  Hence  per- 
sons of  unsound  mind,  or  in  a  state  of  drunkenness,  or 
under  guardianship,  or  otherwise  incapable,  as  are  luna- 
tics, minors,  and  prodigals,  cannot  become  partners.^ 
The  French  law  holds  minors  and  persons  under  guar- 
dianship as  rather  incapable  of  binding  themselves  by 
contract,  than  incapable  of  contracting.  They  may 
oblige  others  to  them ;  although  they  cannot  oblige 
themselves  to  others ;  ^  and  so  is  the  doctrine  of  the 
Institutes.  JSfamque  i^lacuit  7nello7'em  quidem  condi- 
tionem  Ucere  eis  facere,  etiam  sine  tutoris  auctoritaie.^ 
The  Scottish  law  adopts  a  similar  doctrine.^ 

§  9.  As  to  aliens,  there  is  no  doubt,  that  alien  friends 
may  lawfully  contract  a  partnership  in  one  country, 
although  some  or  all  of  the  partners  are  resident  in 
another  country.  But  alien  enemies  are  disabled  dur- 
ing war  from  entering  into  any  partnership  with  each 
other,  as  indeed  they  are  from  entering  into  any  other 
commercial  contract.®     A  state  of  hostility  puts  an  end 

'  Goode  V.  Harrison,  5  B.  &  Aid.  147,  152,  157,  158.  See  also  Fitts  r. 
Hall,  9  N.  H.  441 ;  [Bingham  on  Infancy  (Bennett's  ed.)  and  note.]  {On 
the  question  whether  if  an  infant  partner  disaffirms  a  contract,  the  conti'act 
can  be  treated  as  the  separate  contract  of  the  other  partners,  see  §  255.} 

2  Poth.  Obi.  n.  49-53. 

•■'  Poth.  de  Soc.  n.  77;  17  Duranton,  Droit  Franc,  n.  321. 

"  Poth.  Obi.  n.  49-53.  *  Poth.  Obi.  n.  52.         «  Inst.  1,  21,  Intr. 

7  2  Bell,  Comm.  024,  5th  ed.  «  Coll.  on  P.  B.  1,  c.  1,  p.  9,  2d  ed. 


CHAP.  II.]        WHO  MAY  BE  PARTNERS.  15 

to  the  rights  of  commercial  intercourse,  trade,  and  busi- 
ness between  the  respective  subjects  of  the  belligerent 
nations,  who  are  domiciled  therein.^  Nay,  the  principle 
goes  further,  and  an  antecedent  partnership,  existing 
between  persons  domiciled  in  different  countries,  is 
dissolved  by  the  breaking  out  of  war  between  those 
countries  ;  for  the  whole  rights,  duties,  obligations, 
relations,  and  interests  of  the  partnership,  as  such, 
become  changed  thereby,  and  the  objects  of  the  partner- 
ship are  no  longer  legally  attainable,  or  capable  of  exe- 
cution.^ 

§  10.  As  to  married  women,  they  are  by  the  com- 
mon law  incapable  of  forming  a  partnership,  since  they 
are  disabled  generally  to  contract,  or  to  engage  in 
trade.^  It  sometimes,  however,  happens  in  practice, 
that,  with  the  consent  of  their  husbands,  they  become 
entitled  to  shares  in  banking  partnerships,  and  other 
commercial  establishments  ;  but  in  such  cases  their 
husbands  are  entitled  to  their  shares,  and  become  part- 
ners in  their  stead.^  There  are,  however,  some  excep- 
tions to  this  rule,  even  at  the  common  law.  Thus,  for 
example,  by  the  custom  of  London,  a  married  woman 


'  1  Kent,  66-69  ;  Potts  v.  Bell,  8  T.  R.  548 ;  Willison  v.  Patteson,  7 
Taunt.  439;  The  Indian  Chief,  3  Rob.  22;  The  Jonge  Pieter,  4  Rob.  79; 
The  Franklin,  6  Rob.  127;  Griswold  v.  Waddington,  15  Johns.  57;  s.  c.  16 
Johns.  438;  Ex  parte  Boussmaker,  13  Ves.  71  ;  The  Rapid,  8  Cranch,  155; 
The  Julia,  Id.  181  ;   Scholefield  v.  Eichelberger,  7  Pet.  586. 

*  Griswold  r.  Waddington,  16  Johns.  438.  —  The  masterly  judgment  of 
Mr.  Chancellor  Kent  in  this  case  examines  and  exhausts  the  whole  learning 
on  the  subject.  See  also,  1  Domat,  1,  8,  5,  art.  11,  12,  15.  {See  §  315,  316, 
and  Clemonston  r.  Blessig,  11  Exch.  135,  n.} 

^  2  Kent,  54-64.  {Marriage  of  a  female  partner  dissolves  a  partnership, 
§306.} 

*  Gow  on  P.  2,  3d  ed.  1837;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  9,  10,  2d  ed. ; 
Coslo  V.  De  Bernales,  1  Car.  &  P.  266  ;  s.  C.  Ry.  &  M.  102  ;  1  Story,  Eq.  Jur. 
§  243  ;  2  Ibid.  §  136  7-13  73  ;  1  Bl.  Comm.  442-444  ;  Wats,  on  P.  c.  7,  p.  384, 
2ded. 


16  PARTNERSHIP.  [cHAP.  II. 

is  authorized  to  carry  on  trade  as  a  feme  sole  /  and 
thence  it  has  been  inferred,  that  she  may  enter  into  a 
partnership  in  her  trade  in  that  city.^  So,  a  wife  may 
acquire  a  separate  character  and  power  to  contract  by 
the  civil  death  of  her  husband,  as  by  his  exile,  banish- 
ment, profession,  or  abjuration  of  the  realm. ^  The 
same  rule  has  been  applied,  where  the  husband  has,  in 
pursuance  of  a  criminal  sentence,  been  transported  to 
foreign  parts  for  a  term  of  years.^  The  ground  of  these 
exceptions  is,  that,  by  operation  of  law,  the  husband 
is  disabled  to  return ;  and  his  matrimonial  rights  are 
therefore  consequently  suspended  during  his  exile,  ban- 
ishment, or  transportation.'*  In  the  cases  of  abjuration 
and  profession  he  is  treated  as  cmU'iter  mortuus.^  The 
same  rule  has  also  been  applied  in  England  to  the 
case  of  a  woman,  the  wife  of  a  foreigner,  who  had 
never  been  in  England,  who  was  thereby  held  entitled 
to  contract,  and  to  sue  and  be  sued  as  2ifeme  sole.^ 

§  11.  Such  is  the  doctrine  of  the  common  law  in 
respect  to  married  women.  But  a  far  more  extended 
rule  is  adopted  in  Courts  of  Equity,  where,  if  the  wife 
possesses  or  is  entitled  to  any  property  for  her  sole  and 
separate  use,  either  by  agreement  with  her  husba,nd,  or 

>  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  10.  See  Beard  r.  W^ebb,  2  B.  &  P.  93 ; 
Burke  v.  Winkle,  2  S.  &  R.  189  ;  2  Roper  on  Husb.  &  W.  c.  16,  §  5,  p. 
126,  127. 

2  Beard  v.  Webb,  2  B.  &  P.  93,  105;  Lean  v.  Sehutz,  2  W.  Bl.  1195  ;  1 
Bl.  Coram.  443  ;  2  Roper  on  Husb.  &  AV.  c.  16,  §  5,  p.  123,  124. 

'  2  Roper  on  Husb.  &  W.  c.  16,  §  5,  p.  123,  124  ;  Sparrow  v.  Carruthers, 
cited  2  W.  Bl.  1197,  and  in  Corbett  v.  Poelnitz,  1  T.  R.  5,  7,  and  in  De  Gail- 
Ion  V.  L'Aigle,  1  B.  &  P.  357  ;  Carrol  v.  Blencow,  4  Esp.  27;  s.  C.  cited  in 
Boggett  V.  Frier,  11  East,  303 ;  Marsh  v.  Hutchinson,  2  B.  &  P.  226,  231-233  ; 
Clancy  on  Married  Women,  c.  4,  p.  54-56,  63;  Co.  Litt.  133  a,  133  b  ; 
Gregory  v.  Paul,  15  Mass.  31  ;   2  Kent,  154-164. 

*  Ibid.  *  Marsh  v.  Hutchinson,  2  B.  &  P.  231. 

^  De  Gaillon  v.  L'Aigle,  1  B.  &  P.  35  7  ;  Kay  v.  Duchesse  de  Pienne,  3 
Camp.  123  ;   Gregory  v.  Paul,  15  Mass.  31 ;  Abbot  v.  Bayley,  6  Pick.  89. 


CHAP.  II.]       WHO  MAY  BE  PARTNERS.  17 

otherwise,  she  is  generally  treated,  as  to  such  property, 
as  a  feriie  sole,  and  may  dispose  of  the  same  accordingly, 
and  bind  herself  by  contract  touching  the  same.^  A 
full  discussion  of  this  topic  properly  belongs  to  a  trea- 
tise on  the  jurisdiction  of  Courts  of  Equity.^  It  may, 
however,  be  proper  here  to  state,  that  if,  by  an  ante- 
nuptial or  postnuptial  agreement  for  a  valuable  con- 
sideration, the  husband  contracts  to  allow  his  wife  to 
carry  on  trade  for  her  sole  and  separate  rise,  if  the 
property  is  vested  in  trustees,  it  will  be  held  secure 
against  the  husband  and  his  creditors  even  at  law  ;  and, 
if  no  trustees  are  interposed,  it  will  be  open  to  the  like 
protection  in  equity.^  If  the  agreement  is  voluntary, 
it  will  be  good,  and  will  be  enforced  in  equity  against 
the  husband ;  but  not  against  his  creditors.^  In  like 
manner,  if  a  husband  should  desert  his  wife,  and  she 
should  be  enabled,  by  the  aid  of  her  friends,  to  carry 
on  a  separate  trade  (such  as  that  of  a  milliner)  for  her 
own  support,  and  that  of  her  family,  her  earnings  in 
that  trade  will,  in  equity,  be  held  to  belong  to  her  sepa- 
rate use,  and  be  enforced  accordingly  against  the  claims 
of  her  husband.^ 

§  12.  Although,  as  we  have  seen,*"  it  has  been  thought, 
that  a  /erne  covert,  having  authority  to  carry  on  trade 
as  a,  feme  sole,  by  the  custom  of  London,  may  enter  into, 
a   partnership  in  such  trade  ;    yet  it  does  not  appear 


1  2  Story,  Eq.  Jur.  §  1370-1402  ;   2  Kent,  162-172. 

2  2  Story,  Eq.  Jar.  §  1370-1402. 

3  2  Story,  Eq.  Jur.  §  1385,  1387;  2  Roper  oa  Husb.  &  W.  c.  18,  §  4, 
p.  16  7-175. 

*  2  Story,  Eq.  Jur.  §  1386,  1387;  2  Roper  on  Husb.  &  W.  c.  18,  §  4, 
p.  167-175. 

'  2  Story,  Eq.  Jur.  §  1387;  2  Roper  on  Husb.  &  W.  c.  18,  §  4,  p.  174, 
175  ;  Cecil  v.  Juxon,  1  Atk.  278  ;  Lamphir  v.  Creed,  8  Ves.  599  ;  Comyns' 
Dig.  Chancery,  2  M.  11. 

8  Ante,  §  10. 

2 


18  PARTNERSHIP.  [CHAP.  II. 

ever  to  have  been  decided,  that  the  authority  of  a  ferae 
covert  to  carry  on  trade  as  a  feme  sole,  arising  from  the 
consent  or  agreement  of  her  husband,  positively  entitles 
her  to  engage  in  a  partnership  in  the  trade.  If,  indeed, 
the  trade  cannot  otherwise  be  carried  on,  either  neces- 
sarily, or  conveniently,  or  beneficially,  his  consent  to  the 
partnership  might,  perhaps,  be  inferred.  But  the  con- 
sent of  the  husband,  that  his  wife  may  carry  on  trade 
for  her  sole  and  separate  use,  does  not  necessarily  im- 
port, that  she  may  involve  herself  in  the  complex  trans- 
actions, responsibilities,  and  duties  of  partnership.  In 
cases  where  the  law  treats  the  marriage  as  suspended, 
and  entitles  her  to  act  as  ^fertie  sole  (as  in  cases  of  ban- 
ishment, abjuration,  or  transportation),  there  may  be 
just  ground  to  presume,  that,  as  she  is  thereby  generally 
restored  to  her  rights  as  ?i  feme  sole,  she  may  enter  into 
a  partnership  in  trade.  But  the  question  never  having 
undergone  any  direct  adjudication,  must  be  deemed  still 
open  for  discussion  and  decision.^ 

§  13.  In  the  Roman  law  the  same  positive  union 
and  unity  of  rights  and  interests  between  husband  and 
wife  are  not  recognized,  which  exist  under  the  common 
law  ;  ^  for  in  the  Roman  law,  the   husband   and  wife 

'  {  Under  a  statute  of  Massachusetts,  Gen.  Sts.  c.  108,  §1,3,  which  pro- 
vides that  a  married  woman  may  sell  her  separate  property,  enter  into  any 
contracts  in  reference  to  the  same,  and  carry  on  any  trade  or  business  on  her 
sole  and  separate  account  in  the  same  manner  as  if  she  were  sole,  it  has  been 
held,  that  a  woman  may  belong  to  a  trading  partnership,  if  her  husband  is  not 
a  member  thereof,  but  not  if  he  is  a  member.  Plumer  v.  Lord,  5  All.  460 ; 
s.  c.  7  All.  481  ;  s.  c.  9  All.  455;  Lord  v.  Parker,  3  All.  127  ;  Lord  v.  Davi- 
son, Id.  131  ;  Edwards  v.  Stevens,  Id.  315.  If  a  married  woman  invests  her 
separate  property  in  a  partnership  business  to  be  conducted  by  her  and  others, 
and  property  is  bought  and  delivered  to  such  partners,  a  mere  trespasser  can- 
not defend  himself  by  denying  her  capacity  to  carry  on  such  partnership  busi- 
ness. Horneffer  v.  Duress,  13  Wis.  603.  See  Everit  v.  Watts,  10  Paige,  82  ; 
Atwood  V.  Meredith,  37  Miss.  635.     See  post,  §  239.} 

2  1  Burge,  Col.  &  For.  Law,  Pt.  1,  c.  7,  §  1,  p.  263,  264;  Poth.  Pand.  1,  6, 
n.  9,  21. 


CHAP.  II.]       WHO  MAY  BE  PARTNERS.  19 

constitute  separate  and  distinct  persons,  and  are  sepa- 
rately capable  of  contracting,  under  certain  limitations 
and  restrictions,  with  each  other,  as  well  as  with  third 
persons.^  Mr.  Justice  Blackstone  has  expressed  the 
same  doctrine  still  more  broadly,  and  says  :  "  In  the 
civil  law  the  husband  and  wife  are  considered  as  two 
distinct  persons,  and  may  have  separate  estates,  con- 
tracts, debts,  and  injuries."^  Hence,  the  contracts  of 
the  husband  did  not  bind  the  wife,  unless  she  ex- 
pressly assented  thereto.  Frustra  disjmtas  (says  the 
Code)  de  contractibiis,  cum  marito  tuo  habitis,  utrumne 
jure  steterint,  an  minime :  turn  tibi  siifficicd,  si  2'>T02:)rio 
nomine  nulhim  cordr actum  hahuisti,  quominus pro  marito 
tuo  conveniri  jjossis.^ 

§  14.  In  the  modern  foreign  law  the  same  principle 
has  been  adopted  with  various  modifications,  adapted  to 
local  institutions,  usages,  and  policy.  The  law  of  Scot- 
land most  nearly  approaches  the  English  law.  Inde- 
pendently of  special  contract,  the  husband  and  wife,  by 
entering  into  marriage,  are  joined  in  the  strictest  society 
or  partnership,  which  draws  after  it  a  communication  of 
their  mutual  civil  interests,  styled,  in  that  law,  the  com- 
munion of  goods,  and,  in  the  foreign  law  generally,  the 
property  in  community.  During  the  marriage,  the  wife 
is  placed  under  the  dkection  of  the  husband,  who  has, 
jure  mariii,  the  sole  authority  of  administering  the  prop- 
erty in  communion  ;  and  so  absolute  is  this  right,  that  he 
may  solely  dispose  of  the  property,  and  it  may  be  attached 
by  his  creditors.  In  consequence  of  this  right  and  power, 
the  husband  becomes  liable  also  to  the  personal  debts  of 

1  See  Domat,  1,  0,  6,  art.  1-7  ;  1  BI.  Comm,  444  ;  Ayliffe's  Pand.  B.  2, 
tit.  G,  p.  81,  82  ;  1  Bro.  Civ.  &  Adm.  Law,  82  ;  1  Burge,  Col.  &  For.  J.a\v, 
B.  1,  Pt.  1,  c.  7,§  1,  p.  2G3,  269,  272-274. 

2  1  Bl.  Comm.  444.  =>  Cod.  4,  12,  1. 


20  PARTNERSHIP.  [cHAP.  II. 

his  wife.^  The  wife  does  not  seem  entitled  to  enter  into 
any  contract  independent  of  his  consent.  The  law  of 
France  recognizes  still  more  extensively  the  distinct  char- 
acters and  rights  of  the  husband  and  wife.  The  husband 
and  wife,  independently  of  any  special  convention,  hold 
their  property  in  community,  and  the  husband  is  the  sole 
administrator  of  the  property  of  the  community.^  The 
wife  can  do  no  act  in  law  without  the  authority  of  her 
husband,  even  though  she  shall  be  a  public  trader,  or  not 
in  community,  or  separate  in  her  property.^  Hence,  she 
is  incapable  of  contracting  without  his  authority  and  con- 
sent.^ She  cannot  become  a  sole  trader  without  his  con- 
sent.^ But,  if  authorized  by  him  to  act  as  a  sole  trader, 
she  may  make  herself  liable  for  all  the  concerns  of  her 
mercantile  transactions  ;  and  in  that  case  she  also  renders 
her  husband  liable,  if  there  be  a  community  of  goods  be- 
tween them.*"  It  has  thence  been  supposed  that  his  consent 
and  authority  may  extend  to  a  contract  of  partnership  by 
her  in  trade."^  The  law  of  Louisiana  coincides  with  that  of 
France.^  The  law  of  Holland  and  of  Spain,  and  proba- 
bly that  also  of  most  of  the  continental  states  of  Europe, 
contains  provisions  in  many  respects  similar.^ 

1  Ersk,  Inst.  B.  1,  tit.  6,  §  12-18;  1  Bell,  Comm.  631-G35,  5th  ed. ;  1 
Burge,  Col.  &  For.  Law,  Pt.  1,  c.  7,  p.  423-462. 

2  Code  Civil,  art.  1400,  1421. 

^  Code  Civil,  art.  215,  217;  Locrd,  Esprit  du  Code  de  Comm.  art.  4, 
p.  27-30. 

*  Poth.  Obi.  n.  52. 

5  Locre,  Esprit  du  Code  de  Comm.  tit.  1,  art.  4,  p.  26-29,  36-38,  42. 

^  Code  de  Comm.  art.  4,  5 ;  Code  Civil,  art.  220. 

7  Poth.  de  Soc.  n.  77.  «  q^^^  of  Louisiana,  1825,  art.  121-131. 

9  1  Burge,  Col.  &  For.  Law,  Pt.  1,  c.  7,  §  2,  p.  276,  293-303;  Id.  §  4, 
p.  413,  418-423. 

{  Note.  —  There  are  dicta  that  a  corporation  cannot  be  a  member  of  a 
partnership;  Sharon  Canal  Co.  v.  Fulton  Bank,  7  Wend.  412;  Marine  Bank 
V.  Ogden,  29  111.  248.  See  Angell  &  Ames  on  Corp.  §  272.  In  Van 
Kuren  v.  Trenton  Co.  2  Beasl.  302,  the  point  was  raised,  but  not  decided.    In 


CHAP.  II.]  WHO    MAY    BE    PARTNERS.  21 

Whittenton  Mills  v.  Upton,  10  Gray,  582,  it  was  held,  that  a  manufacturing 
corporation  established  under  the  laws  of  Massachusetts  could  not  be  a  mem- 
ber of  a  partnership ;  and  the  reasoning  of  the  court  seems  applicable  to  all 
corporations.  See  Comm.  v.  Smith,  10  All.  448,  4.'>6.  In  Catskill  Rank  v. 
Gray,  14  Barb.  471,  it  was  held,  that  a  corporation  might  make  itself  liable  to 
thii'd  persons  by  sharing  the  profits  of  a  jjartnership;  but  in  Whittenton  Mills 
V.  Upton,  ubi  sup.,  where  a  corporation  and  an  individual  had  held  themselves 
out  as  partners,  it  was  held,  that  the  corporation  and  the  individual  could  not, 
on  the  petition  of  the  latter,  be  put  Into  insolvency  as  a  partnership.  See, 
further,  Conkling  v.  Washington  University,  2  Md.  Ch.  497.} 


22  PARTNERSHIP.  [cHAP.  III. 


CHAPTER   III. 


PARTNERSHIP     BETWEEN    THE    PARTIES COMMUNITY     OF 

INTERESTS. 

I  §  15.  Contribution  of  property  or  labor. 

16.  Community  of  partnership  property. 

1 7.  Foreign  law. 

18.  Communion  of  profit. 

19.  Whether  communion  of  losses  is  necessary. 

20.  Roman  law. 

21.  Modern  law. 

22.  Statement  of  Pothier. 

23.  Equal  sharing  in  profit  and  loss  not  necessary. 

24.  Presumption  of  equality. 

25.  Roman  and  foreign  law. 

26.  French  law. 

27.  There  may  be  community  of  profits  without  community  of  property. 

28.  Doctrine  of  Pufendorf. 

29.  Doctrine  of  Pothier  and  of  the  Roman  law.} 

§  15.  In  the  next  place,  every  partnership  presupposes 
that  there  must  be  something  brought  into  the  common 
stock  or  fund  by  each  party.^  But  it  is  not  necessary, 
that  each  should  contribute  or  contract  to  contribute  mon- 
ey, goods,  effects,  or  other  property,  towards  the  common 
stock  ;  for  one  may  contribute  labor  or  skill,  and  another 
may  contribute  property,  and  another  may  contribute 
money,  according  as  they  shall  agree."  And  for  this  there 
is  good  reason ;  and  it  is  well  put  in  the  Roman  law : 

'  3  Kent,  24,  25. 

2  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  10,  2d  ed.;  Peacock  v.  Peacock,  16  Ves. 
49;  Reid  v.  HoUinshead,  4  B.  &  C.  878;  Meyer  v.  Sharpe,  5  Taunt.  74; 
Waugh  V.  Carver,  2  H.  Bl.  235,  246;  2  Bell,  Coram.  B.  7,  c.  1,  p.  614,  5th 
ed. ;  1  Stair,  Inst.  B.  1,  tit.  16,  §  2;  Domat,  1,  8,  1,  art.  7;  Dob  v.  Halsey,  16 
Johns.  34.     [Dale  v.  Hamilton,  5  Hare,  393 ;  Perry  v.  Butt,  14  Ga.  699.] 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  23 

Plerumque  enim  tanta  est  indiistria  socii,  ut  plus  societati 
conferaf,  quam  pecimia ;  item,  si  solus  navlget,  si  solus 
peregrinetur,  jjericula  subeat  solus}  Sometimes  it  hap- 
pens, that  each  partner  contributes  only  skill  or  labor,  or 
services  for  the  common  benefit ;  as,  for  example,  house- 
wrights,  or  shipbuilders,  or  riggers,  who  are  partners ; 
or  commission  merchants,  brokers,  or  other  agents,  whose 
partnership  only  extends  to  the  profits  of  their  business, 
and  who  have  no  capital  stock  embarked  in  the  enter- 
prise.^ But  all  must  contribute  something;  and  thus 
join  together  either  money,  or  goods,  or  other  property, 
or  labor,  or  skill ;  ^  or,  as  Pothier  expresses  it :  II  est  de 
r essence  du  contrat  de  society,  que  chacune  des  parties  ap- 
porte  ou  s' oblige  d'apporter  quelque  chose  a  la  societe ; 
ou  de  Vargent,  ou  d'autres  effets,  ou  son  travail  et  son 
industries  The  Roman  law  pronounces  the  same  rule : 
Societatem,  uno  j^ecuniam  conferente,  alio  operam,  posse 
contrahi,  magis  ohtinuit.^  And,  indeed,  it  may  be  said  to 
be  universally  adopted  in  modern  times.^ 

§  16.  In  the  next  place,  from  what  has  been  already 
said,^  it  is  apparent,  that  in  every  case  of  partnership 
there  is  a  community  of  the  property  of  the  partnership 

J  D.  17,  2,  29,  1 ;  Potb.  Panel.  17,  2,  n.  3;  Inst.  3,  26,  2;  Domat,  1,  8, 
1,  art.  7. 

2  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  10,  11,  2d  ed. ;  Cheap  v.  Cramond,  4  B.  & 
Aid.  663 ;  Waugh  v.  Carver,  2  H.  Bl.  235. 

3  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  10,  11,  2d  ed.;  3  Kent,  24,  25.  In  Waugh 
V.  Carver,  2  H.  Bl.  235,  246,  Lord  Chief  Justice  Eyre  said:  "A  case  may  be 
stated,  in  which  it  is  the  clear  sense  of  the  parties  to  the  contract,  that  they 
shall  not  contribute ;  that  A.  is  to  contribute  neither  labor  nor  money,  and,  to 
go  still  farther,  not  to  receive  any  profits.  But  if  he  will  lend  his  name  as  a 
partner,  he  becomes  as  to  all  the  rest  of  the  world  a  partner." 

*  Poth.  de  Soc.  n.'8-lO;  4  Pardessus,  Droit  Comra.  art.  983,  984. 

^  Cod.  4,  37,  1  ;  Poth.  Pand.  17,  2,  n.  2;  Inst.  3,  26,  2;  Vinn.  ad  Inst.  3, 
26,  2,  u.  3, 

«  See  2  Bell,  Comm.  B.  7,  p.  611,  5th  ed.;  Poth.  de  Soc.  n.  8-10  ;  Vinn. 
ad  Inst.  3,  26,  Intr.  p.  693 ;  Domat,  1,  8,  1,  art.  7. 

7  Ante,  §  3. 


24  PARTNERSHIP.  [cHAP.  III. 

between  the  parties,  as  soon  as  it  becomes  part  of  the 
common  stock,  although  it  may  before  that  time  have  ex- 
clusively belonged  to  one  or  more  of  them.^  In  this 
case,  however,  it  is  to  be  understood,  that  we  are  speak- 
ing of  a  partnership,  designed  to  be  such  between  the 
parties  themselves;  and  not  merely  of  a  partnership 
which  may  by  construction  of  law  exist  as  to  third  per- 
sons, although  not  intended  between  the  parties,  of  which 
more  will  presently  be  said.-  Partners,  therefore,  are  to 
be  treated,  in  a  qualified  sense,  as  joint-tenants  of  the 
partnership  property,  having  an  interest  therein  j9er  m?/ 
et per  tout  (as  the  phrase  of  our  ancient  law  is),  that  is, 
having  an  interest  therein  by  the  half  or  moiety,  and  by 
all  ;  or,  more  accurately  speaking,  they,  each  of  them, 
have  an  interest  in,  and  the  entire  possession,  as  well  of 
every  parcel,  as  of  the  whole. ^ 

§  17.  This  principle  is  equally  recognized  in  the  for- 
eign law  ;  and  indeed  seems  to  result  directly  from  the 
nature  of  the  contract  of  partnership,  which  supposes, 
that  the  property  brought  into  it  is  put  into  community 
by  the  joint  consent  of  the  parties,  xiccordingly  Pothier 
insists  upon  this  as  a  leading  distinction.  La  societe  est 
le  contratpar  lequel  deux  ou  jjlusieicrs  j^ersonnes  convien- 
nent  de  mettre  quelque  chose  en  cornmiin;^  and  the  same 
distinction  is  fully  supported  by  other  jurists.^  Mr.  Bell 
says,  that  the  property  of  the  partnership  is  common, 

'  3  Kent,  24-26;  4  Pardessus,  Droit  Comm.  art.  969-972.  | But  prop- 
erty employed  ia  partnership  transactions  may  belong  to  one  partner  only, 
§  27.     On  what  is  partnership  property,  see  §  98,  99,  371-373.} 

*  Waugh  V.  Carver,  2  H.  Bl.  235,  246  ;  Hesketh  v.  Blanchard,  4  East, 
144;  Cheap  v.  Cramond,  4  B.  &  Aid.  663;  Reid  v.  Hollinshead,  4  B.  & 
C.  867. 

3  2  Bl.  Comm.  182. 

*  Poth.  de  Soc.  n.  2;  Poth.  Pand.  17,  2,  Intr.  to  n.  1. 

*  5  Duvergier,  Droit  Civ.  Franc,  tit.  9,  n.  33-40  ;  Vinn.  ad  Inst.  3,  26,  Intr. 
p.  693. 


CHAP.  III.]  C•OMMU^'ITY    OF    INTERESTS.  25 

and  held^?"o  indiviso  by  all  the  partners  as  a  stock  and 
in  trust. ^  So  Vinnius  says :  Ut  sit  societas,  7iecesse  est  ali- 
quicl  niutuo  conferri  et  commmiicari:  nisi  quid  idrinque 
in  commune  conferatur,  societas  non  intelUgitur.^  The 
Roman  law  adopted  the  same  prmciple.  In  societate 
omnium  honorwn  omnes  res^  quae  coeuntimn  sunt,  con- 
timio  communicantur .^ 

§  18.  In  the  next  place,  every  real  partnership,  so  in- 
tended between  the  parties  tliemselves,  imports,  ex  m 
termini,  a  community  of  interest  in  the  profits  of  the 
business  of  the  partnership,  that  is  to  say,  a  joint  and 
mutual  interest  in  the  profits  thereof,  or  a  communion 
of  profit.  And  this  is  of  the  very  essence  of  the  con- 
tract ;  for,  without  this  communion  of  profit,  a  partner- 
ship cannot,  in  the  contemplation  of  law,  exist."*     And 

>  2  Bell,  Comm.  B.  7,  c.  1,  p.  G12,  613,  otli  ed. ;  Stair,  Inst.  B.  1, 
c.  16,  §  1. 

2  VInn.  ad  Inst.  3,  26,  Intr.  p.  693. 

3  D.  17,  2,  1  ;  Id.  17,  2,  3,  1  ;  Both.  Band.  17,  2,  n.  13,  14;  Uomat,  1 
8,  1,  art.  2. 

*  Coll.  on  B.  B.  1,  c.  1,  §  1,  p.  11,  2d  ed. ;  4  Pardessus,  Droit  Comm.  art. 
969  ;  5  Duvergier,  Droit  Civ.  Franc,  tit.  9,  n.  11 ;    3  Kenl^  24,  25 ;  Wats,  on 

B.  c.   1,  p.   33-35;  Id.   p.   56,   57,   2d  ed. ;  Felichy  v.  Hamilton,   1    Wash. 

C.  C.  491;  Gow  on  B.  c.  4,  p.  153,  154,  3d  ed.  —  Mr.  CoUyer  expresses 
the  doctrine  in  the  following  terms.  "  To  constitute  a  partnership  between 
the  partners  themselves,  ther3  must  be  a  communion  of  profit  between  them. 
A  communion  of  profit  implies  a  communion  of  loss ;  for  every  man,  who  has 
a  share  in  the  profits  of  a  trade,  ought  also  to  bear  his  share  of  the  loss." 
Again :  "  By  a  communion  of  profit  is  intended  a  joint  and  mutual  interest 
in  profit."  Coll.  on  B.  B.  1,  c.  1,  §  1,  p.  11,  2d  ed.  By  joint  interest,  as  he 
afterwards  explains,  he  means  a  joint  interest  in  the  profits  arising  from  the 
sale  of  the  goods;  and  by  mutual  interest,  that  each  party  has  a  specific  in- 
terest in  the  profits,  as  a  principal  trader.  Id.  p.  1 1 ,  1 7.  Mr.  Collyer  after- 
wards states  a  curious  case  from  Select  Cases  In  Chancery  (p.  9),  where 
work  was  jointly  undertaken  by  two  persons,  and  they  were  to  divide  the 
money  therefor ;  and  they  were  held  not  to  be  partners.  His  language  is : 
"  Ao-ain,  upon  principles  similar  to  those  of  the  foregoing  cases,  if  two  persons 
jointly  agi'ee  to  do  a  particular  piece  of  work,  but  the  money  received  for 
such  work  is  not  to  be  employed  on  their  joint  account,  the  persons  so  con- 
tracting are  not  partners.  Thus,  in  the  case  of  Finckle  v.  Stacey  (Sel. 
Ca.  5),  joint  articles  were  entered  into  by  the  plaintiff  and  defendant  for 


26  PARTNERSHIP.  [cHAP.  III. 

SO  Pothier  has  laid  down  the  doctrine.  II  est  de  T essence 
de  ce  contrat,  que  la  societe  soit  contractee  pour  V inter et 
commun  des parities}  If  the  contract  be  for  the  sole  and 
exclusive  benefit  of  one  party,  it  is  not  properly  a  case  of 
partnership,  but  must  fall  under  some  other  denomina- 
tion, such  as  a  mandate.^  Hence,  if  in  a  pretended 
contract  of  partnership,  it  should  be  agreed,  .that  one  of 
the  parties  should  take  all  the  profit,  without  the  others 
having  any  share  thereof,  it  would  be  a  mere  nullity, 
and    constitute   no    partnership.^      The    Roman  jurists 

"doing  a  particular  piece  of  work  for  tlie  Duke  of  Marlborough,  on  account 
of  which  several  sums  of  money  had  been  jointly  received  by  them,  and  im- 
mediately divided  between  them.  There  being  a  sum  demanded  by  them 
in  arrear,  which  the  duke  refused  to  pay,  as  being  unreasonable,  Stacey 
applied  to  Finckle  to  join  him  in  a  suit  to  recover  what  was  in  arrear ;  which 
he  refused  to  do,  declaring  that  he  had  several  advantageous  works  under 
the  duke,  which  he  should  lose,  should  he  join  in  a  suit ;  on  which  Stacey 
applied,  and  got  his  own  half  of  the  sum,  which  was  due  to  the  two.  A  bill  was 
then  brought  for  a  moiety  of  the  money  so  received ;  and  it  was  insisted  it 
should  be  considered  as  a  partnership  in  trade,  and  this  money  as  so  much 
received  on  the  joint  account.  But  the  court  were  of  opinion  it  was  not  to 
be  considered  as  a  partnership,  but  only  an  agreement  to  do  a  particular  act, 
between  which  there  is  great  difference ;  and  that  it  is  so  is  plain,  for  the 
money,  which  they  had  received,  they  immediately  divided,  and  did  not  /a?/ 
out  on  a  common  account.  The  bill  was  dismissed  with  costs.  Upon  this 
case,  however,  it  is  to  be  observed,  that  if  no  application  had  been  made 
to  the  plaintiff  to  sue  the  duke,  a  bill  for  an  account,  supposing  an  account 
necessary,  would  clearly  have  been  sustainable  against  the  defendant  on 
other  grounds  than  those  of  partnership.  Here,  however,  the  plaintiff,  for 
his  own  private  ends,  had  absolutely  refused  to  join  in  suing  for  the  money ; 
and  the  court  observed :  '  It  is  pretty  extraordinary,  that  he  sliould  come  here 
to  have  the  benefit  of  another's  act,  in  which  he  refused  to  join  ;  which 
refusal  was  with  a  corrupt  view  for  his  own  advantage,  and  not  on  a  common 
account,  the  money  due  on  which  he  would  rather  sacrifice  than  forego 
his  own  particular  advantage.  And  here  is  no  insolvency  in  the  duke ;  if 
there  had  been,  perhaps  it  would  have  deserved  consideration.' " 
'  Poth.  de  Soc.  n.  11. 

2  Poth.  de  Soc.  n.  12  ;  Waugh  v.  Carver,  2  H.BI.  235,  246. 

3  Poth.  de  Soc.  n.  12;  3  Kent,  29,  30;  D.  17,  2,  30;  Poth.  Pand.  17,  2,  n.  3  ; 
Vinn.  ad  Inst.  3,  26,  Intr.  p.  693 ;  Jestons  v.  Brooke,  Cowp.  793.  In  many 
cases  of  this  sort  the  contract  would  be  treated  as  a  mere  cover  for  usury. 
Ibid. ;  Poth.  de  Soc.  n.  22. 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  27 

branded  such  a  contract  with  the  odious  epithet  of  Soci- 
etas  Leonina,  in  aUusion  to  the  fable  of  the  lion,  who, 
having  entered  into  a  partnership  with  the  other  wild 
beasts  for  hunting,  appropriated  the  whole  prey  to  him- 
self^ And  the  Roman  law  declared,  Societatem  talem 
coiri  7ion  posse^  ut  alter  Iticrum  tantum,  alter  damnum 
sentiret ;  et  hanc  societatem  leoninam  solitum  appellare. 
Et  nos  conseiitimus  talem  societatem  nullum  esse,  ut 
alter  lucrum,  sentiret,  alter  vero  nullum  lucrum,  sed 
damnum  sentiret;  Liiquissimum  enim  genus  societa- 
tis  est,  ex  qua  quis  damnum,  non  etiam  lucrum,  spec- 
tet.^  The  modern  Code  of  France  has  expressly  pro- 
mulgated the  same  doctrine.  It  declares  that  the 
contract,  which  shall  give  to  one  of  the  partners  the  en- 
tirety of  the  profits,  is  nuU.^  Nay,  it  has  gone  further, 
and  added,  that  it  is  the  same  of  a  stipulation,  which 
shall  free  from  all  contribution  to  losses  the  moneys  or 
effects  brought  into  the  partnership  fund  by  one  or  more 
partners.'* 

§  19.  So  strong  and  inflexible  is  this  rule,  that  it  is 
often  laid  down  in  elementary  works,  as  well  as  in  the 
common  law  authorities,  that  to  constitute  a  partnership 
there  must  be  a  communion  of  profits  and  losses  between 
the  partners.^  And  this  in  a  qualified  sense  is  perfectly 
true,  when  it  is  understood  with  the  proper  limitations 

1  Poth.  de  Soc.  n.  12  ;  3  Kent,  29,  30. 

2  D.  17,  2,  29,  2;  Poth.  Panel.  17,  2,  n.  3;  Poth.  de  Soc.  n.  19;  Domat, 
1,  8,  1,  art.  6-10;  Id.  1,  8,  2,  art.  12. 

3  Code  Civil,  art.  1855.  *  Code  Civil,  art.  1855. 

*  See  Coll.  on  P.  B.  1,  e.  1,  §  1,  p.  11 ;   Gow  on  P.  c.  1,  p.  1,  3d  ed. 

3  Kent,  23,  24  ;  Mont,  on  P.  B.  1,  Pt.  1,  p.  2 ;  Grace  v.  Smith,  2  W.  Bl.  998 
Wats,  on  P.  c.  1,  p.  1;  Id.  p.  56,  2d  ed. ;  Ersk.  Inst.  B.  3,  tit.  3,  §  18 
1  Domat,  1,  8,  1,  art.  1 ;  Poth.  de  Soc.  n.  19,  20;  1  Stair,  Inst.  B.  1,  tit.  16 
§  3;  Coope  v.  Eyre,  1  H.  Bl.  37;  Bond  v.  Pittard,  3  M.  &  W.  357,  360 

4  Pardessus,  Droit  Comm.  n.  996  ;  5  Duvergier,  Droit  Civ.  Franc,  n.  17 ;  Ex 
parte  Langdale,  18  Ves.  300;  Green  v.  Beesley,  2  Bing.  N.  C.  108,  112; 
Dry  V.  Boswell,  1  Camp.  329 ;  Hoare  v.  DaAves,  Doug.  371. 


28  PARTNERSHIP.  [CHAP.  III. 

belonging  to  the  statement.  The  doctrine  will  be  found 
in  the  E-oman  law.  Societas  cum  contrahitur,  tarn 
hcan  quam  damni  commmiio  initur}  Sicuti  lucrum  ita 
damnum  quoque  commune  esse  oi^ortet.^  Modern  foreign 
jurists  often  use  expressions  to  the  same  effect.^  The 
Roman  law  carried  this  equitable  presumption  still  fur- 
ther, and  declared,  that  if  the  partners  expressly  men- 
tioned their  shares  in  one  respect  only,  either  solely  as 
to  the  profit,  or  solely  as  to  the  loss,  their  shares  of  that, 
which  was  omitted,  should  be  regulated  by  what  was  ex- 
pressed. Illud  expeditum  est ;  si  in  una  causa  pars  fuerit 
expressa^  vehiti  in  solo  lucro,  vel  in  solo  damno,  in  altera 
vero  omissa^  in  eo  quoque,  quod  j)i"(^€te7^inissuni  est,  ean- 
dem  partem  servari.'^  But  all  this  language  is  to  be 
interpreted  in  a  limited  and  qualified  sense ;  and  so 
understood,  it  admits  of  no  real  dispute. 

§  20.  In  the  first  place,  every  partnership  imports, 
in  the  absence  of  all  contrary  stipulations,  that  the  profit 
and  loss  are  to  be  borne  by  all  the  partners,  according 
to  their  respective  proportions  thereof.^  And  the  ques- 
tion was  much  discussed  in  the  Roman  law,  whether  a 
stipulation,  that  one  partner  only  should  bear  all  the 
losses,  and  both  should  share  the  profits,  was  valid  or 
not.  It  was  finally  settled,  according  to  the  opinion  of 
Servius  Sulpitius,  that  it  was  valid,*and  that  one  partner 
might,  by  agreement,  be  entitled  to  share  in  the  profits, 
and  not  be  accountable  for  any  part  of  the  loss.^     But 

1  D.  17,  2,  67;  Poth.  Pand.  17,  2,  n.  38;  Domat,  1,  8,  1,-art.  1. 

2  D.  17,  2,  52,  4  ;  Poth.  Pand.  17,  2,  n.  39  ;  Domat,  1,  8,  1,  art.  1. 

2  5  Duvergier,  Droit  Civ.  Franc,  tit.  9,  n.  13-18;  4  Pardessus,  Droit 
Comm.  art.  996. 

4  Inst.  3,  26,  3 ;  Vinn.  ad  Inst.  3,  26,  3 ;  Domat,  1,8,  1,  art.  5. 

"  Wats,  on  P.  c.  1,  p.  59,  GO,  2d  ed. ;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  105,  106, 
2d  cd.;  1  Voet,  ad  Pand.  17,  2,  n.  8,  p.  751  ;  Domat,  1,  8,  1,  art.  7,  8. 

6  Inst.  3,  26,  2;  Wats,  on  P.  c.  I,  p.  56,  57,  2d  ed. ;  Domat,  1,  8,  1, 
art.  6-9. 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  29 

then  every  such  stipulation  was  understood  to  be  with 
this  reserve,  that  the  losses  were  first  to  be  deducted 
from  the  profits  ;  and  that  if  profits  accrued  from  one 
species  of  things,  and  losses  from  another,  what  remained 
only  after  the  losses  were  deducted  was  to  be  deemed 
profits.^  So  that,  in  fact,  each  partner  in  this  way,  who 
shared  a  part  of  the  profits,  shared,  by  deduction  from 
the  gross  profits,  his  proportion  of  the  losses  also,  as  far 
as  there  were  any  profits.  Ita  coiri  societatem  posse 
(says  the  Digest),  ut  niillius  partem  damni  alter  sentiat, 
lucrum  vero  commune  sit,  Cassius  ^jz^/«/.  Quod  ita 
demum  valehit  (id  et  Sahinus  scribit),  si  tanti  sit  opera, 
quanti  damnum  est.^  And  again :  Mucius  scribit,  non 
posse  societatem  coiri,  ut  aliarii  damni,  aliam  lucri  par- 
tem socius  ferat.  Servius  in  notcdis  Mucii  ait,  nee  posse 
societatem  ita  contraJii ;  neque  enim  lucrum  intelligitur, 
nisi  omni  damno  deducto ;  neque  damnuin,  7iisi  omni 
lucro  dediicto.  Sed  potest  coiri  societas  ita,  ut  ejus 
lucri,  quod  reliquum  in  societate  sit,  omni  damno  de- 
ducto, pars  cdia  feratur ;  et  ejus  damni,  cpiod  similiter 
relinquatur,  pars  alia  capiatur.^  The  Institutes  express 
the  same  doctrine  still  more  succinctly :  Et  adeo,  contra 
Quinti  Mutii  sententiam  obtinuit,  ut  illud  quocpue  con- 
stiterit,  posse  convenire,  id  quis  lucri  partem  ferat,  de 
damno  non  teneatur.  Quod  tamen  ita  intelligi  oportet, 
ut  si  in  alia  re  lucrum,  in  alia  damnum  illcdum  sit, 
Gompensatione  facta,  solum,  cpiod  superest,  intelUgatur 
lucro  esse.^ 

§  21.  It  is  in  this  sense,  that  the  proposition  has  been 
generally  understood  by  jurists  in  modern  times,  and 
adopted  into  the  common  law ;  that  each  partner  must 

'  Domat,  1,  8,  1,  art.  7,  8. 
^  D.  17,  2,  29,  1  ;  Poth.  Pand.  17,  2,  n.  3. 

3D.  17,  2,  30;  Poth.  Pand.  17,  2,  n.  3:  Poth.  de  Soc.  n.  21;  Domat, 
1,  8,  1,  art.  7-9. 
*  Inst.  3,  26,  2. 


30  PARTNERSHIP.  [cHAP. 


III. 


at  all  events  share  in  the  losses,  so  far,  at  least,  as  they 
constitute  a  charge  upon,  and  diminution  or  deduction 
from,  the  profits ;  and  in  this  sense  it  is  regularly  true.^ 

»  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11,  2d  ed. ;  Potli.  de  Soc.  n.  13,  19,  21 ;  5 
Duvergier,  Droit  Civ.  Franc,  n.  13-18;  Id.  n.  220-222;  Bond  «.  Pittard,  3 
M.  &  W.  35  7,  360;  Vinn.  ad  Inst.  3,  26,  2;  4  Pardessus,  Droit  Comm.  QdQ- 
999;  1  Stair,  Inst.  B.  1,  tit.  16,  §  3.  {See  Cummings  v.  Mills,  1  Daly,  520. 
Mr.  Lindley  explains  clearly  the  different  meanings  of  the  word  "  profits." 
(Lind.  on  P.  10.)  "By  ■writers  on  Political  Economy,  the  word  profit  is 
used  to  denote  the  difference  between  the  value  of  advances,  and  the  value 
of  returns  made  by  their  employment.  Profits  are  divided  by  these  writers 
into  gross  or  net ;  gross  profits  being  the  whole  of  the  above  difference,  and 
net  profits  being  so  much  of  that  difference  as  is  attributable  solely  to  the 
capital  employed.  The  remainder  of  the  difference,  or  in  other  words  the 
gross  profits,  minus  the  net  profits,  has  no  particular  name,  but  it  represents 
the  profits  attributable  to  industry,  skill,  and  enterprise.  (As  will  be  noticed 
hereafter,  lawyers  are  accustomed  to  call  gross  returns  gross  profits.) 

"  If  the  term  profit  be  used  to  denote  the  difference  between  the  value  of 
advances  and  the  value  of  returns,  the  profit  arising  from  any  trade,  business, 
or  adventure  will  be  a  positive  or  a  negative  quantity,  or  neither,  according  as 
the  value  of  the  returns  is  greater  or  less  than,  or  equal  to,  the  value  of  the 
advances.  Using  the  term  pi'ofit  in  this  sense,  persons  who  share  the  profits 
of  any  business  necessarily  share  its  losses,  if  losses  are  incurred ;  for  if  they 
do  not,  what  they  share  is  not  the  difference  above  alluded  to,  but  something 
else ;  as,  for  example,  that  difference  if  it  happens  to  be  a  gain. 

"  But  the  word  profit  is  generally  used  in  a  less  extensive  signification,  and 
presupposes  an  excess  of  the  value  of  returns  over  the  value  of  advances. 
Using  the  word  profit  in  this  more  limited  and  popular  sense,  persons  who 
share  profits  do  not  necessarily  share  losses,  for  they  may  stipulate  for  a 
division  of  gain,  if  any,  and  yet  some  one  or  more  of  them  may. by  agree- 
ment be  entitled  to  be  indemnified  against  losses  by  the  others ;  so  that 
whilst  all  share  profits,  some  only  bear  losses. 

"  The  actual  or  gross  returns  obtained  by  advances  obviously  include  profits 
(in  the  sense  of  gain),  if  profits  have  been  made.  But  those  returns  do 
not  include  losses,  if  losses  are  incurred ;  for_losses  are  the  excess  of  the 
advances  over  the  actual  returns,  and  come  out  of  the  advances,  and  not 
out  of  the  returns.  Hence,  persons  who  share  gross  returns  share  profits 
in  the  sense  of  gain ;  but  they  do  not,  by  sharing  the  returns,  share  losses, 
for  these  fall  entirely  on  those  making  the  advances.  Moreover,  although 
a  division  of  gross  returns  is  a  division  of  profits,  if  there  are  any,  it  is  only 
so  incidentally,  and  because  such  profits  are  included  in  what  is  divided  ; 
it  is  not  a  division  of  profits  as  such ;  and  under  an  agreement  for  a  divi- 
sion of  gross  returns,  whatever  is  returned  must  be  divided,  whether  there 
be  profit  or  loss,  or  neither. 

"  These  considerations  have  led  to  the  distinction  in  Entrlish  law  between 


CHAP.   III.]  COMMUNITY    OF    INTERESTS.  31 

§  22.  Potliier  states  this  doctrine  with  uncommon 
clearness  and  accuracy.  After  remarking,  that,  consist- 
ently with  equity,  it  may  be  agreed  between  the  part- 
ners, that  one  should  bear  a  less  proportion,  or  even  no 
part  of  the  loss  of  the  partnership,  he  adds,  that  this  is 
not  to  be  understood  in  the  sense,  that  one  partner  is 
to  have  a  share  of  the  profit  of  each  particular  trans- 
action, which  shall  be  advantageous  to  the  partnership, 
without  contributing  any  thing  to  the  losses,  which  the 
partnership  may  sustain  from  other  transactions,  which 
shall  be  unprofitable  to  it ;  for  that  would  manifestly ) 
be  unjust.  But  it  is  to  be  understood  in  this  sense,  that,' 
after  the  dissolution  of  the  partnership,  an  account  is  to 
be  taken  of  all  the  profits  of  the  partnership,  and  a  like 
account  of  all  the  losses  on  all  the  business  undertaken 
by  the  partnership ;  and  if  the  totality  of  the  profits 
exceeds  the  totality  of  the  losses,  the  partner  shall  take 
his  share  of  the  excess.  And  if,  on  the  contrary,  the 
totality  of  the  losses  exceeds  that  of  the  profits,  the 
partner  shall  have  neither  profit  nor  loss.^  And  this  is 
in  accordance  with  the  Roman  law :  Neque  enhn  lucrum 
intelligitur,  nisi  omni  damno  deducto ;  neque  damnum^ 
nisi  omni  lucro  deducto.^ 

§  23.  Hence  it  may  be  laid  down,  as  a  general  rule  of 

agreements  to  share  profits  and  agreements  to  sliare  gross  returns,  and  to  the 
doctrine  that  whilst  an  agreement  to  share  profits  creates  a  partnership,  an 
agreement  to  share  gross  returns  does  not." 

An  agreement,  by  one  or  more  partners,  to  indemnify  the  others  against 
loss  entitles  each  of  the  partners  to  a  share  of  the  excess  of  the  returns  over 
the  advances,  while  it  entitles  some  of  the  partners  to  be  indemnified  by  the 
others  for  all  losses  beyond  the  advances.  If  the  parties  are  indemnified,  and 
indemnified  not  only  against  losses  beyond  the  advances,  but  also  against  the 
loss  of  the  advances  themselves,  the  contract  becomes  one  of  loan,  and 
ceases  to  be  one  of  partnership,  at  least  as  between  the  parties  themselves, 
though  it  may  be  so  as  to  third  persons.     See  Lind.  on  P.  17.} 

'  Poth.  de  Soc.  n.  21.     See  5  Duvergier,  Droit  Civ.  Franc,  n.  13-18. 

-  B.  17,  2,  30;  Poth.  Pand.  17,  2,  n.  3. 


32  PARTNERSHIP.  [CH.^ 


AP.  III. 


the  common  law,  that,  in  order  to  constitute  a  partner- 
ship, it  is  not  essential  that  the  partners  should  equally 
share  the  profits  and  losses.  It  is  sufficient,  if  they  are 
to  share  in  the  profits  of  the  business,  after  a  deduction 
of  the  losses ;  or,  in  other  words,  that  they  should  share 
in  the  net  profits  according  to  their  respective  propor- 
tions. It  is,  therefore,  competent  for  the  partners  by 
their  stipulations  to  agree,  that  the  profits  shall  be  divided, 
and  if  there  be  no  profits,  but  a  loss,  that  the  loss  shall 
be  borne  by  one  or  more  of  the  partners  exclusively,  and 
that  the  others  shall,  inter  sese,  be  exempted  therefrom.^ 
So,  the  proportion  in  which  they  are  to  share  the  profits, 
or  losses,  may  be  varied  at  their  pleasure,  whether  they 
contributed  equally  to  the  common  stock,  or  not;  and 
the  same  rule  is  applicable  to  the  proportions  in  which 
they  are  to  bear  the  losses.^  Thus,  they  may  agree,  that 
one  or  more  partners  shall  take  a  greater  proportion  of 
the  profits  than  the  others,  and  shall,  if  there  be  no  prof- 
its, share  a  less  proportion  of  the  losses,  or  even  be  wholly 
exempted  therefrom.^  The  reason  of  all  this  is,  that  the 
inequality  of  skill,  of  labor,  or  of  experience,  which  the 
partners  may  bring  into  the  particular  business,  may  not 
only  justify,  but  positively  require  this  inequality  of  com- 
pensation, and  of  exemption  from  loss,  as  a  matter  of 
justice  and  equity  between  the  parties.  And  the  law  has, 
therefore,  wisely  not  prohibited  it ;  but  has  left  it  to  the 
parties  to  exercise  their  own  discretion  in  these  matters, 
taking  care  that  no  fraud,  imposition,  or  undue  advan- 

1  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11,  2d  ed. ;  Gow  on  P.  c.  1,  p.  9,  3d  ed. ; 
Bond  V.  Pittard,  3  M.  &  W.  357,  359;  Gilpin  v.  Enderbey,  5  B.  &  Aid. 
954.     {Bobbins  v.  Laswell,  27  111.  365.} 

^  Wats,  on  P.  c.  1,  p.  56,  57,  2d  ed. 

3  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11,  2d  ed.;  Gow  on  P.  c.  1,  p.  9,  3d  ed.; 
Gilpin  V.  Enderbey,  5  B.  &  Aid.  954,  964 ;  Bond  v.  Pittard,  3  M.  &  W. 
357,  360;  Wats,  on  P.  c.  1,  p.  56,57,  2d  ed. ;  Fereday  v.  Hordern,  Jac. 
144. 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  33 

tage  is  taken  of  the  other  side.^  In  fact  (as  has  been 
well  observed  by  a  learned  writer),  by  the  common  law, 
the  various  stipulations  and  provisions  relating  to  the  com- 
mencement of  the  partnership,  the  manner  in  which  the 
business  is  to  be  conducted,  the  space  of  time  for  which 
the  partnership  is  to  endure,  the  capital  which  each  is  to 
bring  into  the  trade,  the  proportion  in  which  the  profits 
and  losses  are  to  be  divided,  the  time  and  manner  agreed 
upon  for  settling  the  accounts,  the  powers  and  duties  of 
the  partners  in  regard  to  conducting  the  business,  and 
entering  into  engagements  which  may  affect  the  partner- 
ship, the  mode  in  which  the  partnership  may  be  dissolved, 
together  with  the  various  covenants  adapted  to  the  cir- 
cumstances of  each  particular  case,  are  purely  and  en- 
tirely the  subject  of  personal  and  private  agreement  and 
arrangement ;  and  in  whatever  way  they  may  ultimately 
be  settled,  they  cannot  be  impeached,  unless  they  inter- 
fere with,  or  contravene  some  rule  or  principle  of  law.'^ 

§  24.  In  the  absence,  however,  of  all  precise  stipula- 
tions between  the  partners,  as  to  their  respective  shares 
in  the  profits  and  losses,  and  in  the  absence  of  all  other 
controlling  evidence  and  circumstances,  the  rule  of  the 
common  law  is,  that  they  are  to  share  equally  of  both ; 
for  in  such  a  case  equcility  would  seem  to  be  equity.^ 
And  the  circumstance  that  each  partner  has  brought  an 
unequal  amount  of  capital  into  the  common  stock,  or 
that  one  or  more  has  brought  in  the  whole  capital,  and 

^  See  Poth.  de  Soc.  n.  18,  19.  See  also,  5  Duvergier,  Droit  Civ.  Franc, 
n.  13-18 ;  4  Pardessus,  Droit  Comm.  n.  997 ;  Van  Leeuwen's  Comm.  B.  4,  c. 
23,  §  10. 

*  Gow  on  P.  c.  1,  p.  9,  3d  ed. 

3  Wats,  on  P.  c.  1,  p.  59,  60,  2d  ed. ;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  105,  lOG, 
2d  ed.;  3  Kent,  28.  [Roach  u.  Perry,  16  111.  37;  Donelson  v.  Posey,  13  Ala. 
752.]  Gould  V.  Gould,  6  Wend.  263.  But  sec  Thompson  v.  Williamson,  7 
Bligh,  N.  s.  432;  s.  c.  xuh  nam.  Thomson  v.  Campbell's  Trustee's;  5  W.  & 
Shaw,  16;  2  Moreau  &  Carl.  Partidas,  Pt.  5,  1.  3,  4,  p.  766,  767. 

3 


34  PARTNERSHIP.  [CHAP.  III. 

the  others  have  only  brought  industry,  skill,  and  experi- 
ence, would  not  seem  to  furnish  any  substantial  or  deci- 
sive ground  of  difference,  as  to  the  distribution.  On  the 
contrary,  the  very  silence  of  the  partners,  as  to  any  par- 
ticular stipulation,  might  seem  fairly  to  import,  either, 
that  there  was  not,  all  things  considered,  any  real  ine- 
quality in  the  benefits  to  the  partnership  in  the  case,  or 
that  the  matter  was  waived  upon  grounds  of  good-will,  or 
affection,  or  liberality,  or  expediency.^  It  is  true,  that  it 
has  sometimes  been  asserted,  that  in  cases  of  this  sort, 
there  is  no  natural  presumption  that  the  partners  are  to 
share  equally ;  and  that  it  is  a  matter  of  fact  to  be  settled 
by  a  jury,  or  by  a  court,  according  to  all  the  circum- 
stances, what  would  be  a  reasonable  apportionment. 
Thus,  it  was  held  by  Lord  Ellenborough,  that  if  a  father 
and  son  should  be  partners,  no  presumption  would  arise, 
that  they  were  to  share  in  moieties  in  the  absence  of  all 
positive  stipulations ;  but,  that  the  shares  were  to  be  as- 
certained by  a  jury,  if  the  case  were  at  law.^  But  this 
doctrine  was  afterwards  positively  disapproved  of  by  Lord 
Eldon,  who  held  that  even  in  the  case  of  a  father  and 
son,  who  are  partners,  if  no  distinct  shares  are  ascer- 
tained by  force  of  any  express  contract,  they  must  of  ne- 
cessity be  equal  partners,  and  are  entitled  to  moieties.^ 

»  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  105-107,  2cl  ed. ;  3  Kent,  28  ;  Wats,  on  P. 
c.  1,  p.  56-60,  2d  ed  ;  Gould  v.  Gould,  6  Wend.  2G3.  See  Van  Leeuwen's 
Comm.  B.  4,  c.  23,  §  10. 

*  Peacock  v.  Peacock,  2  Camp.  45. 

^  Peacock  v.  Peacock,  16  Ves.  49,  56  ;  [Webster  v.  Bray.  7  Hare,  159, 1 79]  ; 
Farrar  v.  Beswick,  1  Moo.  &  R.  527;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  105,  106, 
2d  ed. ;  Gow  on  P.  c.  1,  p.  8,  9,  3d  ed. ;  2  Bell,  Comm.  B.  7,  c.  1,  p.  614, 
615,  5th  ed.  —  In  Farrar  v.  Beswick,  1  Moo.  and  R.  527,  Mr.  Justice  Parke 
held  the  same  doctrine  as  Lord  Eldon,  and  said :  "  Where  a  partnership  is 
found  to  exist  between  persons,  but  no  evidence  is  given  to  show  in  what 
proportions  the  parties  are  interested,  it  is  to  be  pi-esumed,  that  they  are 
interested  in  equal  moieties."  It  is  true,  that  in  the  case  of  Thompson  v. 
Williamson,  7  Bligh,  N.  s.  1,  432  ;  s.  c.  5  W.  &  Shaw,  16,  a  doubt  was  thrown 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  35 

However,  it  must  be  still  deemed  an  open  question  in 
England,  since  a  recent  decision  in  the  House  of  Lords 

upon  this  doctrine,  as  a  doctrine  of  the  common  law,  by  Lord  Wynford  and 
Lord  Brougham  ;  but  I  cannot  think,  that  it  is  successfully  maintained  by  the 
reasoning  contained  in  their  opinions.     Each   of  these  learned  judges  ad- 
mitted on  that  occasion,  that  if  there  is  nothing  to  guide  the  judgment  of  the 
court  to  give  unequal  shares,  there  is  no  rule  for  them  to  go  by,  but  to  give  in 
equal  shares.     What  is  this  but  affirming,  that  in  the  absence  of  all  controll- 
ing circumstances,  leading  to  a  different  conclusion,  the  presumption  of  law 
is,  that  the  partners  are  to  take  in  equal  shares?     But  it  is  not  an  irresistible 
presumption ;  for  where  there  are  circumstances,  which  demonstrate,  that  the 
partners  in  the  particular  case  did  in  fact  intend,  or  from  the  general  habit 
and  custom  of  their  trade  and  business,  under  the  like  circumstances,  must  be 
fairly  presumed  to  have  intended,  to  share  in  a  different  proportion,  there 
is  not  the  slightest  difficulty  in  admitting,  that  the  presumption  of  law  ought 
to  yield  to  the  presumption  of  fact,  as  legal  presumptions  ordinarily  do  in 
other  cases.     And  this  is  what  seems  to  have  been  intended  by  Lord  Eldon, 
in  his  opinion  in  Peacock  t).  Peacock,  16  Ves.  49,  56;  and  was  explicitly 
avowed  by  Mr.  Baron  Parke,  in  Farrar  v.  Beswick,  1  Moo.  &  R.  527.     The 
real  difficulty  lies  in  holding,  that,  where  there  is  an  inequality  in  the  stock, 
or  skill,  or  services,  or  experience  of  the  different  partners,  any  one  or  more 
of  those  circumstances  alone,  or  in  conjunction  with   other  circumstances, 
equally  indeterminate  and  equivocal,  should  overcome  the  ordinary  presump- 
tion of  law  of  equality  of  shares  between  the  partners.     Now,  Lord  Ellen- 
borough,  in  Peacock  v.  Peacock,  2  Camp.  45,  seems  to  have  acted  upon  the 
ground,  that,  in  every  such  case  of  inequality,  there  was  no  such  presump- 
tion of  law  whatever  to  govern  it;  but  that  it  was  open  for  the  jury  to  take 
into  consideration  all  the  circumstances,  if  the  suit  were  at  law,  or  for  the 
court,  if  the  suit  were  in  equity,  and  to  adjudge  the  proportions,  not  upon 
any  supposed  contract  between  parties  actually  established,  but  as  it  were  ex 
cequo  ei  bono,  as  upon  a  quantum  meruit.    It  was  in  this  view,  that  Lord  Eldou 
seems   to   have   expressed   his   disapprobation  of  the   doctrine ;    because   it 
assumed  to  overthrow  a  presumption  of  law  (and  it  would  not  have  been 
materially  different,  if  it  were  a  presumption  of  fact),  upon  indeterminate 
circumstances,  which  might  be  urged  with  more  or  less  effect  to  a  jury,  but 
which  carried  no  certainty,  as  to  the  positive  intent  or  contract  of  the  parties. 
His  Lordship  on  that  occasion  said :  "  The  father  employed  his  son  in  his 
business;  and,  as  is  frequently  done  by  a  father,  meaning  to  introduce  his 
son,  the  business  was  carried  on  in  the  name  of  '  Peacock    and    Co.'     It 
appeared    to  me,  that  the  son,  insisting  that  he  had  a  beneficial  interest, 
must  be  entitled  to  an  equal  moiety,  or  to  nothing;  that,  as  no  distinct  share 
was  ascertained  by  force  of  any  express  contract  between  them,  they  must  of 
necessity  be  equal  partners,  if  partners  in  any  thing.     In  that  view  the  re- 
sult of  the  issue,  that  was  directed,  appears  to  be  extraordinary.     The  propo- 
sition being,  that  the  son  was   interested  in   some  share,   not  exceeding  a 


36  PARTNERSHIP.  [cHAP.  III. 

has  questioned,  if  it  has  not  shaken,  the  doctrine  of  Lord 
Eldon,  and   affirmed  that  of  Lord  Ellenborough.^     In 

moiety,  the  jury  in  some  way,  upon  the  footing  of  quantum  meruit,  held  him 
entitled  to  a  quarter.  I  have  no  conception,  how  that  principle  can  be 
applied  to  a  partnership.  The  parties,  however,  consider  themselves  bound 
by  that  verdict."  If,  by  the  custom  of  any  particular  trade  or  business  under 
the  like  circumstances,  the  rule  was  general  to  give  a  fi.xed  proportion,  as, 
for  example,  a  fourth  to  one  partner,  and  three  fourths  to  another,  on 
account  of  the  inequality  of  capital,  or  skill,  or  experience,  or  age,  or  the 
relation  of  parent  and  child,  that  might  properly  control  the  presumption  of 
law ;  for  it  would  amount  to  strong  presumptive  evidence,  that  the  partners 
intended  to  contract  upon  the  usual  terms.  But  where  there  are  no  such 
circumstances,  and  nothing  determinate  in  the  evidence,  but  all  rests  upon 
conjecture,  at  best  admitting  of  various  force  and  application,  what  ground  is 
there  to  presume  a  contract  for  a  quantum  meruit  ?  The  more  reasonable 
ground  would  seem  to  be,  that  the  parties  meant  to  treat  with  each  other 
upon  a  footing  of  equality,  or  to  waive  the  inequality,  as  a  matter  of  liber- 
ality', or  bounty,  or  parental  or  filial  affection,  or  proximity  of  blood  or 
personal  friendship.  There  seems  also  to  be  very  great  uncertainty  in  the 
application  of  the  doctrine;  for  from  such  indeterminate  and  A'ague  circum- 
stances very  different  conclusions  might  be  drawn  by  different  juries  and 
different  courts;  and  it  seems  far  more  convenient  to  adopt  a  general  rule  of 
interpretation  of  the  intention  of  the  parties,  in  the  absence  of  any  express 
or  implied  agreement  or  usage,  as  to  the  apportionment  of  the  profits.  Cases 
may  indeed  arise,  where  the  presumption  fairly  would  be,  that  the  parties 
were  to  share  the  profits  only  in  moieties,  and  not  the  capital ;  as,  for  example, 
in  the  case  of  a  partnership  between  a  father  and  a  son,  where  the  father 
supplied  the  whole  capital.  However  this  may  be,  the  Judges  of  the  Scot- 
tish Court  of  Session  adopted  the  doctrine  of  Lord  Eldon,  in  the  case  of 
Thompson  v.  Williamson,  7  Bligh,  N.  s.  432;  s.  c.  5  W.  &  Shaw,  16;  7 
Shaw  &  D.  No.  333  ;  but  it  was  overturned  in  the  House  of  Lords  by  the  de- 
cision of  Lords  Wynford  and  Brougham.  Mr.  Bell  and  Mr.  Erskine  main- 
tain the  same  doctrine  as  the  Court  of  Session  (2  Bell,  Comm.  B.  7,  c.  1,  p. 
614,  615,  5th  ed. ;  Ersk.  Inst.  B.  3,  tit.  3,  §  19).  Nor  does  it  appear  to  me 
that  the  doctrine  of  Lord  Stair  (1  Stair,  Inst.  B.  1,  tit.  16,  §  3),  is  intended  to 
be  different,  notwithstanding  the  suggestion  of  Lord  Wynford.  In  Gould  v. 
Gould,  6  Wend.  263,  the  Court  of  Errors  of  New  York  held,  that,  in  the  ab- 
sence of  all  proof  to  the  contrary,  partners  will  be  presumed  to  be  equally 
interested  in  the  partnership  funds.  See  Harrison  v.  Sterry,  5  Cranch,  289. 
'  Thompsons.  Williamson,  7  Bligh,  n.  s.  432;  s.  C.  5  W.  &  Shaw,  16. 
[Rut  see  a  later  decision  by  Vice  Chancellor  Wigram,  Webster  v.  Bray,  7 
Hare,  159,  177,  and  another  by  Lord  Cottenham,  Stewart  v.  Forbes,  1  Hall  & 
Tw.  461,  4  72  ;  .s.  c.  1  Macn.  &  G.  137.  In  the  latter  case  the  Lord  Chancellor 
refers  to  Peacock  v.  Peacock,  and  says  :  "  In  that  case  it  was  properly  held, 
that,  in  the  absence  of  any  contract  between  the  parties,  or  any  dealing  from 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  37 

America  the  authorities,  as  far  as  they  go,  seem  decidedly 
to  favor  the  doctrine  of  Lord  Eldon.^ 

which  a  contract  might  be  inferred,  it  would  be  assumed,  that  the  parties  had 

carried  on  business  on  terms  of  an  equal  partnership But  what  would 

have  been  the  decision  in  Peacock  v.  Peacock,  if  the  books  and  accounts, 
instead  of  absolute  silence  as  to  the  shares  of  the  partners  in  each  year,  had 
described  the  shares  in  which  the  partners  were  interested  in  the  business, 
and  had  attributed  to  the  plaintiff  four  sixteenths  only  of  the  shares  of  the 
business  ?  These  entries  are  as  conclusive  of  the  rights  of  the  parties,  as  if 
they  had  been  found  prescribed  in  a  regular  contract."]  { Thompson  v.  Wil- 
liamson (7  Bligh,  N.  s.  432)  was  a  decision  on  the  Scotch,  not  on  the 
En<rlish  law.  From  the  report  of  this  case  in  the  Scotch  Court  of  Session 
(au6  nom.  Campbell  v.  Thomson,  7  Court  of  Sess.  cases,  No.  333,  p.  650) 
it  appears  that  the  defender  contended  "  that  there  was  no  universal  rule  of 
law  establishing  a  presumption  of  equality  in  partnership ;  that  it  was  a  ques- 
tion of  circumstances  to  be  decided  by  a  jury,"  while  the  pursuers  maintained 
"that  in  the  absence  of  any  written  evidence  to  establish  the  extent  of  a 
partner's  share,  the  presumption  by  the  law  of  Scotland  was  equality."  The 
court  found  for  the  pursuers,  and  as  Lord  Wynford  says  (7  Bligh,  x.  s.  433) 
"took  upon  themselves  to  declare  that  when  there  is  no  express  contract" 
the  partnership  property  and  profits  must  be  equally  divided,  or  in  the  words 
of  Lord  Brougham  (7  Bligh,  N.  s.  440)  they  decided  that  "unless  there  be 
a  special  contract  to  exclude  the  legal  presumption,  the  legal  presumption 
shall  give  him  [the  partner]  an  equal  share  of  the  profits,  and  shall  exclude 
all  evidence  of  the  fact ;  excluding  all  consideration  of  the  particular  circum- 
stances of  the  case."  It  was  this  decision  "taking  it  simply  as  a  question  of 
Scotch  law,  deciding  nothing  further,  as  it  is  our  rule,  or  ought  to  be  our  rule, 
in  no  case  to  go  further  than  the  simple  question  before  us,"  (7  Bligh,  N.  s. 
446)  which  was  reversed  ;  and  that  Thompson  v.  Williamson  has  not  been  con- 
sidered as  deciding  that  there  is  no  presumption  of  equality  seems  clear  from 
several  more  recent  cases  which  have  decided  that  there  is  such  a  presump- 
tion, without  an  intimation  that  such  decision  is  in  conflict  with  the  judgment 
of  the  House  of  Lords.  Collins  v.  Jackson,  31  Beav.  645;  Robinson  v.  An- 
derson, 20  Beav.  98,  s.  c.  7  De  G.  M.  &  G.  239.  In  this  latter  case.  Sir 
J.  L.  Knight-Bruce,  L.  J.,  says :  "  The  evidence  satisfies  us  that  the  result  of 
it  cannot  be  represented  more  favorably  for  the  defendant,  than  that  the 
statements  on  one  side  neutralize  those  on  the  other.  So  putting  it,  I  con- 
ceive that  the  presumption  of  law  remains,  which  is  equality ; "  and  Sir  G.  J. 
Turner,  L.  J. :  "  In  the  absence  of  evidence  of  an  agreement  for  a  different  divi- 
sion, the  presumption  is  in  favor  of  equality."  See,  also,  Lind.  on  P.  573-576  ; 
Robley  r.  Brooke,  7  Bligh,  n.  s.  90;  M'Gregor  i\  Bainbrigge,  7  Hare,  164,  n.; 
Copland  V.  Toulmin,  7  CI.  &  Fin.  349  ;  Warner  v.  Smith,  1  De  G.J.  &  S.  337.} 

'  3  Kent,  p.  28;  Gould  v.  Gould,  6  Wend.  263.  { Donelson  v.  Posey,  13 
Ala.  752;  Roach  v.  Perry,  16  III.  3  7.  Fan- r.  Johnson,  25  III.  522 ;  Moore 
0.  Bare,  11  Iowa,  198.  But  see  dissenting  opinion  of  Hoffman,  J.,  in  Ilas- 
brouck  V.  Childs,  3  Bosw.  105.} 


38  PARTNERSHIP.  [cHAP.  III. 

§  25.  The  Roman  law  promulgates  the  like  doc- 
trine. If  no  express  agreement  were  made  by  the 
partners  concerning  their  shares  of  the  profit  and  loss, 
the  profit  and  loss  were  shared  equally  between  them. 
If  there  was  any  such  agreement,  that  was  to  be  faith- 
fully observed.  Et  quidem  (say  the  Institutes),  si  nihil 
de  j^artihiis  lucri  et  damni  nomincdim  convenerit,  cequales 
scilicet  partes  et  in  lucro  et  in  damno  spectantur.  Quod  si 
ex2Jresscefu€rint2)artes,  hce  servari  dehent}  So  the  Digest. 
Si  non  fiierint partes  societati  adjectce,  cequas  eas  esse  con- 
stat.^ This  also  seems  to  be  the  rule  adopted  into  the  mod- 
ern commercial  law ;  but  then  it  is  received,  not  without 
some  modifications  and  qualifications.^  Thus,  Vinnius 
says,  that  this  doctrine  is  commonly  and  rightly  under- 
stood to  be  true,  when  the  partners  have  contributed 
an  equal  amount  to  the  capital  stock ;  for  if  they  have 
contributed  unequal  amounts,  then  they  are  to  share 
according  to  the  proportions  furnished  by  each.  Pufen- 
dorf  and  Noodt  adopt  the  like  interpretation  ;'*  although 
it  must  be  admitted,  that  there  are  other  jurists,  who 
construe  the  Roman  law  as  indiscriminately  applicable  to 
all  cases,  whether  of  equal  or  of  unequal  contributions, 
either  in  capital  or  stock,  or  in  labor  or  services,  or  in  a 
mixed  proportion  of  each.^ 

1  Inst.  3,  26,  1  ;  1  Voet,  ad  Pand.  17,  2,  n.  8,  p.  751  ;  Vinn.  Sel.  Quest. 
Jur.  c.  53,  54  ;   Domat,  1,  8,  1,  art.  4. 

"  D.  1 7,  2,  29 ;  Poth.  Pand.  1 7,  2,  n.  7. 

^  See  Vinn.  ad  Inst.  ed.  Ileinecc.  3,  26,  3,  p.  695,  Comm. ;  Van  Leeu- 
wen's  Comm.  B.  4,  c.  23,  §  10. 

*  Puf.  on  Law  of  Nat.  B.  5,  c.  8,  §  1 ,  2  ;  2  Noodt,  Opera,  Comm.  ad  Dig.  1 7, 
2,  29,  2,  p.  297,  298,  ed.  1767.  But  see  Vinn.  Sel.  Quest.  Jur.  c.  53,  54;  Vinn. 
ad  Inst.  3,  26,  2.    See  Asso  &  Manuel's  Inst,  of  Laws  of  Spain,  B.  2,  tit.  15. 

^  Ibid.;  5  Duvergier,  Droit  Civ.  Franc,  n.  224.  —  lieineccius  pays  this 
beautiful  tribute  to  the  memory  of  Noodt,  speaking  of  his  then  recent  death : 
"  Quern  eximium  jure  consultum,  dum  hsec  scribo,  ad  Superos  e.xcessisse,  non 
sine  dolore  audio.  Mortuum  saltern  nemo  dixerit,  qui  tot  egregiis  operibus 
immortalem  sibi  gloriam  peperit,  et  jam  vivus,  quodammodo  interfuit  posteri- 
tati."  Ilein.  Vinn.  ad  Inst.  3,  26,  1,  note.  {See  Hasbrouck  v.  Childs,  3 
Bosw.  105.J 


CHAP.  HI.]  COMMUNITY    OF    INTERESTS.  39 

§  26.  Pothier  himself,  while  he  admits  the  correctness 
of  the  general  rule  of  the  Roman  law,  suggests  some 
modifications,  or  rather  qualifications  of  it,  in  its  actual 
application.^  Where  each  partner  has  contributed  mon- 
ey or  effects  of  a  value  fixed  between  them  at  the  time, 
there,  he  says,  that  they  are  to  share  in  proportion  to  the 
value  so  fixed ;  and  that  they  are  to  share  equally,  only 
when  no  such  value  is  fixed.  Where  the  money  or  effects 
brought  into  the  partnership  are  so  estimated  at  a  fixed 
value,  his  opinion  is,  that  it  ought  to  make  no  difference 
as  to  the  partners  sharing  in  proportion  to  such  value, 
although  one  may  also  bring  a  higher,  or  peculiar  skill 
or  industry  into  the  firm.^  The  Civil  Code  of  France 
provides  that  the  share  of  each  partner  in  the  profits  or 
losses  is,  in  the  absence  of  any  other  agreement  in  the 
articles  of  partnership,  to  be  in  proportion  to  what  he 
brings  into  the  partnership  funds  ;  and  in  the  like  case, 
if  one  partner  brings  skill  only,  his  share  of  the  profits 
or  losses  is  regulated,  as  if  what  he  brought  in  had  been 
equal  to  that  of  the  partner  who  has  brought  the  least.^ 
The  Code  of  Louisiana  more  closely  adheres  to  the  Ro- 
man law,  and  declares,  that  when  the  contract  of  part- 
nership does  not  determine  the  share  of  each  partner  in 
the  profits  or  losses,  each  one  shall  be  entitled  to  an 
equal  share  of  the  profits,  and  must  contribute  equally 
to  the  losses.^ 

1  Potli.  de  Soc.  n.  15-20;  Id.  n.  73. 

^  Poth.  de  Soc.  n.  15-21 ;  Id.  n.  7.3.  See  also,  5  Duvergler,  Droit  Civ. 
Franc,  n.  12,  n.  224;  13  TouUier,  Droit  Civ.  Franc,  n.  411,  412. 

3  Code  Civil,  art.  1853.     {See  Hasbrouck  v.  Childs,  3  Bosw.  105.} 

*■  Code  of  Louisiana  (1825),  art.  2896.  —  Mr.  Watson  has  made  some  re- 
marks on  this  subject,  which  show  the  difficulty  of  making  a  suitable  appor- 
tionment of  profits,  in  many  cases,  where  there  is  no  express  agreement 
between  the  parties,  and  that  presumptions  of  very  different  force  and 
importance  may  arise  from  the  circumstances,  often  nicely  balancing  each 
other.  "But  with  respect  to  the  profit  and  loss"  (says  he),  "to  be  derived 
from  a  partnership,  the  subject  of  which  comprises  the  capital,  stock,  and 


I 


40  PARTNERSHIP.  [CHAP.  III. 

§  27.  These  two  circumstances,  that  there  is  a  commu- 
nity of  interest  in  the  capital  stock,  and  also  a  commu- 

interest  of  each  partner  therein,  together  with  the  labor  and  skill  to  be  em- 
ployed, and  the  division  thereof,  what  natui-ally  occurs  on  point  of  distribu- 
tion seems  to  be  this,  that  if  each  partner  contributes  an  equal  proportion 
of  capital,  stock,  and  labor,  and  skill,  then  each  must,  according  to  justice, 
receive   an  equal  share   in  the  profit  and  loss;   but  where  they  contribute 
imequally,  certain  rules  should  be  prescribed  according  to  the  circumstances 
of  the  partnership,  for  the  purpose  of  adjusting  the  respective  shares  of  all 
the  partners.     For  instance,  if  one  partner  furnishes  labor,  and  the  other 
money,  whatever  the  produce  of  such  partnership  trade  may  amount  to,  it 
should  seem  right  to  divide  it,  after  deducting  the  sum  advanced,  in  the 
proportion  of  the  interest  of  the  money  to  the  wages  of  the  labor,  allowing 
such  a  rate  of  interest  as  money  might  be  borrowed  for  upon  the  same  species 
of  security,  and  such  wages  or  allowance  as  a  skilful  workman  would  be 
entitled  to,  for  the  same  degree  of  labor  and  a  similar  trust,  according  to  the 
principle  laid  down  in  the  civil  law,  which  says,  that  no  man  doubts,  but 
that  partnership  may  be  entered  into  by  two  persons,  when   one  of  them 
only  finds  money,  inasmuch  as  it  often  happens,  that  the  work  and  labor  of 
the  other  amounts  to  the  value  of  it,  and  supplies  its  place.     For  in  partner- 
ships, where  on  the  one  side  labor  is  contributed,  and  on  the  other,  only  the 
use  of  money,  that  partner,  who  contributed  the  money,  does  not  always 
admit  the  other  to  a  share  of  the  principal,  but  only  to  his  share  of  the 
profit,  which  such  labor  and  money  joined  together  might  produce.     And  if 
A.  for  instance,  who  furnishes  labor  only,  hath  no  title  to  any  part  of  the 
money  advanced  upon  dissolving  the  partnership,  so  B.  alone  should  be  liable 
to  the  risk  of  the  money,  as  owner  thereof;   for  in  such  a  case  it  is  not 
the  money  itself,  but  the  risk,  which  it  runs,  and  the  probable  gain,  which 
may  accrue  from  it,  that  are  to  be  compared  with  the  labor.     Therefore, 
when  the  profits  of  such  a  partnership  are  to  be  shared,  it  would   be   out   of 
all  proportion  in  point  of  reciprocal  advantage,  if  the  labor  were  to  be  com- 
pared with  the  principal  sum  advanced ;  and  the  only  fair  criterion  to  judge 
by  is  a  true  comparison  between  the  value  of  the  labor  on  one  side,  and  the 
risk  and  hazard  which  the  money  advanced  is  exposed  to  on  the  other. 
And  perhaps  the  better  way  in  forming  partnerships  of  this  sort,  is  to  rate 
the  risk  of  the  principal,  and  the  hopes  of  the  profit,  according  to  the  in- 
terest that  is  generally  given  for  money  so  borrowed   upon   risk.     Suppos- 
ing, then,  this  interest  to  be  £5  per  cent ;    if  one  party  contributes  labor 
worth  £50,  and  the  other  advances  £1,000  in  money,  each  partner  will  share 
equally   the   profit.      According  to   this   rule,  if  there   should   be   nothing 
gained  by  the  partnership  concern,  A.  would  lose  his  labor,  and  B.  his  in- 
terest, which  would  be  equal  and  just.     And  should  the  original   stock  be 
diminished,  by  the  same  rule  A.  loses  only  his  labor,  whereas  B.  would  lose 
his  interest  and  a  part  of  the  principal ;  for  which  eventual  disadvantage  B. 
is  compensated  by  having  the  interest  of  his  money  computed  at  five  pounds 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  41 

nity  of  profit  and  loss,  in  the  sense  already  stated,  in  all 
the  partners,  where  they  exist,  are  decisive  that  the  case 

per  cent  in  the  division  of  the  profits,  where  there  are  any.  But  it  some- 
times happens  in  partnershij)  concerns,  that  labor  and  money  are  so  blended 
or  interwoven  together,  as  to  give  to  him,  that  contributed  only  his  labor,  a 
share  in  the  principal;  the  labor  contributed  by  one  partner,  and  the 
money  advanced  by  the  other,  being  so  intermixed  as  to  make  one  general 
mass.  As  for  example,  one  partner  spends  the  money  advanced  by  him  in 
buying  up  unwrought  materials,  and  the  other  furnishes  personal  skill  and 
labor  to  work  them  up  and  manage  them,  which  very  ol'ten  happens  in  large 
manufacturing  towns.  Thus,  again,  if  I  supply  a  weaver  with  £100  to  buy 
wool,  and  he  makes  cloth  of  it,  computing  his  labor  at  £lOO,  it  is  manifest, 
that  here  both  of  us  have  an  equal  interest  in  the  cloth,  and  when  it  is  sold, 
the  money  must  be  equally  divided ;  nor  in  fairness  could  I  deduct  the  £100 
contributed  at  first,  and  then  divide  the  remainder  with  him.  This  rule 
obtains  in  other  things  as  well  as  money ;  as  when  one  allows  ground  for  a 
building,  on  condition  that  he,  who  builds  thereon,  shall  have  a  moiety ;  or, 
when  one  trusts  a  flock  to  be  fed  on  condition,  that,  if  it  be  sold  within  a 
limited  time,  the  money  shall  be  proportionably  divided  amongst  the  part- 
ners. Therefore,  the  profit  or  loss  to  be  derived  from  trade  by  partners 
ought  always  to  be  arranged  and  provided  for  at  the  commencement  of 
their  partnership,  according  to  certain  agreed  proportions."  Wats,  on  P.  c. 
1,  p.  57-59,  2d  ed.  See  also  on  the  same  jwiut  Voet,  ad  Pand.  17,  2,  n.  8  ; 
and  Vinn.  Sel.  Quest.  Jur.  c.  53,  54 ;  Duvergier,  Droit  Civil  Franc,  n.  244- 
288;  17  Duranton,  Droit  Civil  Franc,  n.  415-433;  Poth.  de  Soc.  n.  15-20  ; 
Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  106,  107,  2d  ed.,  cites  Puf.  Lib.  5,  c.  8  ;  Van 
Leeuwen's  Comm.  B.  4,  c.  23,  §  10;  Asso  &  Manuel's  Inst,  of  Laws  of  Spain, 
B.  2,  tit.  15.  Mr.  Rutherforth,  in  his  Institutes  (B.  1,  c.  13,  §  32-3(i),  has 
fully  discussed  the  subject;  and  his  remarks  are  so  just  and  appropriate,  that 
they  are  here  cited.  "  In  partnerships  of  trade,  goods,  or  money,  or  labor, 
under  which  I  Include  skill,  or  management,  ai-e  by  the  consent  of  their  re- 
spective owners,  united  into  one  common  stock.  Each  partner  has  in  view  a 
benefit  to  be  received  for  a  benefit  which  he  gives.  The  separate  stock  of  any 
of  the  partners  alone  might  be  too  small  to  trade  with,  in  the  manner  pro- 
posed ;  or  the  nature  of  the  undertaking  may  require  not  only  more  goods 
or  more  money  than  any  one  of  them  could  supply,  but  more  labor  or  more 
skill  than  any  one  of  them  is  equal  to.  The  gain,  arising  from  the  common 
stock  of  goods  or  money,  is  the  price  obtained  for  the  use  of  those  goods  or 
money  ;  and  the  gain,  arising  from  their  joint  labor,  is  the  wages  obtained 
for  such  labor.  If  we  consider  the  gain  in  this  view,  it  is  easy  to  determine 
what  proportion  of  it  each  partner  ougiit  to  receive.  In  whatever  proj)or- 
tion  the  use  of  one  partner's  goods  is  more  valuable  than  the  use  of  the  other 
partner's  goods,  so  much  more  of  the  gain  belongs  to  the  former,  than  to  the 
latter.  I  do  not  mean,  that  in  dividing  the  gain,  any  regard  is  to  be  had  to 
the  particular  share  of  it,  which  arose  accidentally  from  the  goods  contrib- 


42  PARTNERSHIP.  [cHAP.  III. 

is  one  of  real  partnership  between  the  parties  them- 
selves.^    But  it  is  not  essential  in  all  cases,  to  constitute 

uted  by  this  or  that  partner ;  but  that  after  the  goods  are  united  in  a  joint 
stock  by  agreement,  each  partner  has  a  claim  to  the  gain  arising  from  it,  in 
proportion  to  what  was  the  probable  value  of  the  use  of  his  goods,  if  he  had 
traded  with  them  separately.  And  as  the  probable  value  of  the  use  is  in 
proportion  to  the  value  of  the  goods  themselves,  each  partner's  claim  upon 
the  gain  will  be  in  the  same  proportion.  In  like  manner,  where  there  is  a 
joint  labor,  since  the  profits  arising  from  it  are  the  wages  of  that  joint  labor, 
each  partner  has  a  claim,  not  to  that  particular  part  of  the  gain  which  his 
labor  earned,  for  then  it  would  be  no  partnership,  but  to  such  a  compara- 
tive share  out  of  the  common  wages  or  gain,  as  is  proportional  to  the  value 
of  his  labor,  when  compared  with  the  labor  of  the  other.  As  the  gain  of 
each  partner,  so  likewise  the  loss  of  each  ought  to  be  proportionable  to  the 
value  of  what  he  contributes.  As  much  as  the  goods,  which  one  partner 
contributes,  exceed  in  their  value  the  goods,  which  the  other  contributes,  so 
much  greater  is  the  claim  of  the  former  upon  the  joint  stock,  than  the  claim 
of  the  latter.  Since,  therefore,  their  respective  claims  upon  the  whole  stock 
are  in  jiroportion  to  the  share  of  that  stock,  which  came  originally  from 
each  of  them,  their  claim  upon  each  part  of  the  whole  must  be  in  the  same 
proportion.  And,  consequently,  if  any  part  of  the  stock  is  lost,  each  part- 
ner having  a  claim  upon  such  part  lost  in  proportion  to  his  original  share, 
loses  a  claim  in  the  same  proportion,  that  is,  the  loss  of  each  is  in  proportion 
to  the  original  share  which  he  contributed  towards  the  common  stock.  This, 
then,  is  the  rule  for  adjusting  the  gain  and  loss  in  partnerships,  where  no  ex- 
press agreement  has  been  made  to  the  contrary.  Each  partner  is  to  receive 
such  a  share  of  the  gain,  or  to  bear  such  a  share  of  the  loss,  as  has  the  same 
proportion  to  what  any  other  of  the  partners  receives  or  bears,  that  the  share 
contributed  by  the  former  has  to  the  share  contributed  by  the  latter.  The 
interest  or  claim  of  each  upon  the  whole  stock  is  in  this  proportion;  and,  con- 
sequently, the  interest  or  claim  of  each  in  the  increase  or  decrease  of  it,  in  any 
part  added  to  it  by  way  of  gain,  or  in  any  part  taken  from  it  by  way  of  loss, 
ought  to  be  in  the  same  proportion.  If  the  parties  agree,  that  one  of  them 
shall  have  a  share  in  the  gain,  but  shall  bear  no  share  in  the  loss,  the  contract 
is  a  mixed  one  ;  it  is  partly  partnership,  and  partly  insurance.  As  they  are 
all  of  them  to  have  a  share  in  the  gain,  it  is  partnership ;  but  he  or  they,  who 
are  to  bear  all  the  loss,  insure  the  principal  stock  of  him  who  is  to  bear  none 
of  it.  To  adjust  the  shares,  which  each  party,  in  such  a  mixed  contract,  is  to 
receive  in  the  gain,  we  are  to  consider  what  it  is  worth  to  insure  his  principal, 
■who  is  not  subject  to  any  loss.     And  when  the  value  of  such  insurance  is  de- 


'  Dob  V.  Halsey,  16  Johns.  34  ;  3  Kent,  24 ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p. 
11-17;  2d  ed. ;  Ex  parte  Gellar,  1  Rose,  297.  [See  also  Rawlinson  v.  Clarke, 
15  M.  &  W.  292 ;  Allen  v.  Davis,  8  Eng.  (Ark.)  28.]  {As  to  what  constitutes 
persons  partners  inter  sese,  as  well  as  to  third  persons,  see  the  next  chapter. } 


CHAP.   III.j  COMMUNITY    OF    IN'TERESTS.  43 

such  a  partnership,  that  both  should  concur,  that  is,  that 
there  should  exist,  as  between  the  parties  themselves,  a 

ducted  from  the  whole  gain,  and  assigned  to  those  who  were  to  have  borne 
all  the  loss,  if  there  had  been  any,  the  remaining  portion  is  to  be  divided,  in 
proportion  to  each  party's  share  in  the  capital  stock.  It  is  generally  main- 
tained to  be  contrary  to  the  nature  of  partnerships,  that,  where  a  capital  stock 
is  made  by  mutual  consent,  the  parties  so  forming  a  capital  stock  should  agree, 
that  one  of  them  should  have  all  the  gain,  and  the  other  bear  all  the  loss. 
And  certainly  such  an  agreement  is  contrary  to  the  nature  of  partnership,  if 
we  define  partnership}  to  be  a  contract,  which  gives  the  parties  a  common  claim 
to  the  joint  stock ;  because,  where  they  have  a  common  claim  to  the  stock, 
they  must,  in  consequence,  have  a  common  claim  to  the  gain  arising  from  it, 
and  to  the  losses  sustained  in  it.  But  such  an  agreement,  though  it  may  be 
inconsistent  with  the  nature  of  partnership,  is  not  inconsistent  with  the  law  of 
common  justice.  A  man  wants  five  hundred  pounds  capital  stock,  to  enter 
upon  a  certain  branch  of  trade  ;  he  has  only  three  hundred  pounds  of  his  own. 
I  agree  to  let  him  have  two  hundred  pounds  to  make  up  his  capital,  upon  con- 
dition, that  he  shall  have  all  the  advantage  arising  from  the  whole ;  that,  if 
he  saves  the  whole  capital,  my  money  shall  be  returned,  but  that  if  any  part 
of  it  is  lost.  1  will  bear  the  loss,  as  far  as  the  two  hundred  pounds,  which 
I  have  advanced.  There  can,  I  think,  be  no  question,  whether  the  law  of 
nature  would  allow  of  such  an  act  of  humanity  as  this.  You  may  say,  that 
such  an  agreement  is  contrary  to  the  law  of  partnership.  I  grant  it  is,  and 
therefore  am  satisfied,  that  it  should  not  be  called  a  partnei-ship.  I  only 
insist,  that  the  agreement  is  not  contrary  to  the  law  of  nature,  and  leave  it 
to  you  to  call  it  by  what  name  you  please.  Perhaps  you  may  have  no  name 
for  it;  but  a  contract  is  not  the  more  unlawful  for  wanting  a  name.  In 
partnership,  where  work  is  contributed  on  one  side,  and  money  on  the 
other,  the  partner,  from  whom  the  money  comes,  may  contribute  either  the 
use  only  of  the  money,  or  the  property  of  it.  If  he  contributes  only  the  use 
of  it,  and  still  keeps  his  property  in  the  principal,  so  that  the  joint  stock  is 
to  be  considered  as  made  up  of  the  labor  of  one  partner,  and  of  the  use  of 
the  other's  money;  it  is  plain,  that,  supposing  the  principal  to  be  safe,  it  be- 
longs to  him,  and  that,  supposing  it  to  be  lost,  he  alone  is  to  bear  such  loss. 
The  other  partner,  who  contributes  work,  since,  as  the  case  is  put,  he  had 
no  claim  to  the  principal  money,  or  to  any  part  of  it,  cannot  be  obliged  to 
make  good  any  part  of  that  loss,  or  to  bear  any  share  in  it.  But  if  he  con- 
tributes the  property  of  his  money,  so  that  the  joint  stock,  upon  which  each 
of  them  has  a  common  claim,  is  made  up  of  his  principal  money,  and  of  the 
other's  labor,  then  the  partner,  who  labors,  has  a  claim  upon  the  principal 
money  itself;  and,  consequently,  whenever  the  partnership  is  dissolved,  if 
the  principal  money,  or  any  part  of  it  is  safe,  he  ought  to  have  a  share  in  it ; 
and  if  the  principal  is  lost,  he  is  a  sufferer  by  losing  such  share.  In  the 
former  case,  where  he,  from  whom  the  money  comes,  still  keeps  his  jjroj)- 
erty  in  it,  and  has  a  right  to  the  whole  principal,  you  may  ask,  what  it  is, 


44  PARTNERSHIP.  [cHAP.  III. 

community  or  communion  of  interest  in  the  capital  stock, 
and  also  in  the  profit  and  loss.^  For,  if  the  whole  capital 
stock,  embarked  in  an  enterprise  or  adventure,  belongs  to, 
and  is,  by  agreement,  to  remain  the  exclusive  property  of 
one  of  the  parties ;  yet,  if  there  is  a  community  of  profit 
or  of  profit  and  loss,  in  the  enterprise  or  adventure,  be- 
tween all  the  parties,  they  will  be  partners  in  the  profit, 
or  the  profit  and  loss,  between  themselves,  as  well  as  to 
third  persons,  although  not  partners  in  the  capital  stock.^ 
The  one  does  not  necessarily  include  the  other,  and  there- 
fore we  are  carefully  to  distinguish  between  the  cases. 
Where  there  is  a  positive  agreement  between  the  parties 

■which  he  contributes.  But  the  answer  is  obvious.  He  contributes  the  use 
of  his  money ;  that  is,  he  contributes  the  clear  gain,  which  he  might  proba- 
bly have  made  of  it  himself.  This,  however,  is  not  all.  He  contributes, 
besides  this,  the  hazard  of  his  principal;  because,  if  the  whole  or  any  part  of 
it  should  be  lost,  the  loss  is  his.  In  order,  therefore,  to  adjust  the  share 
which  each  partner  ought  to  have  in  the  gain,  if  there  is  any,  you  are  to 
value  the  work  of  one,  and  the  use  and  hazard  of  the  other's  money;  and 
in  proportion  to  the  value  contributed  by  each  of  them,  upon  such  an  esti- 
mate, their  respective  gains  are  to  be  settled.  In  the  other  case,  where  he, 
from  whom  the  money  comes,  contributes  the  property  of  it,  and  the  other 
contributes  his  labor,  in  adjusting  their  respective  shares  of  the  gain,  you  are 
to  value  the  money  of  one  and  the  labor  of  the  other.  And  when  the  com- 
parative values  of  what  each  has  contributed  are  thus  settled,  their  respective 
shares  in  the  gain  are  to  be  in  the  same  proportion." 

1  {Meaheru.  Cox,  37  Ala.  201.} 

«  Ex  parte  Hamper,  17  Ves.  403.  {See  §  55-58,  205;  Lind.  on  P.  16, 
17,  551  ;  Greenham  v.  Gray,  4  Ir.  C.  L.  501  ;  Fromont  v.  Coupland,  2  Bing. 
170 ;  French  v.  Styring,  2  C.  B.  N.  s.  357 ;  Ward  v.  Thompson,  22  How.  330  ; 
Bromley  v.  Elliot,  38  N.  H.  287,  309;  Stevens  v.  Faucet,  24  III.  483;  Rob- 
bins  r.  Laswell,  27  111.  365;  Fawcett  v.  Osborn,  32  111.  411  :  Bartlett  t\  Jones, 
2  Strobh.  471 ;  Jones  v.  McMichael,  12  Rich.  Law,  176.  This  doctrine  is  de- 
nied in  Dwinel  v.  Stone,  30  Me.  384.  Chase  v.  Barrett,  4  Paige,  148,  is  also 
sometimes  referred  to  as  an  authority  in  opposition  to  the  views  of  the  text. 
But  it  is  to  be  observed  that,  though  Chancellor  Walworth  saj's  that  to  con- 
stitute a  partnership  there  must  be  a  joint  ownership  of  the  partnership  funds, 
yet  the  point  decided  was,  that  A.,  an  alleged  partner,  could  not  share  in  the 
capital  stock,  and  the  decision  can  be  sustained  not  only  on  the  ground  that 
A.  was  not  a  partner,  but  also  on  the  ground  that  though  he  was  a  partner, 
yet  that  the  capital  stock  remained,  in  the  words  of  the  text,  "  the  exclusive 
property"  of  his  copartner.     See  Conklin  v.  Barton,  43  Barb.  435.} 


CHAP.   III.]  COMMUNITY    OF    INTERESTS.  45 

on  this  point,  that  "will  govern  ;  where  there  is  no  such 
agreement,  and  no  implication  from  the  circumstances  of 
the  particular  case,  leading  to  a  different  conclusion,  there 
will  be  presumed  to  be  a  community  of  interest  in  the 
property,  as  well  as  in  the  profit  and  loss.^  Where  the 
property  of  one  partner  only  is,  by  agreement,  actually 
put  into  community,  as  partnership  property,  there,  in  the 
absence  of  any  controlling  stipulations,  the  like  commu- 
nity in  the  profit  and  loss  will  be  intended  to  exist  between 
the  parties,  as  incident  to  the  community  of  property.® 
But  where  the  agreement  merely  in  terms  expresses  that 
the  property  is  furnished  by  one  partner,  and  the  parties 
are  to  have  a  community  of  interest,  and  share  in  the  prof- 
it and  loss,  the  like  inference  is  not  ordinarily  or  necessa- 
rily deducible.^  And  accordingly  it  has  been  held  at  the 
common  law,  that  if  A.  is  the  owner  of  goods,  and  agrees 
with  B.,  that  B.  shall  be  interested  in  a  particular  por- 
tion of  the  profit  and  loss  of  the  adventure  or  voyage 
abroad,  in  which  the  goods  are  to  be  embarked,  such  an 
agreement  will  not  alone  make  A.  and  B.  partners  in  the 
goods,  as  between  themselves,  but  only  partners  in  the 
profits.^  But,  if  the  goods  themselves  are  purchased  on 
joint  account,  or  are  treated  as  a  joint  concern,  or  both 
parties  are,  by  their  agreement,  to  be  interested  therein ; 
there,  a  very  different  inference  will  arise,  and  the  parties 
will  be  treated  as  partners  in  the  goods,  as  well  as  in  the 

'  Coll.  on  P.  B.  2.  c.  1,  §  2,  p.  106-113,  2cl  ed.  See  Brophy  v.  Holmes, 
2  Molloy.  1.     {See  Julio  v.  Ingalls,  1  All.  41.} 

2  Reid  v.  HoUinshead,  4  B.  &  C.  867. 

3  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  106-112,  2d  ed. ;  Mair  v.  Glennie,  4  M.  & 
S.  240. 

"  Meyer  v.  Sliarpe,  5  Taunt.  74:  Smith  v.  Watson,  2  B.  &  C.  401  ;  Coll. 
on  P.  B.  2.  c.  1,  §  2,  p.  107-112,  2d  ed. ;  Hesketh  v.  Blanchard.  4  East.  144  ; 
Ex  parte  Hamper,  1  7  Ves.  403  ;  ]\Iair  v.  Glennie,  4  M.  &  S.  240;  [E.xplained 
In  Stocker  r.  Brockelbank,  3  Macn.  &  G.  250  ;  5  Eng.  L.  &  Eq.  67];  Hall  v. 
Leigh,  8  Craneh,  50;  [Clement  v.  Hadlock,  13  N.  H.  185.] 


46  PARTNERSHIP.  [cHAP.  III. 

profits  and  losses.^  The  like  doctrine  will  apply,  where 
each  of  the  parties  contributes  labor  and  services  and 
materials  in  the  manufacture  of  any  articles  of  trade,  and 
the  articles,  when  made,  are  to  be  equally  or  proportion- 
ably  shared  between  them  ;  they  will  be  deemed  partners, 
inter  sese  ;  for  the  articles  manufactured,  and  so  to  be 
divided,  may  well  be  deemed  the  profits  or  losses  of  their 
joint  undertaking  and  business.  It  is  not  a  mere  division 
of  a  capital  stock  jointly  purchased,  but  of  a  capital 
stock  in  new  proceeds  or  products." 

§  28.  The  like  distinction  is  recognized  and  maintained 
by  foreign  jurists.  Pufendorf  says :  "  Upon  breaking  up 
of  partnership,  if  each  party  only  contributed  money,  it 
is  plain,  upon  a  division,  that  each  must  receive  accord- 
ing to  his  contribution.  But  if  both  money  and  labor 
were  contributed,  it  must  be  considered  after  what  man- 
ner the  contribution  or  collection  was  made  ;  for  when 
labor  is  contributed  on  one  side,  and  only  the  use  of  mon- 
ey on  the  other,  he  who  contributed  the  money,  does  not 
admit  the  other  to  a  share  in  the  principal,  but  only  to 
his  proportion  of  the  gain  that  might  be  made  of  the 
money  and  labor  joined  together.  And  in  this  case,  as 
he  that  contributed  only  labor,  has  no  title  to  any  part  of 
the  money,  when  they  break  off"  partnership,  so  the  other 
alone,  as  owner,  is  concerned  in  the  risk  that  the  money 
is  exposed  to ;  and  in  such  a  partnership  as  this,  not  the 
money  itself,  but  the  risk  that  it  runs,  and  the  gain,  that 
may  be  probably  expected  from  it,  is  compared  with  the 
labor."  ^     He  afterwards  adds  :  "  But  sometimes  the  labor 

>  Reid  V.  Hollinshead,  4  B.  &  C.  867  ;  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  112, 
113,  2d  ed.;  Ex  parte  Gellar,  1  Rose,  297;  [Soule  v.  Ilayward,  1  Cal.  345]; 
{Sims  V.  Willing,  8  S.  &  R.  103.} 

*  Rlusier  v.  Trumpbour,  5  Wend.  274  ;  Everitt  v.  Chapman,  6  Conn.  34  7  ; 
[Wadsworth  v.  Manning,  4  Md.  59]  ;  3  Kent,  24,  25.  {But  see  Hitchings  v. 
Ellis,  12  Gray,  449.} 

^  Puf.  B.  5,  c.  8,  §  2,  by  Kennet,  and  Barbeyrac's  note. 


CHAP.  III.]  COMMUNITY    OF    INTERESTS.  47 

and  money  are  so  interwoven  together,  as  to  give  him  that 
contributed  only  his  labor,  a  share  even  in  the  principal ; 
the  labor  of  the  one,  and  the  money  of  the  other,  being  in 
a  manner  united  into  one  mass.  As  when  one  lays  out  his 
money  upon  unwrought  commodities,  and  another  spends 
his  labor  in  working  them  up,  and  managing  them. 
Thus,  if  I  give  a  weaver  £100  to  buy  wool,  and  he  makes 
cloth  of  it,  computing  his  labor  at  £100,  it  is  manifest 
that  here  both  of  us  have  an  equal  interest  in  the  cloth  ; 
and,  when  it  is  sold,  the  money  must  be  equally  divided. 
Nor  ought  I  to  subtract  the  money  that  I  contributed  at 
first,  and  then  divide  the  remainder  with  him."  ^ 

§  29.  The  like  distinction  is  asserted  by  Pothier. 
"  When  "  (says  he)  "  two  persons  contract  a  partnership 
between  themselves,  to  sell  in  common  certain  goods, 
which  belong  to  one  of  them,  and  to  share  the  proceeds, 
it  is  necessary  carefully  to  examine  what  is  their  inten- 
tion. If  the  intention  is  to  put  the  very  goods  into  part- 
nership, the  partnership  will  extend  to  the  same ;  and  if 
a  part  of  the  goods  perish  before  the  sale  proposed  by  the 
parties  is  made,  the  loss  will  be  borne  as  a  common  loss. 
But,  if  the  intention  is  to  put  into  partnership,  not  the 
goods  themselves,  but  the  price  which  shall  be  obtained 
therefor,  the  entire  loss  will  fall  upon  the  partner  to  whom 
the  goods  belonged."  ^  And  Pothier  adds,  that  the  like 
rule  will  apply  to  the  case  of  two  merchants,  who  are 
associated  for  the  sale  of  merchandise,  which  each  of 
them  has  in  his  own  shop.  It  will  depend  upon  the  na- 
ture of  their  agreement,  as  to  the  goods  being  brought 
into  partnership,  or  only  the  proceeds,  when  sold,  wheth- 
er, if  a  loss  takes  place,  it  is  to  be  borne  by  both  as  a 
common  loss,  or  by  the  original  owner  only.^  The  Ro- 
man law  was  equally  direct  and  expressive.     Cum  ires 

'  Puf.  B.  5,  c.  8,  §  2,  by  Konnct,  and  Barbeyrac's  note. 
*  Toth.  de  Soc.  n.  54.  ^  Ibid. 


48  PARTNERSHIP.  [cHAP.  III. 

equos  haberes,  et  ego  imum,  societatem  coimus,  itt,  accepto 
equo  uneo^  quadrigam  vender es,  et  ex  pretio  quartam  mihi 
redderes.  /Si  igitur  ante  venditionem  equus  mens  mor- 
tuus  sit,  non  putare  se,  Celsus  ait,  societatem,  manere, 
nee  ex  pretio  equoruni  tuorutn  partem  deheri ;  nee  enim 
habendoi  quadrigae,  sed  vendendce  coitam  societatem. 
Ceterum,  si  id  actuin  dicatur  ut  quadriga  Jieret,  eaque 
commimicareticr,  tuque  in  ea  tres  partes  haheres,  ego 
quartam,  non  duhie  adhuc  socii  sumus}  We  here  see 
the  distinction  clearly  laid  down  between  a  partnership 
in  the  capital  stock,  and  a  partnership  in  the  profits  or 
losses  arising  from  the  sale.  Ulpian  also  says :  Coiri 
societatem  et  simpliciter  licet ;  et  si  non  fuerit  distinc- 
tum,  videtur  coita  esse  universorum,  qum  ex  qucestu 
veniunt ;  hoc  est,  si  quod  lucrum  ex  em2)tione,  venditione, 
locatione,  conductione,  descendit.^  Vinniiis  has  put  the 
same  distinction  in  a  clear  light :  Possunt  igitur  duo  so- 
cietatem sic  coire,  ut  unus  ^^ec^wziom  conferat,  unde 
merces  emantur  et  negotiaiio  exerceatur ;  alter  operanfi 
duntaxat,  qui  proficiscatur  ad  merces  emendas,  emat  et 
vendat,  ut  sic  deinde  lucrum  commune  sit.  Ceterum  hcec 
collationon  icno  modojii ;  nam  aut  opera  confertur  cum 
solo  p>ecunim  usu,  quo  casu  sors  domino  peril,  et  si  salva 
est,  domino  salva  est ;  aut  oj^era  confertur  cum  ipso  do- 
minio j^ecunice,  quo  casu  qui  operam  impendit,p)articepsjit 
sortis.  In  2')rima  specie  comparatur  cum  opera  non  sors, 
sed  pericidum  amittendce  sortis,  et  lucrum,  quod  ex  ea 
prohahiliter  sperari  poierat.  In  altera  operoi  pretium, 
hahetur,  quasi  sorti  adjectum,  et  pro  eo,  quod  valet,  in 
ipsa  sorte  partem  hahet,  qui  operam  j)rcestat.^ 

'  D.  17,  2,  58;  Id.  17,  2,  58,  1  ;   Poth.  Pand.  17,  2,  n.  22;   Domat,  1,  8,  4, 
art.  14  ;  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  109,  2d  cd. 

2  D.  17,  2,  7  ;  Poth.  Pand.  17,  2,  n.  20;  Domat,  1,  8,  3,  art.  2. 
'  Vinn.  ad  Inst.  3,  26,  2,  n.  3,  p.  697. 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  49 


CHAPTER  IV. 

PARTNERSHIP    AS    TO    THIRD    PERSONS.^ 

30.  Community  of  property  does  not  of  itself  constitute  a  partnership. 

31.  Cases  where  it  may  constitute  a  partnership. 

32.  Community  of  profit  does  not  of  itself  constitute  a  partnership, 

33.  When  participation  in  the  profits  makes  one  a  partner. 

34.  Meaning  of  an  interest  in  the  profits,  as  profits. 

35.  Lord  Eldon  on  the  rule  that  interest  in  the  profits,  as  profits,  makes 

one  a  partner. 

36.  Remarks  on  the  rule. 

37.  Roman  and  foreign  law. 

38.  That  participation  in  the  profits  makes  one  a  partner  is  a  presumptive 

rule  only. 

39.  The  cases  will  be  found  in  harmony. 

40.  Cases  of  joint  shipment  and  purchase. 

41.  Cases  of  brokers  and  other  agents. 

42.  Cases  of  masters  and  seamen  of  vessels. 

43.  American  cases. 

44.  American  cases  of  masters  of  vessels. 

45.  46.  American  cases  of  the  manufacture  of  goods. 

47.  American  cases  of  agency. 

48.  A  mere  agent  is  not  a  partner. 

49.  The  intention  of  the  parties  should  govern. 

50.  Roman  law. 

51.  French  law, 

52.  The  distinction  of  the  common  law  defensible. 

53.  Liability  of  a  partner  to  third  persons. 

54.  Classification  of  cases  of  such  liability. 

55.  (1)   Community  of  profit  and  loss,  though  not  in  property. 
56-58.  Illustrative  cases. 

59.  (2)   Community  of  profit  and  loss,  where  there  is  no  property. 

60.  (3)  Participation  in  profits,  but  not  in  losses. 

61.  Illustrative  cases. 

62.  Roman  law. 

63.  These  three  classes  include  dormant  partnerships. 

64.  (4)   Holding  out  as  partner. 


'  {In  this  chapter,  notwithstanding  its  title,  the  author  treats  not  only  of 
cases  in  which  persons  are  partners  as  to  third  parties,  but  also  discusses 
largely  the  cases  in  which  they  are  partners  inter  sese.  \ 

4 


50  PARTNERSHIP.  [cHAP.  IV. 

§  65.  How  such  holding  out  may  arise. 

66.  (5)  Loans  and  annuities. 

67.  Test  of  liability  in  such  cases. 

68.  69.  Illustrative  cases. 

70.  Liability  of  trustees  and  executors  as  partners. 
Note. —  Subpartnership.} 

§  30.  In  considering  the  question,  when  and  under 
what  circumstances  a  partnership  may  exist,  as  to  third 
persons,  although  not  between  the  parties  themselves, 
we  are  led  to  the  remark,  that  there  may  be  a  community 
of  interest  in  property,  without  any  community  in  the 
profits  thereof,  as  well  as  a  community  of  interest  in  the 
profits,  without  any  community  in  the  property,  out  of 
which  they  are  to  arise. ^  The  absence  of  both  ingre- 
dients is  necessarily  decisive  that  no  real  partnership 
exists.  But  a  nice  and  difficult  question  may  arise,  and, 
indeed,  often  does  arise.  When  and  under  what  circum- 
stances, notwithstanding  the  absence  of  one  of  these  in- 
gredients, the  presence  of  the  other  will  still  be  deemed 
to  create  a  partnership  between  the  parties  themselves  ;  ~ 
or,  if  not  between  themselves,  yet  it  will  be  deemed  to 

1  {That  a  partnership  may  exist  without  community  in  property,  see§  27. | 
^  {  Who  are  partners  inter  sese.  The  community  of  both  profit  and  loss 
constitutes  a  partnership.  Green  v.  Beesley,  2  Bing.  N.  C.  108;  Brett  v. 
Beckwith,  3  Jur.  x.  s.  3L  In  Duryea  v.  Whitcomb,  31  Yt.  395,  an  agree- 
ment to  jointly  own  property  and  to  share  in  the  profit  and  loss  of  the  busi- 
ness was  held  to  be  by  necessary  legal  construction  an  agreement  for  part- 
nership, though  nothing  was  said  by  the  parties  about  a  partnership,  and 
though  they  were  not  aware  that  the  legal  effect  of  the  agreement  was  to 
create  one.  See  Meyers  v.  Field,  37  Mo.  434.  Mr.  Lindley  (Lind.  on  P.  13) 
says,  he  "  is  not  aware  of  any  case  in  which  persons  who  have  agreed  to 
share  profit  and  loss  have  been  held  not  to  be  partners."  The  only  case  in 
the  Supreme  Court  of  any  of  the  United  States  in  which  such  persons  seem 
held  not  to  be  partners  is  Dwinel  v.  Stone,  30  Me.  384.  There  persons  who 
shared  profit  and  loss  were  held  not  to  be  partners,  for  the  reason  that  they 
had  no  community  of  interest  in  the  property  (a  reason  not  supported  by  the 
•weight  of  authority,  see  §  27.)  The  facts  in  Dwinel  v.  Stone  are  not 
fully  disclosed,  and  it  is  possible  that  the  agreement  to  share  profit  and  loss 
■was  really  an  agreement  to  share  gross  returns,  as  Mr.  Lindley  suggests  to 
have  been  the  case  in  Mair  v.  Glennie,  4  M.  &  S.  240 ;  if  this  was  so,  the 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  51 

exist  as  to  third  persons.^  It  may  be  laid  down  as  a 
general  rule,  that  in  all  such  cases  no  partnership  will 
be  created  between  the  parties  themselves,  if  it  would 
be  contrary  to  their  real  intentions  and  objects.  And 
none  will  be  created  between  themselves  and  third  per- 
sons, if  the  whole  transactions  are  clearly  susceptible  of 
a  different  interpretation,  or  exclude  some  of  the  essen- 
tial ingredients  of  partnership.^  Thus,  for  example,  as 
has  been  already  intimated,  if  two  persons  should  agree 

decision  that  no  partnership  existed  was  in  accordance  with  the  current  of 
authority;  vide  infra.     See  Smith  v.  Wright,  5  Sand.  113. 

Though  nothing  be  said  about  losses,  yet  an  agreement  to  share  profits  is 
presumptively  an  agreement  to  share  losses  also,  and  therefore  constitutes  a 
partnership.  Hodgman  v.  Smith,  13  Barb.  302;  Cox  v.  Delano,  3  Dev.  89; 
Perry  v.  Butt,  14  Ga.  699  ;  Miller  v.  Hughes,  1  A.  K.  Marsh.  181 ;  Lind.  on 
P.  13.  But  even  though  indemnity  against  losses  is  stipulated  tor,  yet  prima 
facie  an  agreement  to  share  profits  is  an  agreement  for  j^ai'tnership.  Lind. 
on  P.  1  7.  Whether  persons  are  to  be  partners,  at  any  rate  inter  sese,  in  this 
class  of  cases  depends  on  intention.  To  determine  whether  the  intention  was 
to  create  a  partnership  or  not,  the  fact  whether  a  community  of  property  has 
or  has  not  been  created  is  strong  though  not  conclusive  evidence.  Lind.  on 
P.  16  ;  Julio  V.  Ingalls,  I  All.  41 ;  Ellsworth  v.  Pomeroy,  26  Ind.  158.  Per- 
sons may  not  be  partners  although  they  call  themselves  so.  R-idclitfe  v.  Rush- 
worth,  33  Beav.  484;  Oliver  v.  Gray,  4  Ark.  425. 

The  chief  classes  of  cases  in  which  sharino;  in  profits  has  been  held  not  to 
make  persons  partners  inter  sese  are — 1.  Sharing  in  gross  returns  (see  § 
34) ;  2.  Sharing  in  joint  shipments  and  purchases ;  3.  Sharing  by  agents ; 
4.  Sharing  by  seamen  and  masters  of  vessels;  5.  Sharing  by  landlords; 
6.  Sharing  by  manufacturers  of  goods ;  7.  Sharing  by  carriers  (classes 
2-7  are  considered  in  §  40-47,  58  a);  8.  Sharing  by  lenders  and  annui- 
tants (see  §  66-69) ;  9.  Sharing  by  creditors,  trustees,  &c.  (See  §  70.) 
See  further  on  the  subject,  §  146-151. 

As  persons  who  are  partners  inter  sese  are  liable  as  partners  to  third  per- 
sons, cases  in  which  persons  have  been  held  not  liable  as  partners  to  third 
persons  are  a  fortiori  authorities  to  show  that  they  were  not  partners  inter 
sese.  Cases  in  which  persons  who  are  not  partners  inter  sese  have  yet  been 
held  liable  as  such  to  third  persons  will  be  considered  infra.     Note  to  §  49.} 

'  See  Gibson  v.  Lupton,  9  Bing.  297;  Post  r.  Kimberly,  9  Johns.  4  70; 
Geddes  r.  Wallace,  2  Bligh,  270;  Hazard  v.  Hazard,  1  Story,  371.  See  1 
Sm.  Lead.  Cas.  504,  &c.,  2d  ed.,  note  to  Waugh  v.  Carver. 

*  {This  rule  of  the  author  is  disapproved  by  Mr.  Justice  Bell  in  Bromley 
V.  Elliot,  38  N.  H.287,  306,  "as  laid  down  by  a  plausible  writer,  but  often 
superficial  thinker."] 


52  PARTNERSHIP.  [cHAP.  IV. 

to  purchase  goods  on  joint  account  in  certain  propor- 
tions, without  any  intention  to  sell  them  on  joint  account, 
or  to  be  jointly  concerned  in  the  future  sale,  this  will 
give  them  a  community  of  interest  in  the  property,  when 
purchased,  but  will  not  make  them  partners  ;  and  they 
will  be  joint  tenants  or  tenants  in  common  thereof,  ac- 
cording to  circumstances.^  And  it  will  make  no  differ- 
ence, whether  the  purchase  is  made  in  their  joint  names, 
or  in  the  name  of  one  of  them,  or  through  the  instru- 
mentality of  an  agent."  In  cases  of  this  sort  one  essen- 
tial ingredient,  that  of  a  communion  of  profit  and  loss, 
is  wanting.^  Upon  similar  principles,  if  two  persons 
agree  to  do  a  particular  piece  of  work,  but  the  money 
received  for  the  work  is  not  to  be  employed  on  their 
joint  account,  or  for  their  joint  benefit,  the  persons  so 
contracting  are  not  partners,  but  merely  joint  contract- 
ors.^ So,  if  two  joint  owners  of  merchandise  should 
consign  it  to  the  same  consignee  for  sale,  informing  him, 
that  each  owns  a  moiety  thereof,  and  should  give  him 
separate  and  distinct  instructions,  each  for  his  own  share, 
as  to  the  sales  and  returns,  they  would  not  be  partners 
in  the  adventure  ;  but  each  would  be  deemed  entitled  to 

'  Ante,  §  3  ;  3  Kent,  25,  2G  ;  Coope  t'.  Eyre,  1  H.  Bl.  37  ;  Gow  on  P.  c.  1, 
p.  10,  11,  3d  ed. ;  Id.  c.  4,  p.  153,  154  ;  Smith  v.  Watson,  2  B.  &  C.  401 ; 
Harding  i\  Foxcroft,  6  Greenl.  76  ;  Jackson  v.  Robinson,  3  Mason,  138.  {So 
a  joint  purchase  of  land,  Sikes  v.  Work,  6  Gray,  433  ;  Munson  r.  Sears,  12 
Iowa,  1 72.  Tenants  in  common  of  a  race-horse  who  share  liis  winnings  and 
divide  the  expenses  of  his  keep  are  not  partners  in  the  horse.  French  v. 
Styring,  2  C.  B.  N.  s.  357.     See  Oliver  v.  Gray,  4  Ark.  425.} 

*  3  Kent,  25,  26;  Hoare  v.  Dawes,  Doug.  371 ;  Coope  v.  Eyre,  1  H.  Bl. 
37;  Post  r.  Kimberly,  9  Johns.  470  ;  Holmes  v.  Unit.  Ins.  Co.  2  Johns.  Cas. 
329 ;  Harding  v.  Foxcroft,  6  Greenl.  76. 

=•  Coope  V.  Eyre,  1  H.  Bl.  37;  Gow  on  P.  c.  1,  p.  10,  3d  ed. ;  Coll.  on  P. 
B.  1,  c.  1,  §  1,  p.  11-15,  2d  ed.;  Gibson  v.  Lupton,  9  Bing.  297.  {A  club 
is  not  a  partnership.  See  §  144.  See  also  Austin  v.  Thomson,  45  N.  H. 
113.} 

*  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  15,  16,  2d  ed. ;  Finckle  v.  Stacey,  Sel.  Ca.  9  ; 
[Dwinel  v.  Stone,  30  Me.  384.] 


CHAP.   IV.]  AS    TO    THIRD    PERSONS.  53 

a  separate  account,  and  a  separate  action  against  the 
consignee,  if  he  should  disobey  his  own  orders.^ 

§  31.  But  cases  may  nevertheless  occur,  where  a  com- 
munity of  interest  in  the  property  may  draw  after  it  the 
establishment  of  a  partnership  between  the  parties, 
although  a  sale  of  the  property  for  the  joint  profit  may 
not  be  contemplated  by  the  parties.  Thus,  as  in  the  ex- 
ample already  suggested,  if  two  persons  should  agree 
together,  to  furnish  an  equal  quantity  of  materials  to 
manufacture  articles  of  a  particular  description,  and  to 
employ  their  mutual  skill,  labor,  and  services,  in  man- 
ufacturing the  articles ;  and  then  the  articles  were  to 
be  equally  divided  between  them,  and  sold  by  each  on 
his  separate  account,  there,  a  partnership  in  the  prop- 
erty and  manufactured  articles  would  be  deemed  to 
exist.^ 

§  32.  On  the  other  hand,  there  may  be  a  community 
of  interest  in  the  profits  between  the  parties,  without 
any  community  of  interest  in  the  property  itself.^  But 
this  participation  in  the  profits  will  not  (as  we  have 
seen"*)  create  a  partnership  between  the  parties  them- 

'  Hall  V.  Leigh,  8  Cranch,  50;  Jackson  v.  Robinson,  3  Mason,  138.  {A., 
B.  and  C.  agreed  that  each  should  furnish  3,000/.  worth  of  goods  to  be  shipped 
on  joint  adventure,  the  profits  to  be  divided  in  proportion  to  the  shipments. 
Held,  no  partnership.  Heap  v.  Dobson,  15  C.  B.  x.  s.  460.  But  see  Sims  v. 
Willing,  8  S.  &R.  103.} 

-  Ante,  §  27;  Musier  v.  Trumpbour,  5  Wend.  274  ;  Everitt  v.  Chapman, 
6  Conn.  347;  Bond  v.  Pittard,  3  j\I.  &  W.  357  ;  3  Kent,  24-26.  See  also, 
Jordan  r.  Wilkins,  3  Wash.  C.  C.  110. 

'  [Thus,  when  two  mercantile  firms  agree  to  share  profits  and  loss  upon 
contracts  for  the  purchase  or  sale  of  merchandise  in  a  particular  branch  of 
their  business,  to  be  made  by  each  firm  separately  in  its  own  name,  and  to  be 
executed  with  its  separate  fund,  this  does  not  constitute  them  partners,  cither 
as  between  themselves  or  to  third  persons ;  since  each  firm  would  be  sepa- 
rately bound  to  fulfil  its  own  contracts,  and  there  would  be  no  union  of  funds, 
services,  or  property,  but  only  a  division  of  profit  and  loss.  Smith  v.  Wright, 
5  Sand.  143.] 

*  Ante,  §  27,  28  ;  Hazard  v.  Hazard,  1  Story,  371.  In  this  case  the  court 
said  :  "  Now,  upon  the  point,  whether  there  was  a  partnership  or  not  between 


54  PARTNERSHIP.  [CHAP.  IV. 

selves,  as  to  the  property,  as  well  as  the  profits,  contrary 
to  their  intentions.^  Nor  will  it  necessarily  create  such 
a  partnership  in  all  cases,  as   to  third  persons.     The 

these  parties  in  the  factory  business,  under  the  agreement,  it  is  necessary  to 
take  notice  of  a  ■vvell-known  distinction  between  cases,  where,  as  to  third 
persons,  there  is  held  to  be  a  partnership,  and  cases  where  there  is  a  partner- 
ship between  the  parties  themselves.  The  former  may  arise  between  the 
parties  by  mere  operation  of  law  against  the  intention  of  the  parties ;  whereas, 
the  latter  exists  only  when  such  is  the  actual  intention  of  the  parties.  Thus, 
if  A.  and  B.  should  agree  to  carry  on  any  business  for  their  joint  profit,  and  to 
divide  the  profits  equally  between  them,  but  B.  should  bear  all  the  losses, 
and  should  agree,  that  there  should  be  no  partnership  between  them  ;  as 
to  third  persons  dealing  with  the  firm,  they  would  be  held  partners,  although 
inter  sese,  they  would  be  held  not  to  be  partners.  This  distinction  is  often 
taken  in  the  authorities.  It  was  very  fully  discussed  and  recognized  in  Waugh 
V.  Carver.  2  H.  Bl.  235;  Cheap  v.  Cramond,  4  B.  &  Aid.  G63;  Peacock  v. 
Peacock,  16  Ves.  49;  Ex  parte  Hamper,  17  Ves.  403;  E'a;  parte  Hodgkinson, 
19  Ves.  291  ;  Ex  parte  Langdale,  18  Ves.  300  ;  Tench  v.  Roberts,  6  Madd, 
145,  note  ;  Hesketh  r.  Blanchard,  4  East,  144  ;  jMuzzy  v.  Whitney,  10  Johns. 
226  ;  Dob  v.  Halsey,  16  Johns.  34.  The  question  before  us  is,  not  as  to  the 
liability  to  third  persons ;  but  it  is  solely  whether  between  themselves  the 
agreement  was  intended  to  create  and  did  create  a  partnership.  I  have 
looked  over  the  agreement  carefully,  and  my  opinion  is,  that  no  partnership 
whatsoever  was  intended  between  the  parties;  but  that  Benjamin  Hazard 
was  to  be  employed  as  a  mere  superintendent,  and  not  as  a  partner ;  and  was 
to  be  paid  the  stipulated  portion  of  the  profits  for  his  services  as  superintend- 
ent. This,  it  is  said,  in  the  agreement,  was  to  be  the  sole  reward  for  his 
services ;  and,  if  there  were  no  profits,  then  he  was  to  submit  to  lose  the  value 
of  his  services.  It  is  not  anj'where  said  in  the  agreement,  that  the  parties 
are  to  be  partners  in  the  business ;  nor  that  Benjamin  Hazard  is  to  pay  any 
part  of  the  losses.  But  language  is  used,  from  which,  I  think,  it  may  fairly 
be  inferred,  as  the  full  understanding  of  the  parties,  that  the  whole  capital 
stock  was  to  be  held  by  T.  R.  Hazard,  as  his  sole  and  e.\clusive  property, 
and  that  the  stock  was  to  be  furnished  by  him,  and  the  proceeds  thereof  were 
to  be  delivered  and  sold  by  him,  and  charged  to  him,  as  his  individual  prop- 
erty, and  debts  and  credits.  Now,  if  this  be  so,  there  is  no  pretence  to  say, 
that  the  parties  intended  a  partnership.  A  mere  participation  in  the  profits 
will  not  make  the  parties  partners  inter  sese,  whatever  it  may  do  as  to  third 
persons,  unless  they  so  intend  it.  If  A.  agrees  to  give  B.  one-third  of  the 
profits  of  a  particular  transaction   in  business,   for  his  labor   and   services 


>  Wish  V.  Small,  1  Camp.  331,  note;  Dry  v.  Boswell,  1  Camp.  329,  330; 
Mair  V.  Glennie,  4  M.  &  S.  240  ;  [Explained  in  Stocker  v.  Brockelbank,  3 
Macn.  &  G.  250,  5  Eng.  Law  &  Eq.  6  7 ;  Clement  v.  Hadlock,  1 3  N.  H.  1 85] ;  post, 
§  41,  42. 


CHAP.  lY.]        AS  TO  THIRD  TERSONS.  55 

various  cases,  in  which  a  partnership  may  exist,  as  to 
third  persons,  although  not  between  the  parties  them- 
selves, will  presently  come  under  our  consideration  ;  ' 
and  therefore,  what  is  here  said,  will  principally  respect 
the  question,  when  no  partnership  is  created  either  way. 
Thus,  if  a  party  has  no  interest  whatsoever  in  the  capital 
stock,  and  as  between  himself  and  the  other  parties  has 
also  no  rights  as  a  partner,  or  no  mutuality  of  powers 
and  duties,  but  is  simply  employed  as  an  agent,  and  is 
to  receive  either  a  given  sum  out  of  the  profits,  or  a  pro- 
portion of  the    profits,    or   a  residuum   of  the   profits 

therein,  that  may  make  both  liable  to  third  persons  as  partners;  but  not 
as  between  themselves.  This  was  the  very  point  adjudged  in  Hesketh  v. 
Blanchard,  4  East,  144,  where  Lord  Ellenborough  said:  'The  distinction 
taken  in  Waugh  v.  Carver  and  others,  applies  to  this  case.  Quoad  tliird 
persons  it  was  a  partnership,  for  the  plaintiff  was  to  share  half  the  profits. 
But,  as  between  themselves,  it  was  only  an  agreement  for  so  much,  as  a  com- 
pensation for  the  plaintiff's  trouble,  and  for  lending  R.  his  credit.'  The  same 
doctrine  was  fully  recognized  in  Muzzy  r.  "Whitney,  10  Johns.  226.  It  is  not 
necessary,  in  the  present  case,  to  decide,  whether  Benjamin  Hazard  was, 
under  the  agreement,  a  partner  as  to  third  persons.  That  question  may  be 
left  for  decision,  until  it  shall  properly  arise  in  judgment.  And  before  it  is 
decided,  it  might  be  necessary  to  examine  a  very  nice  and  curious  class  of 
cases,  standing,  certainly,  upon  a  very  thin  distinction,  if  it  is  a  clearly  dis- 
cernible distinction,  between  cases  of  partnership  as  to  third  persons,  and 
cases  of  mere  agency,  where  the  remuneration  is  to  be  by  a  portion  of  the 
profits.  This  distinction  is  alluded  to  by  Lord  Eldon,  in  Ex  parte  Hamper, 
17  Ves.  403,  and  by  Lord  Chief  Justice  Abbott  in  Cheap  v.  Cramond,  4  B.  & 
Aid.  663,  670.  In  the  latter  case,  the  Chief  Justice  said:  '  Such  an  agree- 
ment is  perfectly  distinct  from  the  cases,  put  in  the  argument  before  us,  of 
remuneration  made  to  a  traveller,  or  other  clerk  or  agent  (in  proportion  to 
the  profits),  by  a  portion  of  the  sums  received  by  the  master  or  principal,  in 
lieu  of  a  fixed  salary,  which  is  only  a  mode  of  payment  adopted  to  increase 
or  secure  exertion.'  It  was  also  acted  upon  in  Muzzy  v.  Whitney,  10  Johns. 
226;  Dry  v.  Boswell,  1  Camp.  320;  Wish  v.  Small,  Id.,  note ;  Benjamin  v. 
Porteus,  2  H.  Bl.  590;  Wilkinson  v.  Frasier,  4  Esp.  182;  and  Mair  v. 
Glennie,  4  M.  &  S.  240,  244.  My  judgment  is,  that  in  the  present  case 
the  parties  never  intended  any  partnership  in  the  capital  stock  ;  but  a  mere 
participation  of  interest  in  the  profits  ;  and  that  the  one-third  or  one-fourth 
of  the  profits,  allowed  by  the  agreement  to  Benjamin  Hazard,  was  merely  a 
mode  of  paying  him  as  agent  for  his  superlntendency  of  the  factories." 
1  Post,  §  53-70. 


66  PARTNERSHIP.  [CHAP.  IV. 

beyond  a  certain  sum,  as  a  compensation  for  his  labor 
and  services,  as  agent  of  the  concern,  and  not  otherwise  ; 
he  will  not  be  deemed  a  partner  in  the  concern  from  that 
fact  alone  ;  not  a  partner  with  the  others  inter  sese,  for 
that  would  be  contrary  to  their  intentions  and  objects  ;  ^ 
nor  as  to  third  persons,  because  the  transaction  admits 
of  a  different  interpretation,  and  may  justly  be  deemed  a 
mere  mode  of  ascertaining  and  paying  the  compensation 
of  an  agent,  as  in  a  naked  case  of  agency.     In  such  a 
case,  it  may  be  properly  enough  said,  that  the  agent  is 
entitled  to  a  share  or  portion  in  the  profits,  liquidated 
or  unliquidated,  and,  therefore,  that  he  has,  in  a  certain 
sense,  a  community  of  interest  therein,  with  the  actual 
partners.     But  he  does   not  participate   therein,  as  an 
owner  ^:>ro  tanto,  or  as  possessed  thereof,  ^er  my  et  per 
tout,  or  as  clothed  with  the  rights,  and  powers,  and  duties 
of  a  partner.     He  has  only  a  limited  interest  therein, 
either  as  entitled  to  a  fixed  sum,  to  be  paid  out  of  the 
profits,  or  as  entitled  to  a  lien  thereon,  or  as  possessed 
of  an  undivided  portion  thereof  as  a  tenant  in  common. 
§  33.  The  distinction  between  the  cases,  where  a  par- 
ticipation in  the  profits  will  make  a  man  liable  to  third 
persons,  as  a  partner,  or  not,  is  sometimes  laid  down  by 
elementary  writers  in   different  language.     Thus  it  has 
been  said  by  a  learned  writer  :  "  A  distinction,  however, 
prevails  between  an  interest  in  the  profits  themselves,  as 
profits,  and  the  payment  of  a  given  sum   of  money  in 
proportion  to  a  given  quantum  of  the  profits,  as  the  re- 
ward of,  and  as  a  compensation  for,  labor  and  services."  ^ 

1  Gow  on  P.  c,  1,  p.  10,  11 ;  Gecldes  v.  Wallace,  2  Bligh,  270;  Benjamin 
V.  Portcus,  2  H.  Bl.  590;  Dry  v.  Boswell,  1  Camp.  329,  330;  Wish  v.  Small, 
1  Camp.  331,  note;  Ex  parte  Watson,  19  Ves.  459;  Muzzy  v.  Whitney,  10 
Johns.  22G;  Turner  v.  Bissell,  14  Pick.  192.  See  Garey  v.  Pyke,  10  Ad.  & 
E.  512;  post,  §  33-36,  38-40, 

«  Gow  on  P.O.  1,  p.  18,3d  ed. ;  [Brockway  v.  Burnap,  16  Barb.  309; 
Pierson  v.  Steinmyer,  4  Rich.  309.] 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  57 

Another  learned  writer  has  expressed  himself  in  the  fol- 
lowing terms:  "In  order  to  constitute  a  communion  of 
profit  between  the  parties,  the  interest  in  the  profit  must 
be  mutual,  that  is,  each  person  must  have  a  specific  in- 
terest in  the  profits  as  a  principal  trader.  He  is  not  a 
partner,  if  he  merely  receives  out  of  the  profits  a  com- 
pensation for  his  trouble,  in  the  character  of  an  agent  or 
servant  of  the  concern."  ^ 

§  34.  The  distinction,  as  thus  presented,  does  certainly 
wear  the  appearance  of  no  small  subtlety  and  refine- 
ment, and  scarcely  meets  the  mind  in  a  clear  and  unam- 
biguous form  ;  ^  for  the  question  must  still  recur  ;  when 
may  a  party  properly  be  said  to  have  "  an  interest  in  the 
profits,  as  profits  "  ^  When  also  may  it  properly  be  said, 
that  "  the  interest  in  the  profits  is  mutual,"  and  that 
"  each  person  has  a  specific  interest  in  the  profits,  as  a 
pi^incipal  trader  "  ?  No  absolute  test  is  given  to  distin- 
guish the  cases  from  each  other,  and  it  is  not  easy  to 
grasp  it,  when  stated  in  so  abstract  a  form.  The  true 
meaning  of  the  language,  "  an  interest  in  the  profits,  as 
profits  (which  has  probably  been  borrowed  from  the 
subtle  and  refined  statement  of  an  eminent  judge ),^  seems 
to  be,  that  the  party  is  to  participate,  indirectly  at  least, 
in  the  losses,  as  well  as  in  the  profits,  or,  in  other  words, 
that  he  is  to  share  in  the  net  profits,  and  not  in  the  gross 
profits.^  If  he  is  to  share  in  the  net  profits,  which  sup- 
poses him  to  have  a  participation  of  profit  and  loss,  that 
will  constitute  him  a  partner  ;  if  in  the  gross  profits, 
then  it  will  be  otherwise.^  Thus,  where  an  agreement 
was  made  between  the  owner  of  a   lighter,   and  B.,  a 

1  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  17,  18,  2(1  ed. 
"^  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  23,  2d  ed. 
=>  Lord  Eldon.  "  Post,  §  56. 

*  Bond  V.  Pittard,  3  M.  &  W.  357;  post,  §  220,  and  note;  post,  §  41, 
42,  48. 


58  PARTNERSHIP.  [CHAP.  IV. 

lighter-man,  that,  in  consideration  of  his  working  the 
hghter,  he  should  have  half  her  gross  earnings,  it  was 
held  to  be  only  a  mode  of  paying  B.  wages  for  his  labor, 
and  not  a  partnership  ;  but,  that  if  the  profits  were  to  be 
equally  divided  between  them,  there  the  participation  of 
the  parties  of  the  profit  and  loss  would  make  the  agree- 
ment a  partnership/ 

§  35.  Lord  Eldon  has  adverted  to  the  like  distinc- 
tion, and  disapproved  of  it  in  strong  terms.  On  one 
occasion  his  Lordship  said :  "  The  cases  have  gone  fur- 
ther to  this  nicety,  upon  a  distinction  so  thin,  that  I 
cannot  state  it  as  established  upon  due  consideration ; 
that  if  a  trader  agrees  to  pay  another  person,  for  his 
labor  in  the  concern,  a  sum  of  money,  even  in  propor- 
tion to  the  profits,  equal  to  a  certain  share,  that  will  not 
make  him  a  partner ;  but,  if  he  has  a  specific  interest 
in  the  profits  themselves,  as  profits,  he  is  a  partner."  ^ 
On  another  occasion,  he  said,  referring  to  the  case  be- 
fore him,  "  That  it  was  impossible  to  say,  that  as  to 

»  Dry  V.  Boswell,  1  Camp.  329,  330;  Cheap  v.  Cramond,  4  B,  &  Aid.  663, 
670.  See  also  Waugh  v.  Carver,  2  H.  Bl.  235,  246,  247;  Saville  v.  Robert- 
son, 4  T,  R.  720;  Bond  v.  Pittard,  3  M.  &  W.  357;  Pearson  v.  Skelton,  1  M. 
&  W.  504;  s.c.  Tyrw.  &  G.  848;  {Hej'hoe  v.  Burge,  9  C.  B.  431.}  See 
also  Cutler  v.  Winsor,  6  Pick.  335;  Bailey  v.  Clark,  6  Pick.  372;  Turnery. 
Bissell,  14  Pick.  192  ;  Chase  v.  Barrett,  4  Paige,  148,  159  ;  Brigham  v.  Dana, 
29  Vt.  1,9;  post,  §  53-69,  220.  —  In  this  case  the  distinction  is  clearly  pointed 
out  between  participation  in  the  gross  profits  and  participation  in  the  net 
profits.  See  post,  §  220,  note  ;  |§  21,  note  ;  Lind.  on  P.  19  ;  Lyon  v.  Knowles, 
3  B.  &  S.  556 ;  Bowman  v.  Bailey,  11  Vt.  170 ;  Pattison  v.  Blancluird,  1  Seld. 
186  ;  Merrick  v.  Gordon,  20  N.  Y.  93.}  See  1  Sm.  Lead.  Cas.  504,  2d  ed., 
note  to  Waugh  v.  Carver.  The  case  of  Thompson  v.  Snow,  4  Greenl.  264, 
seems  to  be  contrary ;  for  it  makes  no  distinction  between  sharing  the  net 
earnings  and  sharing  the  gross  earnings;  post,  §  44,  and  Reynolds  v.  Toppan, 
15  Mass.  3  70.  See  also  Loomis  v.  Marshall,  12  Conn.  69  ;  post,  §  45  ;  [Denny 
V.  Cabot,  6  Met.  82;  Bradley  w.  White,  10  Met.  303];  {Parsons  on  P.  p.  88, 
n.  (q.)} 

*  Ex  parte  Hamper,  17  Ves.  403 ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  23,  24,  2d 
ed. ;  Ex  parte  Watson,  19  Ves.  459  ;  Turner  v.  Bissell,  14  Pick.  192;  Loomis 
V.  Marshall,  12  Conn.  69 ;  1  Sm.  Lead.  Cas.  504,  note,  2d  ed. 


i 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  59 

third  persons,  they  (the  parties)  were  not  partners,  the 
ground  being  settled,  that  if  a  man,  as  a  reward  for  his 
labor,  chooses  to  stipulate  for  an  interest  in  the  profits 
of  a  business,  instead  of  a  certain  sum  proportioned  to 
those  profits,  he  is,  as  to  third  persons,  a  partner ;  and 
no  arrangement  between  the  parties  themselves  could 
prevent  it."  ^ 

§  36.  But  however  nice  the  distinction  may  be  in 
itself,  and  however  difficult  it  may  be  successfully  to 
apply  it  to  the  circumstances  of  particular  cases,  it  is 
by  no  means  clear,  that  there  is  not  a  very  just  and 
satisfactory  foundation  on  which  it  may  well  rest.^  The 
question  in  all  this  class  of  cases  is  first  to  arrive  at  the 
intention  of  the  parties  inter  sese ;  and  secondly,  if 
between  themselves  there  is  no  intention  to  create  a 
partnership  either  in  the  capital  stock,  or  in  the  profits, 
whether  there  is  any  stubborn  rule  of  law,  which  will 
nevertheless,  as  to  third  persons,  make  a  mere  partici- 
pation in  the  profits  conclusive,  that  there  is  a  partner- 
ship. If  there  is  any  such  rule  of  law,  the  next  inquiry 
is,  as  to  the  nature,  and  foundation,  and  true  extent 
thereof.  Now,  it  is  incumbent  upon  those  who  insist 
that  a  partnership  exists  between  the  parties,  as  to 
third  persons,  by  mere  operation  of  law,  in  opposition 
to  their  own  intention,  to  establish,  that  in  the  given 
case,  under  all  the  circumstances,  there  is  such  a  rule, 
and  that  it  is  strictly  applicable.  What  then  is  the  rule 
of  law  relied  on  for  the  purpose "?  It  is  said,  that  the 
true  criterion  is,  whether  the  parties  are  to  participate 
in  profit ;  ^    or,  according  to  the  language  used  on  an- 

>  Ex  parte  Rowlandson,  1  Rose,  89,  91,  92  ;  Coll.  on  P.  B.  1,  c.  1,  §  1, 
p.  24-29,  2d  ed. ;  Ex  parte  Langdale,  18  Ves.  300.  See  also  the  remarks  of 
Mr.  Chief  Justice  Gibson  in  Miller  v.  Bartlet,  15  S.  &  R.  137,  See  Hazard 
V.  Hazard,  1  Story,  371-376;  ante,  §  32,  note. 

"  See  3  Kent,  33,  34. 

^  Lord  Eldon  in  Ex  parte  Langdale,  18  Ves.  300. 


60  PARTNERSHIP.  [CHAP.  IV. 

other  occasion,   "Every  man,  who  has  a  share  in  the 
profits  of  a  trade,  ought  also  to  bear  his  share  of  the 
loss  as  a  partner."  ^     In  a  just  sense  this  language  is 
sufficiently  expressive  of  the  general  rule  of  law  ;    but 
it  is  assuming  the  very  point  in  controversy  to  assert, 
that  it  is  universally  true,  or  that  there  are  no  qualifi- 
cations,  or  limitations,   or   exceptions    to    it.      On   the 
contrary,  the  very  cases  alluded  to  by  Lord  Eldon,  in 
the   clearest  terms   establish,   that    such    qualifications, 
limitations,   and   exceptions   do   exist;    and    are    either 
contemporaneous  with  the  promulgation  of  the  general 
rule,  or  are   necessary  to   its  just  application  and  use. 
It  is,  therefore,  far  from  being  universally  true,  that  a 
mere  participation  in  the  profits  constitutes  the  party 
a  partner ;  at  most,  it  is  true  only  sub  modo.     Indeed, 
as  an  original  question,  it  might  admit  of  very  grave 
doubt,    whether   it   would    not    have    been    more    con- 
venient, and  more   conformable   to  true   principles,  as 
well  as  to  public  policy,  to  have  held,  that  no  partner- 
ship should  be  deemed  to  exist  at  all,  even  as  to  third 
persons,  unless  such  were  the  intention  of  the  parties, 
or  unless  they  had  so  held  themselves  out  to  the  pub- 
lic.^     But   the    common   law   has    already    settled    it 
otherwise  ;  and  therefore  it  is  useless  to  speculate  upon 
the  subject^ 

'  Grace  v.  Smith,  2  W.  Bl.  998,  1000;  Ex  parte  Hamper,  17  Ves.  403; 
Ex  parte  Watson,  19  Ves.  459,  461 ;  Waugh  v.  Carver,  2  H.  Bl.  247  ;  Tur- 
ner u.  Bissell,  14  Pick.  192. 

'  See  the  remarks  of  Mr.  Chancellor  Walworth,  in  Chase  v.  Barrett,  4 
Paige,  148,  159,  IGO  ;  post,  §  48,  49. 

3  The  ground  upon  which  the  participation  in  the  profits  of  a  trade,  although 
no  partnership  is  intended  to  exist  between  the  parties,  shall  make  them 
partners  as  to  third  persons,  is  thus  stated  by  Lord  Chief  Justice  De  Grey,  in 
Grace  v.  Smith,  2  W.  Bl.  998,  1000.  "  Every  man,  who  has  a  share  of  the 
profits  of  a  trade,  ought  also  to  bear  his  share  of  the  loss.  And  if  any  one 
takes  part  of  the  profit,  he  takes  a  part  of  that  fund  on  which  the  credi'tor 
relies  for  his  payment.     If  any  one  advances  or  lends  money  to  a  trader,  it 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  61 

§  37.  The  Roman  law  and  the  modern  foreign  law 
do  not  appear  to  have  created  a  partnership  between 
the  parties,  as  to  third  persons,  without  their  consent, 

is  only  lent  on  his  general  personal  security,  and  yet  the  lender  is  generally 
interested  in  those  profits.  He  relies  on  them  for  repayment."  Now,  to 
say  the  least  of  it,  this  reasoning  is  very  artificial ;  for  if  the  creditor  trusts 
to  the  personal  security  of  his  debtor  generally,  for  advances  made,  or 
goods  sold,  and  he  has  no  lien  on  the  property  or  profits  of  the  trade  for 
repayment,  it  seems  difficult  to  perceive  why  other  persons  should  be  liable 
to  him  on  account  of  their  receipt  of  a  portion  of  the  profits,  there  being 
no  privity  of  contract  and  no  partnership  existing  In  the  advances  of  money 
or  goods  sold  between  the  parties.  Why  should  a  mere  participant  in  the 
profits,  contrary  to  the  intent  of  the  agreement  between  himself  and  his  co- 
contractor,  be  held  responsible  to  a  creditor  of  the  latter,  when  the  latter  has 
trusted  to  his  personal  security,  and  only  had  a  general  confidence,  that  he 
was  doing  a  profitable  business?  Why  should  the  creditor's  contract  displace 
the  contract  of  the  immediate  parties  ?  The  rule  might  have  some  show  of 
equity,  if  the  party  were  only  held  liable  to  the  extent  of  the  profits  re- 
ceived by  him.  But  the  rule  makes  him  liable  to  pay  all  the  losses,  and  all 
the  debts,  whether  he  has  recived  any  profits  or  not.  There  is  great  force  on 
this  point  in  the  argument  of  the  counsel  for  the  defendants  in  Waugh  v. 
Carver,  2  H.  Bl.  244,  245.  It  was  there  said  :  "  The  profits  are  not  a  capital, 
unless  carried  on  as  capital,  and  not  divided.  Ship  agents  are  not  traders, 
but  their  employment  is  merely  to  manage  the  concerns  of  such  ships  in 
port  as  are  addressed  to  them.  Suppose  two  fishermen  were  to  agree  to 
share  the  profits  of  the  fish  that  each  might  catch,  one  would  not  be  liable  for 
mending  the  nets  of  the  other.  So,  if  two  watermen  agree  to  divide  their 
fares,  neither  would  be  answerable  for  repairing  the  other's  boat.  Nor  would 
any  artificers,  who  entered  Into  similar  agreements  to  share  the  produce  of 
their  separate  labor,  be  obliged  to  i)ay  for  each  other's  tools  or  materials. 
And  this  is  not  an  agreement  as  to  the  agency  of  all  shijis,  with  which  the 
parties  were  concerned,  for  such  as  came  to  the  particular  address  of  one 
were  to  be  the  sole  profit  of  that  one.  It  was,  indeed,  clearly  the  intent  of 
the  parties  to  the  agreement,  and  is  so  expressed,  that  neither  should  be 
answerable  for  the  losses,  acts,  or  deeds  of  the  other,  and  that  the  agreement 
should  not  extend  to  their  separate  mercantile  concerns.  It  must,  therefore, 
be  a  strong  and  invariable  rule  of  law,  that  can  make  the  parties  to  the 
agreement  responsible  for  each  other,  against  their  express  intent.  But  all 
cases  of  partnership,  which  have  been  hitherto  decided,  have  proceeded  ou 
one  or  other  of  the  following  grounds :  —  1.  Either  there  has  been  an  avowed 
authority  given  to  one  party  to  contract  for  the  rest ;  2.  Or,  there  has  been 
a  joint  capital  or  stock ;  3.  Or,  in  cases  of  dormant  partners,  there  has 
been  an  appearance  of  fraud  in  holding  out  false  colors  to  the  world."  See 
also' post,  §  48-52.  However,  the  doctrine  is  (as  is  fully  stated  in  the  text) 
completely  established,  upon  the  very  ground  asserted  in   Grace  r.  Smith. 


62  PARTNERSHIP.  [cHAP.  IV. 

or  against  the  stipulations  of  their  own  contract ;  and, 
therefore,  the  common  law  seems  to  have  pressed  its 
principles  on  this  subject  to  an  extent  not  required  by, 
even  if  it  is  consistent  with,  natural  justice.^  Indeed, 
the  Roman  law  deemed  all  contracts  to  be  made  only 
between  the  immediate  parties  thereto  ;  and  no  direct 
remedy  was  generally  furnished  to  or  against  third  per- 
sons, even  where  one  of  the  immediate  parties  was  a 
mere  agent  of  such  third  persons,  and  it  required  the 
interference  of  the  Preetor  to  enlarge  the  remedy  by  an 
equitable  extension  to  reach  them.^ 

§  38.  Admitting,  however,  that  a  participation  in  the 
profits  will  ordinarily  establish  the  existence  of  a  part- 
nership between  the  parties  in  favor  of  third  persons, 
in  the  absence  of  all  other  opposing  circumstances,  it 

See  Waugh  v.  Carver,  2  H.  Bl.  235,  246,  247  ;  Cheap  v.  Cramoiid,  4  B.  & 
Aid.  663;  Dob  v.  Halsey,  16  Johns.  34;  M'lver  v.  Humble,  16  East,  169, 
174,  175;  3  Kent,  24,  25,  27;  Ex  parte  Langdale,  18  Yes.  300;  [Pott  v. 
Eyton,  3  C.  B.  32;  Barry  v.  Nesham,  Id.  641.]  |"I  hope  I  shall  stand 
excused,  if  I  venture  to  discuss  the  reasoning  in  Waugh  v.  Carver.  What 
was  it?  It  was  that  '  he  who  takes  a  share  of  the  profits  of  a  business,  takes 
part  of  the  fund  on  which  creditors  rely  for  payment.'  Can  any  thing  be  con- 
ceived more  false  ?  Creditors  neither  can  nor  do  rely  on  profits  for  payment. 
Profits  do  not  exist  until  ci'editors  are  paid.  Look  at  any  individual  transaction. 
A.  sells  goods  to  B.  for  lOOZ. ;  B.  resells  them  for  llOl.  There  is  10/.  profit. 
Does  the  creditor  look  to  this  10/.  for  the  payment  of  his  1 00/. '?  No :  he  looks  to 
the  100/.  That  sum  would  pay  him,  and  is  the  proper  fund  to  pay  him.  The 
10/.  would  not.  The  10/.  evidently  belongs  to  B.,  and  is  the  fund  to  enable 
him  to  pay  the  outgoings  of  his  trade  and  subsist  himself  and  his  family." 
Testimony  of  Mr.  Commissioner  Fane  before  a  Committee  of  the  House  of 
Commons,  given  in  Lind.  on  P.  40,  n.  (/.).  In  fact,  what  a  creditor  does  rely 
on  as  a  fund  of  payment  are  the  gross  returns,  not  the  net  profits.  Yet  it  is 
declared  that  one  who  shares  gross  returns  is  not,  while  one  who  shares  net 
profits  is,  a  partner,  because  the  latter  takes  from  the  fund  on  which  creditors 
rely.  Perhaps  there  is  no  other  instance  in  commercial  law,  where  so  many 
confessedly  harsh  decisions  have  been  based  on  so  obvious  a  fallacy. } 

'  See  Domat,  1,  8,  2,  art.  1  ;  Id.  1,  8,  4,  art.  18;  Civil  Code  of  France, 
art.  1862-1865  ;  Vinn.  ad  Inst.  3,  26,  2,  n.  3  ;  17  Duranton,  Droit  Civil,  n. 
328-331  ;  5  Duvergier,  Droit  Civ.  Franc,  n.  45  ;  Id.  n.  385-387  ;  4  Pardessus, 
Droit  Comm.  n.  96i) ;  post,  §  50. 

*  Story  on  Ag.  §  165,  261,  271,  425. 


CHAP.   IV.]  AS    TO    THIRD    PERSONS.  63 

remains  to  consider,  whether  the  rule  ought  to  be 
regarded,  as  any  thing  more  than  mere  presumptive 
proof  thereof,  and  therefore  hable  to  be  repelled,  and 
overcome  by  other  circumstances,  and  not  as  of  itself 
overcoming  or  controlling  them.^  In  other  words,  the 
question  is,  whether  the  circumstances,  under  which 
the  participation  in  the  profits  exists,  may  not  qualify 
the  presumption,  and  satisfactorily  prove,  that  the  por- 
tion of  the  profits  is  taken,  not  in  the  character  of  a 
partner,  but  in  the  character  of  an  agent,  as  a  mere 
compensation  for  labor  and  services.  If  the  latter  be 
the  true  predicament  of  the  party,  and  the  whole  trans- 
action admits,  nay,  requires,  that  very  interpretation, 
where  is  the  rule  of  law,  which  forces  upon  the  trans- 
action the  opposite  interpretation,  and  requires  the 
Court  to  pronounce  an  agency  to  be  a  partnership,  con- 
trary to  the  truth  of  the  facts,  and  the  intention  of 
the  parties  ]  Xow, .  it  is  precisely  upon  this  very 
ground,  that  no  such  absolute  rule  exists,  and  that  it  is 
a  mere  presumption  of  law,  which  prevails  in  the  ab- 
sence of  controlling  circumstances,  but  is  controlled  by 
them,  that  the  doctrine  in  the  authorities  alluded  to  is 
founded.  If  the  participation  in  the  profits  can  be 
clearly  shown  to  be  in  the  character  of  agent,  then  the 
presumption  of  partnership  is  repelled.  In  this  way 
the  law  carries  into  eff"ect  the  actual  intention  of  the 
parties,  and  violates  none  of  its  own  established  rules. 
It  simply  refuses  to  make  a  person  a  partner,  who  is 
but  an  agent  for  a  compensation  payable  out  of  the 
profits ;  and  there  is  no  hardship  upon  third  persons, 
since  the  party  does  not  hold  himself  out  as  more  than 

'  [In  Wood  V.  Vallette,  7  Ohio  St.  172,  it  was  held  that  a  contract  be- 
tween parties  to  share  in  the  net  profits  of  a  business,  to  the  carrying  on  of 
which  they  respectively  contribute,  necessarily  makes  them  partners  as  to  third 
persons  dealing  with  the  firm.] 


64  PARTNERSHIP.  [cHAP.  IV. 

an  agent.  This  qualification  of  the  rule  (the  rule  itself 
being  built  upon  an  artificial  foundation)  is,  in  truth, 
but  carrying  into  effect  the  real  intention  of  the  parties, 
and  would  seem  far  more  consonant  to  justice  and 
equity,  than  to  enforce  an  opposite  doctrine,  which 
must  always  carry  in  its  train  serious  mischiefs  or  ruin- 
ous results,  never  contemplated  by  the  parties.  In  this 
view  the  distinction,  taken  in  the  authorities  above 
alluded  to,  has  a  reasonable  and  just  foundation,  and  is 
entirely  consistent  with  the  equities,  which  ought  to  pre- 
vail in  all  reciprocal  contracts.^ 

'  Mr.  Chancellor  Walworth  has  expressed  himself  in  favor  of  the  distinc- 
tion as  well  founded,  in  the  case  of  Champion  v.  Bostwick,  18  Wend.  175,  184. 
He  there  said :  "  There  is  a  class  of  cases,  in  which  it  has  been  held  that  a 
person,  who  merely  receives  a  compensation  for  his  labor  in  proportion  to 
the  gross  profits  of  the  business  in  which  he  is  employed,  is  not  a  partner 
with  his  employer  even  as  to  third  persons.  The  distinction  appears  to  be 
between  the  stipulation  for  a  compensation  proportioned  to  the  profits,  and 
a  stipulation  for  an  interest  in  such  profits,  so  as  to  entitle  him  to  an  account 
as  a  partner  (1  Rose,  91)  ;  a  distinction,  whieh  Lord  Eldon  says  is  so  thin, 
that  he  cannot  state  it  as  settled  upon  due  consideration.  But  he  says, 
it  is  clearly  settled  as  to  third  persons,  though  he  regrets  it,  '  that  if  a 
man  stipulates,  that  as  the  reward  of  his  labor  he  shall  have,  not  a  specific 
interest  in  the  business,  but  a  given  sum  of  money,  even  in  proportion  to 
the  quantum  of  profits,  that  will  not  make  him  a  partner ;  but  if  he  agrees 
for  a  part  of  the  profits,  as  such,  giving  him  a  right  to  an  account,  though 
having  no  property  in  the  capital,  he  is  as  to  third  persons  a  partner;  and 
no  arrangement  between  the  parties  themselves  can  prevent  it.'  Ex  parte 
Hamper,  Stark's  Law  of  P.  137.  Cary,  however,  defends  the  principle, 
upon  which  this  distinction  is  based.  He  insists,  that  as  the  person,  who  is 
to  receive  a  compensation  for  his  labor  in  proportion  to  the  profits  of  the 
business,  without  having  a  specific  lien  upon  such  profits  to  the  exclusion  of 
other  creditors,  it  is  for  their  interest  that  he  should  be  compensated  in  that 
■way,  instead  of  receiving  a  fixed  compensation,  whether  the  business  pro- 
duced profits  or  otherwise ;  on  the  other  hand,  that,  if  he  stipulates  for  an 
interest  in  the  profits  of  the  business,  which  would  entitle  him  to  an  account, 
and  give  him  a  specific  lien  or  a  preference  in  payment  over  other  creditors, 
and  giving  him  the  full  benefit  of  the  increased  profits  of  the  business,  with- 
out any  corresponding  risk  in  case  of  loss,  it  would  operate  unjustly  as  to 
other  creditors ;  and  therefore  that  it  is  perfectly  right  in  principle,  that  he 
should  be  holden  to  be  liable  to  third  parties,  as  a  partner  in  the  latter  case, 
but  not  in  the  first.     Cary  on  P.  11,  note  i.     I  am  inclined  to  think  this 


CHAP.   IV.]  AS    TO    THIRD    PERSONS.  G5 

§  39.  Keeping  this  distinction  in  view,  all  the  sup- 
posed repugnancy  or  difficulty  of  the  various  decided 
cases  vanishes,  and  they  are  in  harmony  with  each  other, 

distinction  is  a  sound  one,  as  regards  the  rights  of  third  persons.  But  as 
between  the  parties  themselves,  it  is  perfectly  competent  for  them  to  agree, 
that  one  shall  have  his  full  share  of  the  anticipated  profits,  as  a  compensa- 
tion for  his  labor  or  skill,  without  running  any  risk  of  absolute  loss,  except 
as  to  third  persons,  if  instead  of  producing  profits  the  business  should  prove 
a  losing  concern.  Many  of  the  cases  cited  by  the  counsel  for  the  plaintiffs 
in  error,  were  those,  in  which  the  question  arose  between  the  immediate 
parties  to  the  agreement,  which  was  supposed  to  make  them  partners  as 
between  themselves ;  and  they  may  therefore  be  reconciled  with  other  cases, 
in  which  they  were  held  to  be  liable  as  partners  to  third  persons  upon  the 
principles  before  stated."  ]\Ir.  Gary  in  the  passage  alluded  to  says  :  "  It  is 
not  within  the  original  object  of  this  work  to  enter  into  any  contested  points, 
or  to  broach  an  opinion  not  immediately  sanctioned  by  judicial  decisions. 
In  the  pi'esent  case,  however,  it  may  be  allowable  to  depart  from  this  rule, 
as  the  principle,  on  which  the  above  distinction  is  grounded,  seems  to  the 
author  of  this  work  perfectly  clear  and  just.  On  the  one  hand,  suppose  a 
person  is  to  receive  a  proportion  of  a  given  quantum  of  profits,  by  way  of 
recompense  for  his  labor,  this  cannot  be  productive  of  injustice  to  any  of  the 
creditors  of  the  trader,  for  the  trader's  own  interest  will  not  suffer  him  to 
give  a  greater  proportion  of  the  profits  than  the  particular  adventure  will 
well  afford.  As  if  the  risk  is  worth  ten  per  cent  he  will  not  be  satisfied 
with  securing  five  per  cent  only  as  his  own  return,  but  will  probably  offer 
an  equal  share  of  the  profits  above  the  five  per  cent.  But  suppose  the 
adventure  fails,  and  there  is  none  or  very  little  profit  to  be  divided,  the  cred- 
itor is  obviously  in  a  better  condition  than  if  a  sum  certain  had  been  given 
as  wages ;  for  as  every  undertaking  must  be  attended  with  some  expense, 
and  it  is  usual  to  pay  agents  or  servants  before  any  return  of  profit  can  be 
fairly  calculated  upon,  it  would  be  unreasonable  to  say,  that  an  agent  or 
servant  shall  not  be  paid,  until  the  trader's  other  creditors  are  satisfied,  and 
whether  those  Avages  are  paid  by  a  proportion  of  the  profits,  or  by  a  sum 
certain,  which  must  be  deducted  from  the  profits,  cannot  be  very  material 
to  the  creditors.  On  the  other  hand,  if  the  agent  agrees  for  a  part  of  the 
profits  as  such,  and  stipulates  for  an  interest  in  the  profits  of  a  business, 
instead  of  a  certain  sum  proportioned  to  those  profits,  he  obtains  the  right 
of  an  account,  and  to  the  prejudice  of  the  creditors  may  institute  a  suit 
against  his  employer,  not  for  the  recovery  of  his  wages,  but  for  an  account 
of  profits;  and  supposing  him  not  to  be  thereby  constituted  a  partner, 
might  take  his  full  share  of  the  profits,  having  an  obvious  advantage  over 
the  other  creditors ;  for  in  case  of  the  trader's  insolvency,  his  claim  (still 
supposing  him  not  to  be  a  partner)  would  be  prior  to  that  of  other  creditors, 
whereas  in  the  former  case  he  has  not  a  determinate  interest  in  the  profits, 
but  on  the  event  of  the  trader's  becoming  bankrupt,  would  be  on  the  same 

5 


66  PARTNERSHIP.  [CHAP.  IV. 

as  well  as  with  common  sense.^  Let  us  proceed  then  to 
illustrate  the  doctrine  by  adverting  to  some  of  the  more 
striking  cases,  in  which  it  has  been  judicially  recognized 
and  confirmed. 

§  40.  Thus,    where    A.,    having  neither    money    nor 
credit,  offered  to  B.,  that  if  he  would  order  certain  goods 
to  be  shipped  with  A.,  upon  adventure  to  foreign  parts, 
if  any  profit  should  arise  therefrom,  B.  should  have  one- 
half  for  his  trouble  ;  and  B.  accepted  the  offer,  and  the 
goods  were  purchased  accordingly,  and  charged  to  both 
A.  and  B.  as  joint  debtors;  and  B.,  having  been  after- 
wards compelled  to  pay  the  whole  debt,  brought  a  suit 
against  A.'s  executors,  to  recover  the  value  of  the  goods 
so  purchased;  on  an  objection   taken,  that  A.   and  B. 
were  partners  in  the  adventure,  and  the  action  was  not 
therefore  maintainable,  the  court  overruled  the  objec- 
tion, and  held,  that  quoad  third  persons,  this  was  a  part- 
nership, for  the  plaintiff  B.  was  to  share  half  the  profits  ; 
but,  as  between  themselves,  it  was  only  an  agreement  for 
so  much,  as  a  compensation  for  the  plaintiff's  trouble, 
and  for  lending  A.  his  credit.^     In  this  case  the  purchase 
was  on  joint  account,  for  the  purpose  of  selling  the  same 
goods  and  dividing  the  profits  ;   and  therefore  it  might 
well  be  deemed  a  partnership,  as  to  third  persons,  as  for 
example,  in  favor  of  the  seller  of  the  goods,  consistently 
with  the  distinction  above  stated.^ 

footing  with  other  simple  contract  creditors."  See  also  Perrine  v.  Hankorson,  • 
6  Halst.    181  ;  3  Kent,   25,  note  (b),  where  the  learned  commentator  adopts 
■with  approbation  the  doctrine  of  Mr.  Chancellor  AValworth.     See  also  Story 
on  Contracts,  §  352,  353,  357,  and  note. 

'  See  Mont,  on  P.  B.  1,  Pt.  1,  p.  10-12,  2d  ed.,  where  many  of  the  cases 
are  collected. 

«  Hesketh  v.  Blanchard,  4  East,  144,  146 ;  Smith  v.  Watson,  2  B,  &  C. 
401 ;  Post,  §  5G,  57. 

'  [So  where  several  persons  Avere  engaged  in  running  a  line  of  stages 
from  A.  to  B.,  and  by  the  agreement  between  them  one  was  to  run  at  his 
own  expense  a  portion  of  the  route,  and  the  others,  in  like  manner,  the 
residue  ;  each  being  authorized  to  collect  fare  over  the  whole  or  any  part  of 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  G7 

§  41.  But  a  case,  bringing  the  distinction  to  its  strict- 
est test,  may  easily  be  put,  of  factors,  brokers,  and  other 
agents,  who  are  employed  to  sell  goods  on  account  of 
their  principals,  and  are  to  receive  a  commission  out  of 
the  profits,  or  a  proportion  of  the  profits,  or  a  particular 
percentage  out  of  the  price,  or  a  part  or  the  whole  of 
the  price,  beyond  a  certain  sum,  for  which  the  goods  are 
sold,  as  a  compensation  for  their  services.  In  all  such 
cases  it  has  been  constantly  held,  that  the  factors,  brok- 
ers, and  other  agents,  are  not  partners  with  their  prin- 
cipals, as  to  third  persons,  and  a  fortiori^  not  between 
themselves  and  their  principals.^  It  might  be  different, 
as  to  third  persons  (as  we  shall  hereafter  see),  if  the 
factor,  broker,  or  other  agent,  were  not  only  thus  to 
receive  a  proportion  of  the  profits,  but  also  to  bear 
a  proportion  of  the  losses.^     So,  where  a  lighterman 

the  route ;  the  parties  to  settle  monthly,  and  the  fare  so  received  to  be 
divided  in  proportion  to  the  length  of  each  one's  route,  the  party  found  to 
have  received  more  than  his  share,  to  pay  over  to  the  other  the  balance  on 
each  monthly  settlement,  this  was  held  not  to  constitute  a  partnership  be- 
tween the  parties,  whatever  it  might  be  as  between  them  and  third  persons. 
Pattison  v.  Blanchard,  1  Seld.  186.  And  see  Ellsworth  v.  Tartt,  26  Ala. 
733:  Bonsteel  ?;.  Vanderbilt,  21  Barb.  26]  ;  {Merrick  v.  Gordon,  20  N.  Y. 
93.     See§58«.} 

1  Coll,  on  P.  B.  1,  c.  1,  §  I,  p.  18-29.  See  Dixon  v.  Cooper,  3  Wils.  40 ; 
Benjamin  v.  Porteus,  2  H.  Bl.  590 ;  Meyer  v.  Sharpe,  5  Taunt.  74 ;  Rice  v. 
Austin,  17  Mass.  197,  206;  3  Kent,  33  ;  2  Bell,  Comm.  B.  7,  p.  623,  5th  ed. ; 
Withington  v.  Herring,  3  Moo.  &  P.  30  ;  Gibbons  v.  Wilcox,  2  Stark.  43  ; 
[Tobias  v.  Blin,  21  Vt.  544]  ;  Gow  on  P.  c.  1,  p.  18-20,  3d  ed. ;  Ex  parte 
•Watson,  19  Ves.  459;  Turner  v.  Bissell,  14  Pick.  192;  [Denny  v.  Cabot,  6 
Met.  82;  Bradley  v.  White,  10  Met.  303;  Judson  v.  Adams,  8  Cush.  556; 
Pottr.  Eyton,3  C.  B.  32;  Burckle  r.  Eckart,  1  Denio,337;  s.  c.  3  Comst.  132]; 
{Fitch  V.  Hall,  25  Barb.  13  ;  Hanna  t'.  Flint,  14  Cal.  73;  Berthold  v.  Gold- 
smith, 24  How.  536  ;  Hallet  v.  Desban,  14  La.  An.  529  ;  Ellsworth  v.  Pomeroy, 
26  Ind.  158.  See  also  Braley  v.  Goddard,  49  Me.  115;  Benson  r.  Ketchum, 
14  Md.  331.} 

*  Smith  r.  AVatson,  2  B.  &  C.  401  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  19,  2d  ed. ; 
Green  v.  Beesley,  2  Bing.  N.  C.  108.  But  see  Mair  v.  Glennie,  4  M.  &  S. 
240  ;  [Explained  in  Stocker  v.  Brockelbank,  3  Macn.  &  G.  250,  5  Eng.  L.  & 
Eq.  67]  ;  Perrott  v.  Bryant,  2  You.  &  C.  Ex.  61,  67,  68. 


68  PARTNERSHIP.  [CHAP.  IV. 

agreed  with  the  owner  of  a  lighter  to  work  the 
lighter,  and  to  receive  half  of  the  gross  earnings,  as  his 
compensation  therefor,  he  was  held  not  to  be  a  partner, 
even  as  to  third  persons ;  but  it  was  merely  a  mode  of 
compensation  of  his  services.^  So,  where  a  person 
agreed  to  give  his  attendance  and  services  in  a  grocery 
store,  and  for  such  attendance  and  services  he  was  to 
receive  a  fixed  salary,  and  also  a  commission  of  seven 
per  cent  upon  the  profits  of  the  business,  from  the 
owners,  it  was  held,  that  this  did  not  constitute  him  a 
partner,  upon  the  ground,  that  a  commission  on  the 
profits  was  distinct  from  an  interest  in  the  profits.^  It 
might  perhaps  be  more  accurately  said,  that  it  was  a 
mere  mode  of  compensation  for  an  agency.  The  like 
rule  would  apply,  where  a  person  should  agree  to  de- 
pasture cattle  on  the  lands  of  another,  who  was  to  be 
repaid  for  fattening  the  same,  by  equally  dividing  all  the 
profits  with  the  owner,  above  £20,  the  estimated  value 
of  the  cattle,  uj)on  a  resale.^ 

'  Ante,  §  34  ;  Dry  t\  Boswell,  1  Camp.  329  ;  Coll.  on  P.  B.  1,  c.  1,  §  1, 
p.  21,  2(1  ed. ;  Gow  on  P.  p.  19,  20,  3d  ed. ;  Taggard  v.  Loring,  16  Mass.  336  ; 
Cutler  V.  Winsor,  6  Pick.  335;  Cheap  v.  Cramond,  4  B.  &  Aid.  663,  670; 
[Heirastreet  r.  Howland,  5  Denio,  68.]  See  also  Mohawk  &  Hudson  R.  R. 
Co.  V.  Niles,  3  Hill,  (N.  Y.)  162  ;  {Bowman  v.  Bailey,  10  Vt.  170;  Bowyer 
V.  Anderson,  2  Leigh,  550.} 

*  Miller  v.  Bartlet,  15  S.  &  R.  137  ;  [Pott  v.  Eyton,  3  C.  B.  32]  ;  {New- 
man i\  Bean,  1  Fost.  93  ;  Bartlett  v.  Jones,  2  Strobh.  4  71  ;  Macy  v.  Combs, 
15  Ind.  469.} 

3  Wish  V.  Small,  1  Camp.  331,  note;  Gow  on  P.  p.  19,  20,  3d  ed. ;  [Raw- 
linson  v.  Clarke,  15  M.  &  W.  292.  And  where  A.  agrees  to  furnish  a 
farm  with  a  certain  amount  of  teams  and  labor,  and  B.  is  to  manage  the 
farm,  and  give  certain  labor,  the  crops  to  be  divided  between  them,  this  does 
not  constitute  a  partnership.  Blue  v.  Leathers,  15  111.  31  ;  {Moore  v.  Smith, 
19  Ala.  774;  post,  §  46,  note.}  So,  where  a  patentee  of  an  article  con- 
tracted with  tlie  defendant  to  act  as  manager  of  the  business  of  manufacturing 
the  article  which  was  to  be  marked  with  the  patentee's  name,  the  defendant 
furnishing  all  the  capital,  but  the  patentee  having  the  management  of  the 
work,  employing  the  workmen,  making  the  purchases,  &c.,  and  was  to  receive 
a  remuneration  equal  to  forty  per  cent  on  the  capital  stock,  deducting  all 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  G9 

§  42.  It  is  upon  the  like  ground,  that  if  the  master  of 
a  ship  contracts  with  the  owner  to  receive  a  certain  pro- 
portion of  the  profits  of  the  voyage,  in  Heu  of  wages  and 
primage,  this  alone  will  not  constitute  him  a  partner 
with  the  owner  m  the  adventure  inter  sese,  whatever  may 
be  the  case  as  to  third  persons.^     So,  seamen  engaged 

liabilities,  but  by  express  terms  was  not  to  be  a  partner  with  the  defendant, 
this  was  held  not  to  make  the  patentee  a  partner  with  the  defendant,  although 
his  remuneration  depended  distinctly  upon  the  amount  of  profits.  Stocker 
V.  Brockelbank,  3  Macn.  &  G.  250,  5  Eng.  L.  &  Eq.  67,  But  if  the  joint 
owners  of  a  patent  agree  to  make  a  common  interest  to  sell,  and  to  divide  the 
net  proceeds  equally,  a  partnership  is  thereby  created.  Penniman  v.  Munson, 
26  Vt.  164  ;  and  see  Noyes  v.  Cushman,  25  Vt.  390.] 

'  Mair  v.  Glennie,  4  M.  &  S.  240.  —  In  this  case,  by  agreement,  the 
master  of  the  ship  was  to  have,  in  lieu  of  wages,  primage,  &c.,  one-fifth 
share  of  the  profit  or  loss  of  the  intended  voyage  on  ship  and  cargo,  and 
was  to  follow  the  instructions  of  the  owner  of  the  ship  and  cargo,  and  do 
all  the  business  himself  that  he  could  do,  and  for  the  rest  make  the  best 
bargains  he  could.  The  voyage  was  to  Havana,  and  to  take  in  a  return 
cargo  for  the  Baltic.  The  owner  became  bankrupt  during  the  voyage,  and 
had  mortgaged  the  ship  to  A.  &  Co.  for  advances  ;  who  had  not  taken  pos- 
session of  the  ship  upon  her  return,  and  had  also  become  bankrupts.  The 
ship  and  cargo  had  been  sold,  and  the  suit  was  by  the  assignees  of  the 
owner  against  the  assignees  of  the  mortgagees,  for  the  proceeds.  One 
question  was,  whether  the  master,  under  the  agreement,  was  a  partner 
in  the  ship  and  cargo,  for  the  voyage.  The  court  held  that  he  was  not. 
On  this  occasion  Lord  EUenborough  said :  "  And  upon  this  point,  it  has 
been  contended,  that  the  caj^tain  was  virtually  a  partner.  But  on  what 
ground  has  it  been  so  contended?  The  ground  is,  because  payment  of 
the  captain's  wages  was  to  depend,  as  to  its  amount,  upon  a  reference  to  the 
value  of  the  cargo,  but,  according  to  that  mode  of  argument,  every  seaman 
in  a  Greenland  voyage  would  become  a  partner  in  a  fishing  concern.  There 
is  no  pretence,  therefore,  for  saying,  tliat  the  captain  was  a  partner,  because 
his  wages  were  to  be  regulated  and  paid  by  reference  to  a  calculation  on  the 
profits  of  the  adventure."  [This  case  was  commented  upon  and  approved 
in  Stocker  v.  Brockelbank,  3  Mac.  &  G.  250,  5  Eng.  L.  &  Eq.  67.]  This 
language  is  certainly  very  general ;  and  perhaps  in  its  application  it  ought 
to  be  limited  to  the  very  case  before  the  court,  which  involved  the  point 
only  whether  there  was  a  partnership  between  the  parties  ;  not  whetlier  there 
was  a  partnership  as  to  third  persons.  It  is  indeed  difficult,  even  with  this 
qualification,  to  reconcile  this  case  with  the  doctrine  pronudgated  in  some 
other  cases ;  for  as  the  master  was  to  share  both  in  the  profit  and  losses  of 
the  voyage,  it  would  seem  that  the  owner  and  master  were,  i7iter  sese,  part- 
ners in    the  ship  and  cargo  for  the  voyage,  as  well  as  in  regard  to  tliird 


70  PARTMERSHIP.  [cHAP.  IV. 

in  the  whale  fisheries,  who  are  to  receive  a  certain  pro- 
portion of  the  profits  or  proceeds  of  the  voyage  after  the 
sale  thereof,  in  lieu  of  wages,  are  not  deemed  inter  sese, 
or  as  to  third  persons,  partners  with  the  owner  and 
master  therein ;  but  their  shares  are  treated,  as  in  the 
nature  of  wages,  unliquidated  at  the  time,  but  capable  of 
being  reduced  to  a  certainty,  on  the  sale  of  the  oil  or 
fish,  when  it  has  taken  place  ;  and  thus  they  become  en- 
titled to  wages  to  the  extent  of  their  proportion  in  the 
produce  of  the  voyage.^  It  would  be  manifestly  against 
the  common  understanding  in  all  such  voyages,  to  con- 
sider them  partners  inter  sese.^  And  it  would  be  equally 
against  the  common  usage  to  treat  them  as  partners  as 
to  third  persons,  and  liable  thereby  for  the  outfits,  ad- 
vances, and  other  charges  for  the  voyage  to  third  per- 
sons, who  should  give  credit  for  them.  On  the  contrary, 
in  all  such  voyages  the  owner  of  the  ship  is  treated  as 
solely  responsible  therefor,  and  the  masters,  officers,  and 
crew  are  not  even  deemed  tenants  in  common  in  the 

persons.  At  least  there  are  authorities  which  sustain  this  view  of  the  matter. 
See  ante,  §  27,  32,  34,  41  ;  post,  §  43,  44,  55-58.  {But  in  Mair  v.  Glennie, 
the  expression  profit  or  loss  seems  to  have  been  used  for  gross  returns.  See 
§  30,  note}  ;  Smith  v.  Watson,  2  B.  &  C.  401 ;  Bond  v.  Pittard,  3  M.  &  W. 
357;  Green  v.  Beesley,  2  Bing.  N.  C.  108;  Perrott  v.  Bryant,  2  You. 
&  C.  Ex.  61,  68 ;  Coll.  on  P.  B.  1,  c.  1,  §  l,|p.  20-24,  2d  ed. 

'  Wilkinson  v.  Frasier,  4  Esp.  182 ;  Baxter  v.  Rodman,  3  Pick.  435, 
438,  439  ;  Turner  v.  Bissell,  14  Pick.  192,  195  ;  {Coffin  v.  Jenkins,  3  Story, 
108  ;  The  Crusader,  Ware,  437  ;  Reed  v.  Hussey,  Bl.  &  Howl,  525  ;  Duryee 
V.  Elkins,  Abbotts,  Adm.  529. } 

'^  Rice  V.  Austin,  17  Mass.  197,  205,  206.  — Mr.  Justice  Putnam,  in  de- 
livering the  opinion  of  the  court  in  this  case,  said :  "It  cannot,  however,  be 
true,  that  all  who  participate  in  the  profits  are  to  be  considered  as  partners, 
in  respect  to  the  concern  or  adventure,  from  which  the  profits  of  the  voyage 
arise.  Seamen,  for  example,  who  are  employed  in  the  whale  fisheries,  are 
usually  compensated  for  their  services  by  a  certain  part  of  the  profits  of  the 
voyage.  Nevertheless,  it  has  not  been  supposed,  that  this  circumstance 
made  the  mariner  a  partner  with  the  ship-owner,  so  as  to  render  it  lawful 
for  a  creditor  of  the  mariner  to  take  the  whole  cargo  of  oil  for  his  private 
debt."     See  also  Turner  v.  Bissell,  14  Pick.  192. 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  71 

voyage ;  but  are  rather  deemed  entitled  to  several  and 
distinct  proportions  of  the  proceeds  thereof,  as  in  the 
nature  of  wages,  and  in  no  sense  as  partners.^  The  case 
therefore  is  one  where  the  seamen  are  to  participate  in 
the  profits,  if  any,  but  are  to  bear  no  part  of  the  losses, 
if  the  profits  are  not  sufficient  to  repay  the  owner.^  In 
like  manner,  where  persons,  who  are  engaged  as  dredg- 
ers in  the  oyster  fisheries,  have  no  interest  in  the  boats, 
nor  in  the  fish  caught,  but  the  latter  belong  wholly  to 

'  See  Fennings  v.  Lord  Gi'enville,  1  Taunt.  241.  —  In  Baxter  v.  Rodman, 
3  Pick.  435,  438,  Mr.  Chief  Justice  Parker,  in  delivering  the  opinion  of  the 
court,  it  being  a  case  growing  out  of  a  contract  for  a. whaling  voyage,  said : 
"  The  first  objection  is,  that  as  by  virtue  of  the  contract,  on  which  the 
master  and  crew  engage  in  the  voyage,  they  are  to  receive  their  pay  out  of 
the  proceeds  of  the  oil,  they  are  joint  owners  and  quasi  partners,  and  so 
ought  all  to  have  joined  in  the  action.  If  this  were  the  law,  it  would  be 
found  to  be  exceedingly  inconvenient,  and  would,  no  doubt,  entirely  break 
up  the  peculiar  mode  of  conducting  these  voyages,  which  have  been  found 
to  be  so  beneficial  to  those  who  carry  them  on,  and  to  the  country.  That 
every  seaman  should  be  tenant  in  common  with  all  the  other  seamen,  the 
master,  and  the  owners  of  the  vessel,  in  all  the  oil,  which  may  be  taken  on 
a  whaling  vo3'age,  so  that  no  action  could  be  brought  respecting  it  without 
joining  all,  and  none  could  be  sued  without  the  whole,  giving  every  seaman 
a  right  to  discontinue  the  action,  or  to  release  the  claim,  or  to  receive  pay- 
ment for  the  whole,  would  be  a  state  of  things  not  suspected  by  the  wise 
and  enterprising  men  who  have  carried  on  the  whale  fishery.  But  we  think 
it  is  not  the  law.  The  owners  of  the  vessel  and  projectors  of  the  voyage 
are  the  owners  of  the  product  of  the  voyage.  The  true  meaning  of  the 
shipping  contract  is,  that  the  men  shall  be  paid  out  of  the  proceeds  in  a 
stipulated  proportion.  It  is  an  agreement  as  to  the  mode  of  compensation, 
and  gives  them  no  property  in  the  oil,  but  only  regulates  the  amount  of 
compensation."  In  the  common  cod  fisheries  a  different  usage  seems  to 
prevail.  There  the  fishermen  generally  share  the  fish  caught,  and  the  pro- 
ceeds thereof,  when  sold  by  the  owner,  in  certain  fixed  proportions.  This 
has  never  been  supposed  to  constitute  them  partners  inter  sese,  or  as  to  third 
persons,  in  the  adventure.  At  most  they  could  be  deemed  no  more  than 
tenants  in  common  of  the  fish  caught  with  the  owner.  The  act  of  Congress 
manifestly  contemplates  them  as  having  rights  and  interests  in  severalty, 
and  gives  each  fisherman  a  several  remedy  against  the  vessel  for  his  share  of 
the  fish  caught,  and  of  the  proceeds  when  sold.  Act  of  19  June,  1813,  c.  2. 
See  Houston  v.  Darling,  16  Me.  413. 

*  See  Coppard  v.  Page,  Forrest,  1 ;  Perrott  v.  Bryant,  2  You.  &  C.  Ex. 
61,  67,  68. 


72  PARTNERSHIP.  [cHAP.  IV. 

the  owners  of  the  boats ;  and  the  dredgers  are  to  receive 
a  share  of  the  profits  ;  such  persons  are  not  deemed 
partners  in  the  adventure,  either  inter  sese,  or  as  to  third 
persons  ;  but  it  is  treated  as  a  mere  mode  of  calculating 
the  amount  of  wages  due  to  them  from  the  owners  of 
the  boats.^  But  it  might  be  otherwise,  if  the  dredgers 
were  to  share  in  the  profits  and  losses  according  to 
certain  agreed  proportions.^ 

§  43.  In  America  the  doctrine  has  been  applied  to 
other  analogous  cases,  and  pressed  somewhat  further. 
Thus,  where  a  party  was  to  receive,  by  way  of  rent,  a 
portion  of  the  profits  of  a  farm  or  tavern,  let  to  hire  by 
him,  it  was  held,  that  he  ought  not  to  be  deemed  a  part- 
ner in  the  concern  ;  but  that  it  was  to  be  treated  as  a 
mode  of  receiving  compensation  only.^  Upon  the  like 
analogy,  where  A.  advanced  his  funds  to  be  invested  by 
B.  in  live  oak  in  Florida,  to  be  procured,  cut,  and  trans- 
ported at  the  expense  of  B.,  but  on  account  and  risk  of 
A.,  to  the  navy  yard  of  the  United  States,  and  for  his 
services  and  disbursements,  B.  was  to  receive  half  the 
profits,  and  A.,  for  his  risk  and  advances,  was  to  have 
the  residue  of  the  profits ;  it  was  held,  that  the  parties 
were  not  partners  in  the  timber,  nor  could  third  persons 
be  at  liberty  to  treat  it  as  partnership  property.  On 
that  occasion  the  court  said,  that  it  was  not  true,  that  all, 
who  participated  in  the  profits,  are  to  be  considered  as 
partners  in  respect  to  the  concern  or  adventure,  from 
which  the  profits  arise.     And  the   case  was  put  of  ship- 

'  Perrott  v.  Bryant,  2  You.  &  C.  Ex.  61,  67. 

*  Coppard  V.  Page,  Forrest,  1 ;  Perrott  v.  Bryant,  2  You.  &  C.  Ex.  61,  68. 
But  see  Mair  v.  Glennie,  4  M.  &  S.  2-40;  [Stocker  v.  Brockelbank,  SMacn. 
&  Q.  250,  5  Eng..  L.  &  Eq.  67.] 

3  Perrine  v.  Hankinson,  6  Ilalst.  181;  3  Kent,  33;  {Lyon  v.  Knowles, 
3  B.  &  S.  556  ;  Putnam  v.  Wise,  1  Hill,  (X.  Y.)  234  ;  Bowyer  v.  Anderson, 
2  Leigh,  550;  Chase  v.  Barrett,  4  Paige,  148.  But  see  Catskill  Bank  v. 
Gray,  14  Barb.  471.  | 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  73 

ments  to  India  upon  half  profits  (which  are  so  generally 
practised  in  this  country),  in  which  it  has  never  been 
supposed,  that  thereby  the  shippers  and  the  owners  of 
the  ship  became  answerable  for  each  other,  or  were  in 
any  way  interested,  as  partners,  in  respect  to  the  pro- 
perty, which  constituted  the  original  adventure,  and 
w^hich  was  undertaken  to  be  carried  to  India  for  half 
profits,  or  in  the  return  cargo,  in  which  the  proceeds 
were  invested ;  but  that  the  half  profits  were  treated 
only  as  a  mode  of  compensation  for  freight,  disburse- 
ments, and  charges  in  the  course  of  the  voyage.^  So, 
where  A.  and  B.  having  entered  into  a  contract  with  a 
turnpike  company  to  make  and  complete  a  certain  road, 
afterwards  agreed  w^ith  C.  to  let  him  have  a  share  of  the 
profits,  if  any,  in  making  the  second  ten  miles  of  the 
road,  in  proportion  to  the  help  he  aflforded  in  complet- 

'  Rice  V.  Austin,  17  Mass.  197,  206 ;  Turner  v.  Bissell,  14  Pick.  192, 
195  ;  3  Kent,  3-1 ;  {Braley  i'.  Goddard,  49  Me.  115. }  [So,  where  an  agree- 
ment was  entered  into  between  D.  and  W.,  under  which  D.  was  to  furnish 
goods  for  a  store,  and  pay  all  the  expenses,  and  W.  was  to  transact  the 
business  of  the  store,  and  receive  half  of  the  profits,  as  a  compensation  for 
his  service,  it  was  held  that  they  were  not  partners,  and  that  D.  only  was 
liable  for  goods  furnished.  Bradley  v.  White,  10  Met.  303.  See  also  Pott 
V.  Eyton,  3  C.  B.  32;  Dunham  v.  Rogers,  1  Penn.  St.  255;  Rawlinson  v. 
Clark,  15  M.  &  W.  292.  The  like  rule  was  followed,  where  A.  agreed  to 
manufacture  articles  for  B.,  who  agreed  to  furnish  the  raw  materials,  and  to 
pay  A.  such  amount  as  should  arise  from  the  profits  of  the  business,  de- 
ducting the  materials  and  incidental  expenses  of  B.,  together  with  ten  per 
cent  on  the  amount  of  sales.  Judson  v.  Adams,  8  Cush.  556.  So  where  a 
railroad  corporation  leased  to  A.  a  public  house,  owned  by  the  company,  he 
paying  a  certain  sum  annually  out  of  the  net  profits  for  the  use  of  the  fur- 
niture, and  "  one-half  of  the  net  proceeds  arising  from  keeping  the  house 
as  a  hotel,"  and  keeping  an  account,  open  to  their  inspection,  and  giving 
his  own  time  and  attention,  and  having  free  passage  over  their  road  for 
himself  and  all  persons  employed  by  him,  and  all  articles  used  by  him  in 
keeping  the  house,  it  was  held,  that  the  corporation  did  not  thereby  become 
a  partner,  and  liable  for  supplies  furnished  the  house  by  third  persons. 
Holmes  v.  Old  Colony  Railroad  Co.,  5  Gray,  58.  The  question  does 
not  seem  to  have  been  raised  in  this  case,  whether  the  railroad  company  had 
any  corporate  power  to  engage  in  the  business  of  hotel  keeping.] 


74  PARTNERSHIP.  [cHAP.  IV. 

ing  the  same,  the  one-half  to  be  taken  from  A.'s  part, 
and  the  other  half  from  B.'s  part ;  it  was  held,  that  this 
agreement  did  not  create  a  partnership  between  A.,  B., 
and  C,  but  was  only  a  mode  of  paying  C.  for  his  help 
and  lab  or.  ^ 

§  44.  So,  where  the  master  of  a  ship  agreed  with 
the  owner  to  take  her  for  the  purpose  of  getting 
employment  in  the  freighting  business,  and  engaged 
to  victual  and  man  her,  and  pay  half  the  port  charges, 
pilotage,  &c. ;  and  the  owner  was  to  pay  the  other  half, 
together  with  eight  dollars  per  month  for  one  man's 
wages,  and  to  put  the  vessel  in  sufficient  order  for  busi- 
ness ;  and  all  the  money  so  stocked  in  the  vessel  was  to 
be  equally  divided  between  the  master  and  the  owner, 
each  party  accounting  for  the  above ;  it  was  held,  that 
the  master  was,  ^9ro  hac  vice,  owner  for  the  voyage  un- 
dertaken, and  the  owner  was  not  a  partner,  even  as  to 
third  persons ;  for  the  agreement  amounted  to  no  more 
than  a  compensation  out  of  the  earnings  of  the  vessel, 
after  deducting  certain  fixed  charges.^  In  this  case  the 
deduction  was  from  the  gross  earnings.  In  another  case 
the  same  principle  was  applied  to  the  case  of  the  net 
earnings.  Thus,  w^here  the  vessel  was  let  to  charter  to 
the  master  for  the  season,  and  she  was  by  the  agreement 
to  be  at  the  risk  of  the  owner,  and  after  deducting  the 
first  cost  of  the  lumber,  or  whatever  she  might  carry,  the 
owner  was  to  receive  two-fifths  of   the  net  proceeds, 

'  Muzzy  V.  Whitney,  10  Johns.  226.  —  In  this  last  case,  as  in  Hesketh  v. 
Blan chard,  4  East,  144,  the  real  question  before  the  court  was,  whether  the 
parties  were  partners  inter  sese ;  and  the  court  did  not  decide,  whether 
the  pai'ties  were  partners  as  to  third  persons,  as  the  court  did  in  Ilesketh 
V.  Blanchard.  But  the  inference  deducible  from  the  language  of  the  court 
leads  to  the  conclusion  that  they  were  not  partners  either  way.  3  Kent,  34. 
But  see  Dob  v.  Ilalsoy,  16  Johns.  34;   jVoorhees  v.  Jones,  5  Dutch.  270.} 

"  Cutler  V.  Winsor,  6  Pick.  335  ;  Taggard  v.  Loring,  16  Mass.  336.  See 
Dry  V.  Boswell,  1  Camp.  329,  330;   [Dwinel  v.  Stone,  30  Me.  384.] 


CHAP.  IV.]         AS  TO  THIRD  PERSONS.  '75 

and  the  master  was  to  purchase  the  cargoes  at  his 
own  expense,  to  victual  and  man  the  vessel,  and  to 
pay  the  two-fifths  at  the  end  of  each  trip ;  it  was 
held,  that  the  master  was,  p?*o  hac  vice,  owner  for  the 
season ;  and  that  the  general  owner  was  not  liahle 
to  third  persons,  as  a  partner  on  account  of  other 
shipments,  not  made  within  the  scope  of  the  agree- 
ment.^ 

§  45.  Other  cases  have  arisen,  where  the  same  dis- 
tinction has  been  still  more  strikingly  adopted.  Thus, 
where  A.,  residing  at  a  distance  from  a  factory  of  cloths, 
occupied  by  B.,  entered  into  an  agreement  with  B.,  in 
substance  as  follows :  A.  was  to  furnish  a  full  supply  of 
wool  for  the  factory  for  two  years ;  and  B.  was  to  man- 
ufacture such  wool  into  broadcloths  and  satinets,  in  a 
good  and  workmanlike  manner,  according  to  the  direc- 
tions of  A.,  and  to  devote  the  entire  use  of  his  factory 
to  that  purpose  for  the  term ;  and  the  net  proceeds  of 
the  cloths,  after  deducting  the  incidental  expenses  and 
charges  of  sale,  were  to  be  divided,  so  that  A.  should 
have  fifty-five  per  cent,  and  B.  forty-five  per  cent 
thereof ;  and  in  the  manufacture  of  satinets  from  such 
wool,  A.  was  to  pay  fifty-five  per  cent,  and  B.  forty-five 
per  cent  of  the  cost  of  the  warp  ;  and  the  expense  of 
insurance  on  the  work  and  cloth  was  to  be  borne  by  A. 
and  B.,  in  the  same  ratio  as  their  interest  was  in  the 
final  division  of  the  avails  of  the  cloths ;  and  in  case  of 

'  Reynolds  v.  Toppan,  15  Mass.  370.  —  This  case  seems  to  have  turned 
upon  its  own  peculiar  circumstances ;  otherwise,  it  might  not  seem  easy  at 
first  view  to  reconcile  it  with  the  doctrine  of  Lord  EUenborough,  in  Dry  v. 
Boswell,  1  Camp.  329,  330,  where  the  distinction  is  expressly  taken  between 
sharing  the  gross  earnings  and  sharing  the  net  earnings.  The  former  is 
not,  the  latter  is,  the  case  of  a  partnership.  Ante,  §  34,  and  note  ;  post, 
§  56.  See  also  Cheap  v.  Cramond,  4  B.  &  Aid.  6G3,  668,  cited  post,  §  56, 
note;  {Ward  v.  Thompson,  22  How.  330;  Winsor  v.  Cutts,  7  Greenl.  261. 
But  see  Julio  v.  Ingalls,  1  All.  41.} 


76  PARTNERSHIP.  [cHAP.  IV. 

the  destruction  of  any  work  or  cloth  by  fire,  the  amount 
received  of  the  insurers  was  to  be  divided  between  A. 
and  B.,  according  to  the  loss  sustained  by  each ;  it  was 
held,  that  under  this  agreement,  A.  and  B.  were  not 
partners,  either  inter  se,  or  as  to  third  persons,  and  that 
B.  had  no  other  interest  in  the  profits,  than  a  compen- 
sation for  his  labor  and  materials  by  a  percentage  on  the 
avails  of  the  cloths.^ 

'  Loomis  V.  Marshall,  12  Conn.  69.  —  The  general  reasoning  of  the  cases 
on  this  subject  was  so  fully  gone  into  upon  this  occasion,  that  it  may  be 
acceptable  to  the  learned  reader  to  have  an  opportunity  to  examine  it.  Mr. 
Justice  Huntingdon,  in  delivering 'the  opinion  of  the  court,  said:  "That 
the  parties  to  this  agreement  did  not  intend  to  create  a  partnership,  either 
as  between  themselves  or  thii'd  persons,  is,  we  think,  very  obvious  from  the 
facts  set  forth  in  the  motion,  connected  with  the  stipulations  contained  in 
the  agreement ;  and  if  they  are  liable  as  partners,  they  are  made  so  by 
construction  of  law.  Those  who  were  to  furnish  the  wool,  supposed  they 
alone  were  responsible  for  the  purchase-money ;  and  those  who  were  to 
perform  the  labor  and  provide  the  materials  necessary  to  complete  the  man- 
ufacture of  it,  believed  they  alone  were  liable  for  the  price  of  the  labor  and 
materials.  If  they  are  all  jointly  liable,  their  liability  arises  from  the  fact, 
that  they  have  entered  into  a  contract,  which,  as  between  themselves  and 
the  plaintiff,  controls  their  clear  intention,  if  not  express  stipulation,  to  the 
contrary.  And  it  is  undoubtedly  true  that  a  person  may  expressly  refuse 
to  be  responsible  as  partner,  and  yet,  in  the  same  instrument  which  con- 
tains that  refusal,  may  agree  to  such  terms  as  will  in  law  constitute  him  a 
partner.  Whether  these  defendants  have  entered  into  such  terms,  is  to  be 
determined  by  a  fair  construction  of  the  agreement  which  they  have  executed. 
While,  on  the  one  hand,  we  should  be  careful  to  adopt  no  rule  of  construction, 
which  would  enable  parties,  who  are  interested  in  the  profits  of  business,  as 
profits,  to  deprive  the  creditors  of  any  portion  of  the  fund,  on  which  they 
have  a  just  claim  for  the  payment  of  the  debts  due  to  them ;  so,  on  the  other 
hand  (to  use  the  language  of  Kent,  C.  J.,  in  Post  v.  Kimberly,  9  Johns. 
504),  '  we  must  be  careful  not  to  carry  the  doctrine  of  constructive  partner- 
ship so  far  as  to  render  it  a  trap  for  the  unwary.'  We  must  in  this,  as  other 
cases,  look  to  the  entire  transaction,  in  order  to  judge  correctly  of  its  nature 
and  tendency.  And  we  think  (as  is  said  by  Gould,  J.,  in  Coope  v.  Eyre, 
1  H.  Bl.  44),  'Cases  of  this  nature  should  stand  on  broad  lines,  not  on 
subtleties  and  refinements,  the  source  of  litigation  and  disputes.'  A  com- 
munity of  interest  in  land  does  not,  of  itself,  constitute  a  partnership ;  nor 
does  a  mere  community  of  interest  in  personal  estate.  There  must  be  some 
joint  adventure,  and  an  agreement  to  share  in  the  profit  of  the  undertaking. 
Porter  v.  M'Clure,  15  Wend.  187 ;  Green  v.  Beesley,  2  Bing.  N.  C.  108 ; 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  77 

§  46.  The  like  decision  was  made  under  the  follow- 
ing circumstances.  By  a  written  agreement  A.  agreed 
to  furnish  B.  for  one  year  with  wool  to  be  worked  into 

Fereday  r.  IIordoiTi,  Jac.  144.  This  community  of  profit  is  the  test  to  tlu- 
termine  whether  the  contract  be  one  of  partnership ;  and  to  constitute  it,  a 
partner  must  not  only  share  in  the  profits,  but  share  in  them  as  a  principal ; 
for  the  rule  is  now  well  established,  that  a  party,  who  stipulates  to  receive  a 
sum  of  money  in  proportion  to  a  given  quantum  of  the  profits,  as  a  reward 
for  his  labor,  is  not  chargeable  as  a  partner.  The  cases  are  collected  and 
well  arranged  by  Collyer,  in  his  Treatise  on  Partnership,  14,  15,  et  seq., 
and  by  Gary  (on  Partn.),  8-11.  They  embrace  factors  and  brokers,  who 
receive  a  commission  out  of  the  profits  of  the  goods  sold  by  them ;  masters 
of  vessels,  who  share  in  the  profit  and  loss  of  the  adventure  in  lieu  of 
wages  ;  seamen  employed  in  the  whale  fisheries  ;  shipments  from  this  country 
to  India  on  half  profits ;  those  who  receive,  in  the  form  of  rent,  a  portion  of 
the  profits  of  a  farm  or  tavern ;  and  a  variety  of  other  adventures,  to  which 
it  is  unnecessary  particularly  to  refer.  Dry  v.  Boswell,  1  Camp.  329 ;  AVish 
V.  Small,  1  Camp.  331,  note;  Hesketh  v.  Blanchard,  4  East,  144;  Mair  v. 
Glennie,  4M.  &  S.  240  ;  Dixon  v.  Cooper,  3  Wils.  40  ;  Withington  v.  Herring, 

5  Bing.  442  ;  Rice  v.  Austin,  17  Mass.  197  ;  Baxters.  Rodman,  3  Pick.  435  ; 
Cutler  V.  Winsor,  6  Pick.  335 ;  Turner  i'.  Bissell,  14  Pick.  192 ;  Muzzy  v. 
Whitney,  10  Johns.  226  ;  Ross  v.  Drinker,  2  Hall,  415  ;  Harding  v.  Foxcroft, 

6  Greenl.  76  ;  Thompson  v.  Snow,  4  Greenl.  264 ;  Miller  v.  Bartlet,  15  S.  & 
R.  137.  The  rule,  which  these  and  other  cases  establish,  is  founded  on  the 
distinction  which  has  been  taken  between  agreements,  by  which  the  parties 
have  a  specific  interest  in  the  profits  themselves,  as  profits,  and  such  as  give 
to  the  party  sought  to  be  charged  as  a  partner,  not  a  specific  interest  in  the 
business  or  profits,  as  such,  but  a  stipulated  proportion  of  the  profits,  as  a 
compensation  for  his  labor  and  services.  Ex  parte  Chuck,  8  Bing.  469. 
We  are  aware  that  this  distinction  has  not  received  the  approbation  of  Lord 
Eldon,  Avho  says,  in  Ex  parte  Hamper,  17  Ves.  403:  'The  cases  have  gone 
further  to  this  nicety,  upon  a  distinction  'so  thin,  that  I  cannot  state  it  as 
established  upon  due  consideration,  that  if  a  trader  agrees  to  pay  another 
person  for  his  labor  in  the  concern  a  sum  of  money  even  in  proportion  to 
the  profits,  equal  to  a  certain  share,  that  will  not  make  him  a  partner;  but 
if  he  has  a  specific  interest  in  the  profits  themselves,  as  profits,  he  is  a  partner. 
It  is  clearly  settled,  though  I  regret  it,  that  if  a  man  stipulates,  that,  as  the 
reward  of  his  labor,  he  shall  have,  not  a  specific  interest  in  the  business,  but  a 
given  sura  of  money,  even  in  proportion  to  a  given  quantum  of  the  profits, 
that  will  not  make  him  a  partner ;  but  if  he  agrees  for  a  part  of  the  profits,  as 
such,  giving  him  a  right  to  an  account,  though  having  no  property  in  the 
capital,  he  is,  as  to  third  persons,  a  partner.'  Id.  412  ;  Ex  ^yarte  Rowlandson, 
1  Rose,  91  ;  Ex  parte  Watson,  19  Ves.  459.  We  do  not  propose  to  examine 
the  reason-ableness  of  the  doubts  expressed  by  this  distingui;ihed  judge. 
Such  inquiry  we  consider  closed  by  a  series  of  precedents,  which  we  do 


78  PARTNERSHIP.  [CHAP.  IV. 

satinets,  and  B.  was  to  deliver  to  A.  all  the  satinets, 
which  the  wool  would  make,  and  to  find  and  pay  for 
warps  for  the  same  ;  A.  was  to  pay  B.,  for  working  the 
wool,  finding  the  warps,  &c.,  forty  per  cent  on  the  sale 
of  the  satinets ;  each  was  to  pay  half  the  charges ;  A. 
was  to  have  the  whole  direction  of  the  sales,  and  if  he 
should  make  sales  himself,  he  was  to  have  one  and  a 
half  per  cent  upon  forty  per  cent  of  the  sales.  It 
was  held,  that  A.  and  B.  were  not  partners  inter  sese,  or 
as  to  third  persons.^ 

not  feel  at  liberty  to  disregard.  They  have  settled  principles,  which  have 
for  a  long  period  regulated  the  agreements  of  parties,  in  cases  to  which 
they  are  applicable  ;  and  they  ought  not  now  to  be  questioned.  The  dis- 
tinction, to  which  we  have  referred  in  our  opinion,  embraces  the  present 
case.  The  object  of  Marshall  and  his  associates  was  to  have  the  wool  man- 
ufactured into  cloth.  They  resided  at  a  distance  from  the  factory  occupied 
by  French  and  Hubbell,  and  were  unacquainted  with  the  business  of  manu- 
facturing. They  were  willing  to  avail  themselves  of  the  opportunity,  which 
the  possession  of  the  factory  by  French  afforded,  of  having  their  wool 
worked  into  cloth,  and  of  the  skill  of  French  and  Hubbell,  to  prepare  it  for 
market.  To  secure  and  increase  exertion,  they  agreed  to  give  them,  as  a 
reward  for  their  services  and  the  materials,  which  they  should  furnish, 
a  certain  proportion  of  the  '  net  proceeds  of  all  the  cloths,  after  deducting 
incidental  and  necessary  expenses  of  transporting  and  other  proper  charges 
of  sale.''  It  is  not  expressed,  in  terms,  to  be  for  such  compensation  ;  but 
this  is  its  legal  meaning.  In  many  of  the  cases,  to  which  we  have  referred, 
the  language  of  the  agreements  was  not  more  explicit  than  in  the  one  now 
under  consideration  ;  but  looking  at  the  entire  transaction,  such  was  con- 
sidered the  obvious  meaning  of  the  parties.  French  and  Hubbell  had  no 
other  interest  in  the  profits  than  such  as  arose  from  the  agreement  to  pay 
them  for  their  labor,  &c.,  in  a  specific  proportion  of  the  amount  of  the  sale 
of  the  manufactured  article."     [See  Brigham  v.  Dana,  29  Vt.  1,  9.] 

'  Turner  v.  Bissell,  14  Pick.  192.  — On  this  occasion  Mr.  Justice  Wilde, 
in  delivering  the  opinion  of  the  court,  said:  "  The  question  submitted  is, 
whether  the  defendants  are  liable  in  this  suit  as  partners.  It  is  admitted, 
that  they  were  not  partners  inter  se ;  for  by  the  terms  of  their  agreement, 
they  had  not  a  mutual  interest  in  the  profits  and  loss  of  the  business,  to 
which  it  related,  which  is  essential  to  render  a  partnership  complete.  But 
the  plaintiff 's  counsel  contend,  that  both  of  the  defendants  participated  in 
the  profits  of  the  business,  and  were  thereby  chargeable  with  respect  to 
third  persons.  And  it  is  certainly  a  well-established  principle,  that  whoever 
participates  in  the  profits  of  a  trade,  or  has  a  specific  interest  in  the  profits 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  79 

§  47.  So,  where  a  person  was  employed  as  an  agent 
in  conducting  the  husiness  of  a  foundry  for  iron  cast- 
ings, at  a  fixed  salary  of  ^300,  and  in  addition  thereto, 
he  was  to  receive  one-third  of  the  profits  of  the  foundry, 

themselves,  as  profits,  is  chargeable  as  a  partner  with  respect  to  tliird 
persons.  Gow  on  P.  14.  But  it  is  equally  well  established,  that,  where  a 
party  is  entitled  to  or  receives  a  given  sum  of  money,  in  proportion  to  a  given 
quantum  of  the  profits,  as  a  compensation  for  his  labor  and  services,  he  is 
not  thereby  liable  to  be  charged  as  a  partner.  Gow  on  P.  19.  Thus, 
in  Dry  v.  Boswell,  1  Camp.  o29,  the  proprietor  of  a  lighter  agreed  with  a 
person  to  work  his  lighter,  and  to  allow  him  therefor  one-half  of  the  gross 
earnings,  as  a  compensation  for  his  labor ;  and  it  was  ruled  by  Lord  Ellen- 
borough,  that  such  an  agreement  did  not  constitute  a  partnership.  The  cases 
of  the  seamen  employed  in  the  whale  fisheries,  and  of  shipments  to  India  on 
half  profits,  come  witliin  the  same  distinction.  So  factors  and  other  agents, 
who  receive  commissions  in  proportion  to  the  amount  of  sales,  are  inter- 
ested in  the  profits,  but  as  they  have  no  interest  in  them,  excepting  so  far 
as  they  may  determine  the  amount  of  compensation  for  their  services,  thev 
do  not  thereby  become  partners.  And  we  are  of  opinion,  that  the  present 
case  falls  within  this  distinction.  The  object  of  Bissell  was  to  have  his 
wool  worked  into  cloth,  and  he  agreed  to  allow  Root,  as  compensation  for 
manufacturing,  an  amount  of  money  to  be  regulated  by  the  amount  of 
sales ;  and  in  no  other  manner  was  Root  interested  in  the  profits.  The 
circumstance,  that  Root  was  to  find  warps,  does  not  affect  the  principle,  upon 
which  the  distinction  as  to  compensation  is  founded.  If  Bissell  had  agreed 
with  Root  to  pay  him  a  certain  sum  for  his  services,  and  for  supplying  the 
warps,  there  could  be  no  pretence  for  holding  them  as  partners  ;  and  we  can 
perceive  no  difl'erenee  in  principle,  arising  from  the  circumstance,  that  the 
compensation  was  to  be  determined  according  to  the  amount  of  sales." 
[And  see  Hawes  v.  Tillinghast,  1  Gray,  289;  {Denny  v.  Cabot,  6  Met.  82; 
Judson  V.  Adams,  8  Cush.  556;  Hitchings  v.  Ellis,  12  Gray,  4-49;  Kellogg 
V.  Griswold,  12  Vt.  291 ;  Mason  v.  Potter,  26  Yt.  722 ;  Lamb  v.  Grover, 
47  Barb.  317  ;  Dunham  v.  Rogers,  1  Penn.  St.  255 ;  Johnson  v.  Miller,  16 
Ohio,  431.  See  §  41.}  So  where  A.  agreed  to  serve  B.  as  overseer  on 
his  farm  for  one  year,  A.  to  furnish  a  certain  number  of  hands  and  horses, 
and  to  defray  his  and  their  expenses  himself,  and  they  were  to  be  worked 
on  B.'s  farm  in  connection  with  B.'s  hands  and  horses,  and  A.  was  to  have 
one-fourth  of  the  crop  for  his  compensation,  this  was  held  to  constitute  no 
partnership  inter  sese,  as  A.  was  to  share  only  in  the  gross  profits,  and  not 
at  all  in  the  loss.  Moore  v.  Smith,  19  Ala.  774  ;  {Blue  v.  Leathers.  15  111. 
31;  ante,  §  41,  note.}  But  where  A.  gave  B.  possession  of  a  stock-farm 
for  a  term  of  years  to  improve,  B.  to  have  one-third  of  tiie  profits,  and  to 
pay  no  rent,  the  current  expenses  to  be  paid  by  the  concern,  and  six  per 
cent  interest  to  be  allowed  on  advances  made  by  either  party,  this  contract 
was  held  to  be  a  partnership.     Tibbatts  v.  Tibbatts,  G  McLean,  80.] 


80  PARTNERSHIP.  [cHAP.  IV. 

if  any  were  made,  and  he  had  nothing  to  do  with  the 
losses ;  and  his  employers  were  to  find  all  the  capital 
stock,  and  he  was  to  give  his  services ;  it  was  held, 
that  the  agent  was  not,  either  as  to  his  employers,  or 
as  to  third  persons,  a  partner ;  but  that  the  case  fell 
within  that  class  of  decisions,  where  the  agent  was  to 
receive  a  share  of  the  profits  as  a  compensation  for  his 
labor  and  services.^ 

§  48.  These  may  suffice  as  illustrations  of  the  dis- 
tinction above  alluded  to.  The  whole  foundation,  on 
which  it  rests,  is,  that  no  partnership  is  intended  to  be 
created  by  the  parties  inter  sese  ;  that  the  agent  is  not 
clothed  with  the  general  powers,  rights,  or  duties  of  a 
partner ;  that  the  share  in  the  profits  given  to  him  is 
not  designed  to  make  him  a  partner,  either  in  the 
capital  stock,  or  in  the  profits,  but  to  excite  his  dili- 
gence, and  secure  his  personal  skill  and  exertions,  as 
an  agent  of  the  concern,  and  is  contemplated  merely 
as  a  compensation  therefor.  It  is,  therefore,  not  only 
susceptible  of  being  treated  purely  as  a  case  of  agency ; 
but  in  reality  it  is  positively  and  absolutely  so,  as  far 
as  the  intention  of  the  parties  can  accomplish  the 
object.  Under  such  circumstances,  what  ground  is 
there  in  reason,  or  in  equity,  or  in  natural  justice,  why 
in  favor  of  third  persons  this  intention  should  be  over- 
thrown, and  another  rule  substituted,  which  must  work 
a  manifest  injustice  to  the  agent,  and  has  not  operated 
either  as  a  fraud,  or  a  deceit,  or  an  intentional  wrong 
upon  third  persons  ?  Why  should  the  agent,  who  is  by 
this  very  agreement  deprived  of  all  power  over  the 
capital  stock,  and  the  disposal  of  the  funds,  and  even 

»  Vanderburgh  v.  Hull,  20  Wend.  70.  See  1  Smith,  Lead.  Cas.  504, 
and  note,  2d  ed.  ;  [Ilawlinson  v.  Clarke,  15  M.  &  W.  292]  ;  {§  41  ;  Clark 
V.  Gilbert,  ^2  Barb.  57G  ;  Atherton  v.  Tilton,  44  N.  H.  452;  Bull  v.  Schu- 
bcrth,  2  Md.  38.     But  see  Holt  v.  Kernodle,  1  Ired.  191).} 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  81 

of  the  ordinary  rights  of  a  partner  to  a  levy  ^  thereon, 
and  an  account  thereof,  be  thus  subjected  to  an  un- 
Hmited  responsibihty  to  third  persons,  from  whom  he 
has  taken  no  more  of  the  funds  or  profits  (and,  indeed, 
ordinarily  less  so)  than  he  would  have  taken,  if  the 
compensation  had  been  fixed  and  absolute,  instead  of 
being  contingent?^  If  there  be  any  stubborn  rule  of 
law,  which  establishes  such  a  doctrine,  it  must  be 
obeyed;  but  if  none  such  exists,  then  it  is  assuming 
the  very  ground  in  controversy  to  assert,  that  it  flows 
from  general  analogies  or  principles.  On  the  contrary, 
it  may  be  far  more  correctly  said,  that  even  admitting 
(what  as  a  matter  unafl"ected  by  decisions,  and  to  be 
reasoned  out  upon  original  principles,  might  well  be 
doubted  ^),  that  where  each  party  is  to  take  a  share  of 
the  profits  indefinitely,  and  is  to  bear  a  proportion  of  the 
losses,  each  having  an  equal  right  to  act  as  a  principal, 
as  to  the  profits,  although  the  capital  stock  might  belong 
to  one  only,^  it  shall  constitute,  as  to  third  persons,  a 
case  of  partnership  ;  yet  that  rule  ought  not  to  apply  to 
cases,  where  one  party  is  to  act  manifestly  as  the  mere 
agent  for  another,  and  is  to  receive  a  compensation  for 
his  skill  and  services  only,  and  not  to  share  as  a  partner, 
or  to  possess  the  rights  and  powers  of  a  partner. 

§  49.  In  short,  the  true  rule,  ex  cecfiio  et  bono,  would 
seem  to  be,  that  the  agreement  and  intention  of  the 
parties  themselves  should  govern  all  the  cases.  If  they 
intended  a  partnership  in  the  capital  stock,  or  in  the 
profits,  or  in  both,  then,  that  the  same  rule  should 
apply  in  favor  of  third  persons,  even  if  the  agreement 

>  { Qu.  lien  ? } 

«  Gary  on  P.  11,  note  (i)  ;  ante,  §  37,  note  (1). 
=»  Ante,  §  36,  37. 

*  Grace  v.  Smith,  2  W.  Bl.  998 ;  Waugh  v.  Carver,  2  II.  Bl.  235  ;  ante, 
§  27,  28. 


82  PARTNERSHIP.  [cHAP.   IV. 

were  unknown  to  them.  And,  on  the  other  hand,  if  no 
such  partnership  were  intended  between  the  parties, 
then,  that  there  should  be  none  as  to  third  persons, 
unless  where  the  parties  had  held  themselves  out  as 
partners  to  the  public,  or  their  conduct  operated  as  a 
fraud  or  deceit  upon  third  persons.  It  is  upon  this 
foundation,  that  the  decisions  rest,  which  affirm  the 
truth  and  correctness  of  the  distinction  already  con- 
sidered, as  a  qualification  of  the  more  general  doctrine 
contended  for.  And  in  this  view  it  is  difficult  to  per- 
ceive, why  it  has  not  a  just  support  in  reason,  and 
equity,  and  public  policy.  Wherever  the  profits  and 
losses  are  to  be  shared  by  the  parties  in  fixed  propor- 
tions and  shares,  and  each  is  intended  to  be  clothed 
with  the  powers,  and  rights,  and  duties,  and  responsi- 
bilities of  a  principal,  either  as  to  the  capital  stock,  or 
the  profits,  or  both,  there  may  be  a  just  ground  to 
assert,  in  the  absence  of  all  controlling  stipulations  and 
circumstances,  that  they  intend  a  partnership.  But 
where  one  party  is  stripped  of  the  powers  and  rights 
of  a  partner,  and  clothed  only  with  the  more  limited 
powers  and  rights  of  an  agent,  it  seems  harsh,  if  not 
unreasonable,  to  crowd  upon  him  the  duties  and 
responsibilities  of  a  partner,  which  he  has  never  as- 
sumed, and  for  which  he  has  no  reciprocity  of  reward 
or  interest.  It  has,  therefore,  been  well  said  by  Mr. 
Chancellor  Kent,  in  his  learned  Commentaries,  that 
"  to  be  a  partner,  one  must  have  such  an  interest  in 
the  profits,  as  will  entitle  him  to  an  account,  and  give 
him  a  specific  lien  or  preference  in  payment  over  other 
creditors.  There  is  a  distinction  between  a  stipulation 
for  a  compensation  for  labor  proportioned  to  the  profits, 
which  does  not  make  a  person  a  partner ;  and  a  stipu- 
lation for  an  interest  in  such  profits,  which  entitles  the 


CHAP.  IV.J        AS  TO  THIRD  PERSONS.  83 

party  to  an  account,  as  a  partner." '  And  Mr.  Collyer 
has  given  the  same  doctrine  in  equally  expressive 
terms,  when  he  says,  that  in  order  to  constitute  a  com- 
munion of  profits  between  the  parties,  which  shall 
make  them  partners,  the  interest  in  the  profits  must  be 
mutual ;  that  is,  each  person  must  have  a  specific  inter- 
est in  the  profits,  as  a  principal  trader.^ 

'  3  Kent,  25,  note  (b)  ;  Gary  on  P.  11,  note  (i)  ;  ante,  §  37,  note  (1)  ; 
post,  §  57.     [See  Rawlinson  v.  Clarke,  15  M.  &  W.  292.] 

*  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  17,  2d  ed.;  Id.  p.  11;  Id.  p.  23.  {The 
doctrine  that  participation  in  profits  makes  one  liable  as  a  partner  to  third 
persons  by  operation  of  Into,  first  distinctly  enunciated  in  Waugh  v.  Carver,  2 
H.  Bl.  235,  after  being  disapproved  by  almost  all  text-writers,  reluctantly 
followed  by  courts  and  broken  in  upon  by  subtle  exceptions  and  limitations, 
has  been  finally  overthrown  in  England.  A  series  of  cases  has  decided  that 
the  law  of  partnership  is  a  branch  of  the  law  of  agency ;  that  the  test  to 
determine  the  liability  of  one  sought  to  be  charged  as  a  partner,  is  whether 
the  trade  is  carried  on  in  his  behalf;  and  that  participation  In  the  profits  is 
not  decisive  of  that  question,  except  so  far  as  it  is  evidence  of  the  relation  of 
principal  and  agent  between  the  persons  taking  the  profits  and  those  actually 
carrying  on  the  business.  Cox  v.  Hickman,  18  C  B.  617;  s.  c.  8  H.  L.  C. 
2G8;  Kilshaw  i'.  Jukes,  3  B.  &  S.  847;  Bullen  v.  Sharp,  (Exch.  Ch.)  Law 
Rep.  1  C.  P.  86. 

In  the  last  case  Mr.  Justice  Blackburn  says,  p.  109:  "The  first  point 
therefore  to  be  determined  In  the  present  case,  is  what  really  was  the  effect 
of  the  decision  of  the  House  of  Lords  in  Cox  v.  Hickman,  8  H.  L.  C.  268. 
Prior  to  that  decision,  the  dictum  of  De  Grey,  C.  J.,  In  Grace  v.  Smith,  2  W. 
Bl.  998,  'that  every  man  who  has  a  share  of  the  profits  of  a  trade  ought 
also  to  bear  a  share  of  the  loss,"  had  been  adopted  as  the  ground  of  judgment 
In  Waugh  v.  Carver,  2  H.  Bl.  235,  where  It  was  laid  down  'that  he  who 
takes  a  moiety  of  all  profits  Indefinitely  shall,  by  operation  of  law,  be  made 
liable  to  losses  if  losses  arise,  upon  the  principle  that,  by  taking  a  part  of  the 
profits,  he  takes  from  the  creditors  a  part  of  that  fund  which  Is  the  proper 
security  to  them  for  the  payment  of  their  debts.'  This  decision  had  never 
been  overruled.  The  reasoning  on  which  It  proceeds  seems  to  have  been 
generally  acquiesced  In  at  the  time :  and  when,  more  recently.  It  was  dis- 
puted, it  was  a  common  opinion  (in  which  I  for  one  participated)  that  the 
doctrine  had  become  so  Inveterately  part  of  the  law  of  England  that  it  would 
require  legislation  to  reverse  It.  In  Cox  r.  Hickman,  the  creditors  of  a  trade 
had  agreed  that  their  debtor's  trade  should  be  carried  on  for  the  purpose  of 
paying  them  their  debts  out  of  the  profits;  and  the  composition  deed,  to  wliich 
they  were  parties,  secured  to  them  a  property  In  the  profits.  The  rule  laid 
down  In  Waugh  v.  Carver,  if  logically  followed  out,  led  to  the  conclusion 


84  PARTNERSHIP.  [cHAP.  IV. 

§  50.  The  Koman  law  fully  recognized  the  same  dis- 
tinction, treating  the  case  as  a  mandate,  and  not  as  a 

thai  all  tlie  creditors  ■who  assented  to  this  deed,  and  by  so  doing  agreed 
to  take  the  profits,  were  individually  liable  as  partners;  but,  when  it  was 
sought  to  apply  the  rule  to  such  an  extreme  case,  it  was  questioned  whether 
the  rule  itself  was  really  established.  There  was  a  very  great  difference  of 
opinion  amongst  the  judges  who  decided  the  case  in  its  various  stages  below, 
and  also  amongst  those  consulted  in  the  House  of  Lords.  In  the  result,  the 
House  of  Lords,  —  consisting  of  Lord  Campbell,  C,  and  Lords  Brougham, 
Cranworth,  Wensleydale,  and  Chelmsford,  —  unanimously  decided  that  the 
creditors  were  not  partners.  The  judgments  of  Lord  Cranworth  and  of 
Lord  Wensleydale  bear  internal  evidence  of  having  been  written.  Lord 
Campbell,  C,  and  Lords  Brougham  and  Chelmsford  said  a  few  words 
expressing  their  concurrence.  It  is,  therefore,  in  the  written  judgments,  and 
more  especially  in  the  elaborate  judgment  of  Lord  Cranworth,  that  we  must 
look  for  the  7-atio  decidendi.  Now,  we  find  Lord  Cranworth  says,  8  H.  L.  C. 
306  :  '  It  was  argued,  that,  as  they  would  be  interested  in  the  profits,  therefore 
they  would  be  partners.  But  this  is  a  fallacy.  It  is  often  said  that  the  test, 
or  one  of  the  tests,  whether  a  person  not  ostensibly  a  partner  is  nevertheless, 
in  contemplation  of  law,  a  partner,  is,  whether  he  is  entitled  to  participate, in 
the  profits.  This,  no  doubt,  is  in  general  a  sufficiently  accurate  test;  for  a 
right  to  participate  in  profits  affords  cogent,  often  conclusive,  evidence  that 
the  trade  in  which  the  profits  have  been  made  was  carried  on  in  part  for  or 
on  behalf  of  the  person  setting  up  such  a  claim.  But  the  real  ground  of  the 
liability  is,  that  the  trade  has  been  carried  on  by  persons  acting  on  his  behalf; 
when  that  is  the  case,  he  is  liable  to  the  trade  obligations,  and  entitled  to  its 
profits,  or  to  a  share  of  them.  It  is  not  strictly  correct  to  say  that  his  right  to 
share  in  the  profits  makes  him  liable  to  the  debts  of  the  trade.  The  correct 
mode  of  stating  the  proposition  is,  to  say  that  the  same  thing  which  entitles 
him  to  the  one  makes  him  liable  to  the  other,  viz.  the  fact  that  the  trade  has 
been  carried  on  on  his  behalf,  i.  e.  that  he  stood  in  the  relation  of  principal 
towards  the  persons  acting  ostensibly  as  the  traders  by  whom  the  liabilities 
have  been  incurred,  and  under  whose  management  the  profits  have  been 
made.  Taking  this  to  be  the  ground  of  liability  as  a  partner,  it  seems  to  me 
to  follow  that  the  mere  concurrence  of  creditors  in  an  arrangement  under 
which  they  permit  their  debtor,  or  trustees  for  their  debtor,  to  continue  his 
trade,  applying  the  profits  in  discharge  of  their  demands,  does  not  make 
them  partners  with  their  debtor  or  the  trustees.  The  debtor  is  still  the 
person  solely  interested  in  the  profits,  save  only  that  he  has  mortgaged  them 
to  his  creditors.  He  receives  the  benefit  of  the  profits  as  they  accrue, 
though  he  has  precluded  himself  from  applying  them  to  any  other  purpose 
than  the  discharge  of  his  debts.  The  trade  is  not  carried  on  by  or  on 
account  of  the  creditors ;  though  their  consent  is  necessary  in  such  a  case ; 
for,  without  it,  all  the  property  might  be  seized  by  them  in  execution.  But 
the  trade  still  remains  the  trade  of  the  debtor  or  his  trustees ;  the  debtor  or 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  85 

partnership,  unless  the  hitter  was  the  intention  of  the 
parties  themselves,  where  one  person  was  employed  to 

the  trustees  are  the  person  by  or  on  behalf  of  whom  it  is  carried  on.'  He 
afterwards  adds,  8  H.  L.  C.  309  :  '  The  authorities  cited  in  argument  did 
not  throw  much  light  upon  the  subject.  I  can  find  no  case  in  which  a 
person  has  been  made  liable  as  a  dormant  or  sleeping  partner,  where  the 
trade  might  not  fairly  be  said  to  have  been  carried  on  for  him,  together  with 
those  ostensibly  conducting  it,  and  when  therefore  he  would  stand  in  the 
position  of  principal  towards  the  ostensible  members  of  the  firm  as  his  agents.' 
And  Lord  Wensleydale  says,  8  H.  L.  C.  312:  'A  man  who  allows  another 
to  carry  on  trade,  whether  in  his  own  name  or  not,  to  buy  and  sell,  and 
to  pay  over  all  the  profits  to  him,  is  undoubtedly  the  principal,  and  the 
person  so  employed  is  the  agent,  and  the  principal  is  liable  for  the  agent's 
contracts  in  the  course  of  his  employment.  So,  if  two  or  more  agree  that 
they  shall  carry  on  a  trade,  and  share  the  profits  of  it,  each  is  a  principal,  and 
each  is  an  agent  for  the  other;  and  each  is  bound  by  the  other's  contracts  in 
carrying  on  the  trade,  as  much  as  a  single  principal  would  be  by  the  act  of 
an  agent  who  was  to  give  the  whole  of  the  profits  to  his  employer.  Hence, 
it  becomes  a  test  of  the  liability  of  one  for  the  contract  of  another  that  he  is 
to  receive  the  whole  or  a  part  of  the  profits  arising  from  that  contract,  by 
virtue  of  the  agreement  made  at  the  time  of  the  employment.  I  believe  this 
is  the  true  principle  of  partnership  liability.  Perhaps  the  maxim  that  he  who 
partakes  the  advantage  ought  to  bear  the  loss,  often  stated  in  the  earlier  cases 
on  the  subject,  is  only  the  consequence,  not  the  cause,  why  a  man  is  made 
liable  as  a  partner.  Can  we,  then,  collect  from  the  trust  deed  that  each  of 
the  subscribing  creditors  is  a  partner  with  the  trustees,  and  by  the  mere  sig- 
nature of  the  deed  constitutes  them  his  agents  for  carrj'ing  on  the  business  on 
the  account  of  himself  and  the  rest  of  the  creditors  ?  I  think  not.'  And 
he  afterwards  gives  as  the  reason  of  his  decision,  that  in  the  particular  case, 
there  was  not  'such  a  participation  of  profits  as  to  constitute  the  relation  of 
principal  and  agent  between  the  creditors  (the  defendants)  and  the  trustees, 
who  actually  made  the  contract  sued  on.' 

"I  think  that  the  ratio  decidendi  is,  that  the  proposition  laid  down  in 
Waugh  V.  Carver,  viz.  that  a  participation  in  the  profits  of  a  business  does  of 
itself,  by  operation  of  law,  constitute  a  partnership,  is  not  a  correct  state- 
ment of  the  law  of  England ;  but  that  the  true  question  is,  as  stated  by  Lord 
Cranworth,  whether  the  trade  is  carried  on  on  behalf  of  the  person  sought  to 
be  charged  as  a  partner,  the  particij)ation  in  the  profits  being  a  most  im- 
portant element  in  determining  that  question,  but  not  being  in  itself  decisive ; 
the  test  being,  in  the  language  of  Lord  Wensleydale,  whether  it  is  such  a  par- 
ticipation of  profits  as  to  constitute  the  relation  of  principal  and  agent  between 
the  person  taking  the  profits  and  those  actually  carrying  on  the  business." 

And  in  the  same  case,  p.  125,  Mr.  Baron  Bramwell  says:  "They 
say  that  the  defendant  is  a  partner  with  his  son ;  and  that,  if  not  part- 
ners inter  se,  they  are  so  as  regards  third  parties.     A   most   remarkable 


86  PARTNERSHIP.  [CHAP.  IV. 

sell  the  goods  of  another,  and  was  to  receive  for  his  ser- 
vices a  portion  of  the  profits,  or  the  whole  or  a  part  of 

expression  !  Partnership  means  a  certain  relation  between  two  parties.    How, 
then,  can  it  be  correct  to  say  that  A.  and  B.  are  not  in    partnership  as 
between  themselves,  they  have  not  held  themselves  out  as  being  so,  and  yet 
a  third  person  has  a  right  to  say  they  are  so  as  relates  to  him  V     But  that 
must  mean    vifer  se,  for  partnership  is  a  relation  inter  se,  and  the  word 
cannot  be  used  except  to  signify  that  relation.     A.  is  not  the  agent  of  B. ;  B. 
has  never  held  him  out  as  such ;  yet  C.  is  entitled,  as  between  himself  and  B., 
to  say  that  A.  is  the  agent  of  B.  !    Why  is  he  so  entitled,  if  the  fact  is  not  so, 
and  B.  has  not  so  represented?     But   'partnership,'   and  a  'right  to  call 
persons  partners  as  regards  third  parties'  are  words,  and  the   tJiing  must 
be  looked  at,  viz.  the  taking  or  sharing  of  profits,  which  it  is  said  gives  C.  a 
right  as  against  B.,  to  say  B.  is  a  partner  of  A.     Why  should  it  ?     I  trust, 
that,  in  the  present  state  of  authority,  this  question  may  be  freely  handled 
without  presumption,  and  that  the  goodness  of  such  a  rule  may  be  examined ; 
because,  though  we  are  bound  to  administer  the  law  as  we  find  it,  yet,  when 
we  are  considering  what  is  the  law,  we  may  not  improperly  inquire  into  the 
reasonableness  of  that  suggested.     Why,  then,  does  a  taking  or  sharing  of 
A.'s  profits  by  B.  entitle  C.  to  demand  payment  by  B.  of  A.'s  debts  in  the 
trade  ?     How,  if  there  is  such  taking  or  sharing  in  this  case,  does  it  prove 
that  the  defendant  '  subscribed  the  policy  and  became  an  insurer '  ?    If  A. 
agrees  with  B.  to  share  profits  and  losses,  but  not  to  interfere  with  the  busi- 
ness, and  not  to  buy  nor  sell,  and  does  not  interfere,  nor  buy  nor  sell,  and  C. 
knowing  this,  deals  with  B.,  he  would  have  no  claim  on  A.    AVhy  should  he, 
if  he  does  not  know  of  it  ?     Why,  upon  finding  out  something  between  A. 
and  B.,  which  has  in  no  way  affected  or  influenced  him,  should  he  who  has 
dealt  with  B.  have  a  claim  on  A.  ?     It  is  said,  because  profits  are  what  the 
creditor  trusts  to,  they  are  his  fund  for  payment.     This  would  be  a  bad 
reason,  if  true  in  fact.     A  man  who  trusts  another  generally,  has  a  claim  on 
his  profits  and  capital  too.    How  does  a  man  who  trusts  the  former  only  more 
afiect  the  creditor's  fund  ?     But,  further,  it  really  is  not  true  in  substance, 
only  in  words.     It  is  not  a  receipt  of  profits,  in  substance,  that  makes  a  man 
liable.     If  I  agree  to  receive  a  sum  in  proportion  to  profits,  as,  for  instance, 
a  sum  equal  to  a  tenth,  I  am  not  liable.     If  I  receive  a  tenth,  I  am.     What 
is  the  difference,  except  in  words,  at  least  as  far  as  creditors  are  concerned  ? 
How  can  one  set  of  words  between  A.  and  B.,  give  C.  a  right,  and  the  same 
thing  in  other  words  not?      How  many  men  in  a  thousand,  not  lawyers, 
could  be  got  to  understand,  that,  of  the  two  servants  of  a  firm,  the  one  who 
received  a  tenth  of  the  profits  was  liable  for  its  debts,  and  the  other  who 
received   a   sum  equal  to  a  tenth  was  not?     This  Mr.  Justice  Story  calls 
'satisfactory.'     Story  on  P.  §  32.     Satisfactory  in  what  sense?    In  a  practi- 
cal business  sense  ?     No ;  but  in  the  sense  of  an  acute  and  subtle  lawyer, 
who  is  pleased  with  refined  distinctions,  interesting  as  intellectual  exercises, 
though  unintelligible  to  ordinary  men,  and  mischievous  when  applied  to  the 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  87 

the  excess  of  price  beyond  a  given  sum.^  Si  margarita 
tibi  vendenda  dedei^o,  ut,  si  ea  decern  vendidisses,  red- 

ordinary  affairs  of  life.  Lord  Eldon  did  not  think  it  satisfactory.  Ex  parte 
Hamper,  17  Ves.  404.  Such  a  law  is  a  law  of  surprise  and  injustice,  and 
against  good  policy.  It  fixes  a  liability  on  a  man  contrary  to  his  intent  and 
expectation,  and  without  reason,  and  gives  a  benefit  to  another  which  he  did 
not  bargain  for  and  ought  not  to  have,  and  prevents  that  free  use  of  capital 
and  enterprise  which  is  so  important.  It  is  said  that  this  is  true  of  a  dor- 
mant partner.  It  is  not :  his  existence  may  be  unknown  to  the  creditor ;  but 
the  dormant  partner  knows  he  is  liable,  and  means  to  be ;  and  the  creditor 
trusts  all  such  persons ;  he  means  to  deal  with  all  real  persons.  It  may  be 
said,  that,  if  this  reasoning  is  right,  a  man  might  bargain  to  receive  all  the 
profits  of  a  business,  and  not  be  liable.  The  answer  is,  the  thing  is  impossi- 
ble. There  never  was,  and  never  will  be,  a  bona  fide  agreement  by  one  man 
to  carry  on  a  business,  bear  all  its  losses,  and  pay  over  all  its  profits.  Should 
such  an  agreement  appear,  it  would  obviously  be  colorable.  Where  there  is 
a  chance  of  profit  to  the  trader,  there  such  an  agreement  may  be  honest ; 
and,  where  honest,  ought  not  to  make  him  liable  who  is  certainly  to  receive 
some  of  the  profits,  and  perhaps  all. 

"I  have  hitherto  dealt  with  the  case  on  principle.  I  proceed  to  examine 
the  authorities.  The  labor  formerly  needful  is  now  rendered  unnecessary  by 
Cox  V.  Hickman,  8  H.  L.  C.  268.  That  case  has  settled  the  law,  I  may  be 
permitted,  I  hope,  to  say,  in  a  perfectly  satisfactory  manner.  .  .  .  But, 
even  if  we  assume  that  the  law  supposed  to  exist  before  Cox  v.  Hickman, 
remains  untouched,  that  is  to  say,  the  supposed  law  of  Waugh  v.  Carver,  2 
H.  Bl.  235,  I  think  the  same  conclusion  ought  to  be  come  to.  Lord  Wensley- 
dale  does  not  notice  that  case.  Lord  Cranworth  does,  and,  with  submission, 
gives  a  better  reason  for  the  decision  than  is  to  be  found  in  the  case  itself. 
The  Chief  Justice  there  says  the  question  is  whether  they  have  not  consti- 
tuted themselves  partners  in  respect  to  other  persons,  and  puts  his  decision  on 
the  ground  that,  '  he  who  takes  a  moiety  of  all  the  profits  indefinitely,  shall  by 
operation  of  law  be  liable  to  losses.'  Let  us  hope  that  this  notion  is  over- 
ruled, —  one  which  I  believe  has  cau.sed  more  injustice  and  mischief  than 
any  bad  law  in  our  books.  ...  I  hope  I  shall  not  be  charged  with  arro- 
gance for  the  way  in  which  I  have  spoken  of  bygone  opinions.  The  law  had 
drifted  into  the  condition  from  which  it  was  rescued  by  Cox  v.  Hickman. 
No  one  in  particular  was  responsible  for,  and  probably  no  one  person  could 
have  put  it  at  once  in  the  position  it  was  in.  But  the  true  line  had  been  de- 
parted from,  at  first  but  a  little,  and  for  a  good  reason ;  and  every  subse- 
quent move  took  it  further  away  in  a  wrong  direction,  till  it  was  happily 
brought  back  by  Cox  v.  Hickman." 

In  America  there  is  much  conflict  among  the  authorities.  It  has  been 
generally  considered  that  a  mere  participation  in  the  profits,  even  the  net 
profits,  will  not  necessarily  constitute  one  a  partner ;  and  even  the  Pennsyl- 

'  Ante,  §37. 


88  PARTNERSHIP.  [cHAP.  IT. 

deres  mihi  decern ;  si  2^^uris^  quod  excedit  tit  haheres  ; 
mihi  videtur  (says  Ulpian)  si  animo  contr^ahendce  socie- 

vania  courts,  though  they  have  complained  greatly  of  the  rule  that  a  commis- 
sion on  profits  is  not  such  an  interest  as  constitutes  partnership,  have  yet 
followed  it.  Miller  v.  Bartlet,  15  S.  &  R.  137  ;  Dunham  f.  Rogers,  1  Penn. 
St.  255.  But  this  doctrine  has  not  been  universally  received.  In  a  case  in 
Maryland,  in  1815,  Taylor  v.  Terme,  3  Harr.  &  J.  505,  the  plaintiff  con- 
tended that  an  agent  who  received  a  share  of  the  profits  was  liable  as  a 
partner;  the  defendant  admitted  that  the  English  cases  were  so,  but  con- 
tended that  as  they  were  decided  since  the  revolution  they  should  not  govern 
in  this  country.  The  court  gave  judgment  for  the  plaintiff.  There  is  no 
opinion.  The  Supreme  Court  of  Ohio  in  Wood  v.  Vallette,  7  Ohio  St.  172, 
say,  "that  even  an  agent  cannot  stipulate  with  his  employer  to  receive  an 
interest  in  the  profits,  other  than  of  gross  profits,  as  a  remuneration  for 
his  services,  without  thereby  becoming  a  partner  as  to  third  persons."  In 
this  case,  however,  the  agreement  between  the  parties  was  probably  such  as 
to  constitute  them  partners  it^tei'  sese.  In  Bromley  v.  Elliot,  38  N.  H.  287, 
the  Supreme  Court  of  New  Hampshire  say  that  the  case  in  which  the  person 
dealing  with  the  alleged  partners  knows  or  ought  to  know  that  they  are  not 
partners  "seems  the  only  exception  which  can  be  admitted  to  the  general 
rule  that  he  who  shares  profits  must  share  losses  and  responsibilities,  with 
safety  to  the  public,  or  to  those  who  deal  with  such  parties."  "It  is  said,  they 
must  share  the  profits  as  profits,  to  render  them  liable.  The  principle  thus 
cited  rests  on  a  distinction  long  since  disapproved  as  too  thin  to  be  satisfac- 
tory." "  Again  it  is  said,  that  a  person  may  receive  a  share  of  the  profits  of 
a  business,  by  way  of  salary  or  compensation  for  services,  without  being  held 
liable  as  a  partner  to  third  persons.  This  principle  has  not  been  adopted 
here,  and,  unless  received  with  the  qualification  that  the  true  character  of  the 
agreements  between  the  parties  is  made  known  to  those  who  may  have  deal- 
ings with  them,  or  the  apparent  relations  of  the  parties  are  so  evidently  those 
of  principal  and  agent,  or  rather  of  master  and  servant,  that  no  person  could 
be  misled  or  defrauded  in  consequence  of  the  connection,  it  seems  to  us 
it  would  be  of  most  unsafe  and  dangerous  tendency,  and  wholly  unfit  to 
be  adopted."  These  remarks  seem,  however,  to  be  uncalled  for,  as  the  court 
was  of  opinion  that  the  facts  constituted  the  defendants  partners  inter  sese. 
In  Pierson  v.  Steinmeyer,  4  Rich.  309,  319,  it  is  said  that  the  only  excep- 
tion to  the  rule  that  he  who  shares  profits  is  liable  as  a  partner  to  third  per- 
sons, is  in  the  case  of  agents  and  servants,  and  the  court  refused  to  extend 
the  exception  to  cover  the  case  of  one  who  had  made  advances  to  the  firm. 

On  the  other  hand,  some  cases  come  very  near,  if  not  quite  up  to  the 
modern  English  rule.  In  the  leading  case  of  Loomis  v.  Marshall,  12  Conn. 
69  (see  §  45,  ante),  the  court  say,  "  a  partner  must  not  only  share  in  the 
profits,  but  share  in  them  as  a  principal,"  and  in  Bucknam  v.  Barnum,  15 
Conn.  67,  73,  attention  is  called  to  the  fact  that  the  decision  in  Loomis  i'.  Mar- 
shall was  placed  on  this  ground.  So  in  Hallet  v.  Desban,  14  La.  An.  529, 
and  Berthold  v.  Goldsmith,  24  How.  636,  though  in  this  case  the  actual 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  89 

tads  id  actum  sit^j^^o  socio  actionem;  si  minus ^ j'^'^^^' 
scriptis  verbis.^     In  short,  the  Roman  law  seems  prin- 

relations  betweon  the  alleged  partners  were  known  to  third  persons.  See 
Burckle  v.  Eckhart,  3  Comst.  132. 

In  some  American  cases,  he  who  shares  in  profits  is  said  to  be  liable 
to  third  persons,  on  the  ground  that  he  takes  a  part  of  the  fund  on  which 
creditors  rely.  Purviance  v.  M'Clintee,  6  S.  &  R.  259 ;  see  ante,  §  36. 
The  test,  however,  commonly  proposed  in  the  American  cases  is,  whether 
the  alleged  partner  has  a  specific  lien  on  the  profits  to  the  exclusion  of 
other  creditors,  and  the  i-ight  to  an  account.  This  is  laid  down  in  Cham- 
pion V.  Bostwick,  IS  Wend.  175,  §  38,  ante;  and  is  followed  by  a  series  of 
decisions  in  Massachusetts.  Denny  v.  Cabot,  6  Met.  82  ;  Bradley  v.  White, 
10  Met.  803 ;  Holmes  v.  Old  Colony  R.  R.  Co.  5  Gray,  58 ;  Fitch  v.  Har- 
rington, 13  Gray,  468 ;  Pratt  v.  Langdon,  12  All.  544.  In  this  last  case 
it  is  said  that  "the  decisive  fact  is,  that  each  had  a  lien  on  the  stock  for 
his  share  of  the  profits."  So,  Catskill  Bank  v.  Gray,  14  Barb.  471;  Voor- 
hees  V.  Jones,  5  Dutch.  270;  Reynolds  v.  Hicks,  19  Ind.  113.  See  Cox  v. 
Delano,  3  Dev.  89 ;  Conklin  v.  Barton,  43  Barb.  435. 

Undoubtedly  the  fact  that  a  person  has  a  lien  on  the  profits  is  "  cogent, 
often  conclusive,  evidence"  that  he  is  a  partner;  but  it  maybe  doubted 
whether,  as  an  ultimate  test  to  be  applied  in  all  cases,  it  is  entirely  satis- 
factory. It  is  said  in  the  leading  case  of  Champion  v.  Bostwick,  18  Wend. 
175,  in  language  which  has  been  often  adopted  in  subsequent  decisions, 
that  if  one  stipulates  for  an  interest  in  the  profits  of  a  business  which  would 
entitle  him  to  an  account,  and  give  him  a  specific  lien  or  a  preference  in 
payment  over  other  creditors,  giving  him  the  full  benefit  of  the  increased 
profits  without  any  corresponding  risk  in  case  of  loss,  it  would  operate 
unjustly  as  to  other  creditors.  But  the  creditors  to  whom  he  is  preferred 
are  only  the  separate  creditors  of  the  actual  partners ;  he  has  no  preference 
over  the  partnership  creditors,  for  there  are  no  profits  till  they  are  paid, 
and  it  is  only  out  of  the  profits  that  his  remuneration  is  to  come.  Why 
should  the  fact  that  he  has  a  priority  over  one  set  of  creditors,  make  him 
liable  "  to  his  last  shilling"  to  another  set  of  creditors?  A  second  mort- 
gagee has  a  priority  over  the  mortgagor''s  general  creditors ;  but  has  it 
been  ever  ai'gued  that  ^/^ej-e/bre  his  whole  property,  of  every  kind,  sliould  be 
liable  for  the  first  mortgage  debt  ?    Yet  the  cases  would  seem  very  analogous. 

And  though  a  partner  is  entitled  to  an  account,  yet  a  person  may  well  be 
entitled  to  an  account,  and  yet  not  be  a  partner.  If  he  is  to  receive  a 
sum  equal  to  a  share  of  the  profits,  he  is,  by  the  great  weight  of  authority, 
clearly  no  partner ;  yet  how  can  he  secure  the  payment  of  the  compensa- 
tion agreed  upon  unless  he  has  an  account?  See  also  Holmes  v.  Old 
Colony  R.  R.  Co.,  5  Gray,  58.     See  2  Am.  Law  Rev.  1,  193. } 

*  D.  17,  2,  44  ;  Poth.  Pand.  17,  2,  n.  4,  and  note,  ibid. ;  17  Duranton,  Droit 
Franc,  de  Societe,  n.  332;  Poth.  de  Soc.  n.  13;  5  Duvergier,  Droit  Civil 
Franc,  n.  45. 


90  PARTNERSHIP.  [cHAP.  IV. 

cipally,  if  not  altogether,  to  have  treated  the  case  of 
partnership  only  as  between  the  parties  themselves,  and 
does  not  even  affect  to  give  rights  to  third  persons 
against  them,  founded  upon  any  responsibility  not  con- 
templated by  the  partnership  contract.^  Voet,  in 
speaking  on  the  subject,  manifestly  deems  every  part- 
nership, whether  express  or  implied,  to  be  a  matter  of 
consent  between  the  parties.  Societas  dwiditur  j^Timo 
(says  he)  in  eoc/pressam^  quce,  expressa  conventione  fit^  et 
tacitam,  quce  re  contrahi  dicitur,  dum  rehus  ipsis  et 
factis,  simulemendo,  vendendo,  lucra  et  damna  dividendo, 
socii  ineundce  societatis  voluntatem  declarant^ 

§  51.  The  same  distinction  is  well  known  and  fully 
recognized  in  the  French  law.  Pothier  has  not,  indeed, 
spoken  with  his  usual  clearness,  or  exactness,  on  the 
subject.^  But  Pardessus  has  expressed  his  opinion  in 
the  most  direct  and  satisfactory  manner.  Thus  (he 
says),  whenever  a  merchant,  instead  of  a  fixed  salary, 
agrees  to  give  his  agent  a  certain  part  of  the  annual 
profit,  the  agent  is  a  letter  of  his  services  under  an 
aleatory  condition ;  but  he  is  not  a  partner.  He  can- 
not make  claim  in  that  quality  to  any  proprietary  in- 
terest in  the  merchandise,  bought  with  the  funds  of  his 
principal,  although  he  partakes  of  the  profits  thereof. 
He  cannot,  at  least  without  an  express  stipulation, 
have  any  voice  in  the  deliberations  of  the  partnership ; 
and  he  will  not  be  subjected  to  the  contracts  of  the 
partnership  in  respect  to  third  persons,  unless,  indeed, 
he  has  exceeded  his  powers,  and  then  he  is  responsible 
as  a  mandatary.^     So,   when  one    person    has    trusted 

>  See  17  Duranton,  Droit  Franc,  de  Societe,  n.  334;  Poth.  Pand.  17,  2, 
n.  30-40;  ante,  §  37. 

^  Voet,  ad  Pand.  1 7,  2,  §  2. 

'  See  Potb.  Pand.  17,  2,  n.  4,  and  Pothier's  notes,  ibid.  Poth.  de  Soc.  n. 
13  ;  5  Duvergier,  Droit  Civ.  Franc,  n.  45  ;  ante,  §  37. 

*  Pardessus,  Droit  Comm.  Tom.  4,  n.  969 ;  Id.  Tom.  2,  n.  560. 


CHAP.   IV.]  AS    TO    THIRD    PERSONS.  91 

goods  to  another  to  be  sold  for  him,  and  has  agreed 
to  give  him  the  whole  or  a  part  of  the  price,  which 
shall  exceed  a  certain  sum,  this  will  not  create  a  part- 
nership between  them  ;  but  only  be  a  salaried  man- 
date, or  commission  to  the  agent,  thus  undertaking  the 
business.^  Duvergier  holds  the  same  opinion,  and  has 
reasoned  out  the  grounds  thereof  with  uncommon 
acuteness   and  ability.^      And,  indeed,  it  seems    to   be 

^  Pardessus,  Droit  Comm.  Tom.  4,  n.  969.     See,  also,  Id.  Tom.  2,  n.  306 ; 
Id.  Tom.  3,  n.  702. 

^  5  Duvergier,  Droit  Civ.  Franc,  n.   48-56.  —  The  following   quotation 
clearly  exhibits  his  views.     "  Enfin,  il  y   a  un   usage   fort  repandu  parmi 
les   commercans,   qui   consiste   a   donner,    a   titre    d'appointemens,   a    leur 
commis  ou  employes,  une  quote  part  des  benefices  de  leur  commerce.     Cette 
stipulation   semble,   au  premier  coup-d'ceil,  reunir  tons  les   elemens   de   la 
societe ;  elle  a  d'un  autre  cote,  beaucoup  d'analogie  avec  le  mandat  salarie. 
On  comprend  combien  il  est  utile  de  savoir  a  laquelle  de  ces  deux  classes 
de  contrats  elle  appartient  reellement.     II  est  inutile  de  citer  d'autres  exem- 
ples.     Ceux  que  je  viens  de  presenter  montrent  assez,  qu'il  est  tres  difficile 
de  demeler  le  veritable  caractere  de  ces  conventions  qui  paraissent  partici- 
per  egalement  de  la  societe,   du   mandat  salarie,  et  du   louage   d'ouvrage. 
Recherchons  maintenant  les  principes,  qui  doivent  diriger  dans  cette  appre- 
ciation.   La  definition  qui  a  ete  precedemment  donnee  du  contrat  de  societe, 
me  semble  jeter  sur  ces  delicates  questions  une  lumiere  suffisante.     Elle  pre- 
sente  deux  idees  principales ;  elle  montre  dans  le  contrat  de  societe  deux 
elemens  essentiels ;    d'abord,  un  fonds  commun  compose  des  mises  particu- 
lieres  ;  en  second  lieu,  une  participation  aux  benefices  produits  par  le  fond 
social  ainsi  forme.     Si  done  j'analyse  une  convention,  et  que  je  ne  voie  point, 
qu'elle  ait   fait  des  choses,  dont  chacun  des  contractans  etait  proprietaire 
exclusif,  une  chose  commune  k  tous,  je  suis  autorise  a  conclure,  qu'elle  n'est 
point  une  societe.     Je  suis  conduit  a  la  meme  consequence,  quoique  un  droit 
de  propriete  soit  etabli  par  I'efTet  de  la  stii^ulation,  si  les  contractans  n'ont 
point  eu  en  vue  de  se  partager  des  benefices  resultant  de  I'etat  de  commu- 
naute,  qu'ils  ont  cree.     II  ne  suffit  done  pas,  qu'ils  aient  mis  leurs  proprietds 
en  contact,  sans  les  confondre,  et  qu'ils  se  soient  procures  par  h\  certains 
avantages,  pour  qu'ils  soient  associes;    il  ne  suflit  pas  meme,  que  les  pro- 
prietds  soient  confondues,  et  que  cette  communication  de  droits  ait  acciden- 
tellement  des  resultats  profitables ;  il  faut  que  ce  soit  precisement  en  vuo  de 
ces  resultats  que  la  convention  ait  ^te  formee.     L'application  de  ces  princi- 
pes aux   diverses  hypotheses,   dont  il   vient  d'etre  parl^,  montre  que,  dans 
aucune  d'elles,  il  n'y  a  societe.      Entre    le   proprietaire   de   pierrerics   ou 
d'autres  objets,  et  celui  qui  se  charge  de  les  vendre,  moyennant  la  portion 
du  prix,  qui  e.xc^dera  une  limite  ddterminee,  il  n'y  a  point  de  propri^td  com- 


92  PARTNERSHIP.  [cHAP.   IV. 

the  established  doctrine  of  the  French  tribunals.     This 
coincidence  of  doctrine,  founded  upon  gejieral  reason- 

mune.     L'industrie  de  I'un  s'exerce  sur  une  chose,  qui  ne  cesse  point  d'ap- 
partenir  a  I'autre.     II  n'y  a  point,  a  proprement  parler,  de  benefice,  qui  se 
partage  entre  eux;  la  somme  totale,  moyeunant  laquelle  la  vente  est  faite, 
est  le  prix  des  objets  vendus  ;  elle  est  la  representation,  d'abord  de  la  valeur 
intrinseque  de  ces  objets,  et  en  second  lieu  des  peines,  des  soins  et  meme  des 
frais  qui  ont  pu  etre  necessaires  pour  les  fairs  parvenir  a  un  acheteur.     Dans 
toute  vente,  le  prix  se  compose  de  ces  deux  elemens ;  lorsque  les  marches  se 
concluent,   sans   intermediaire    entre    I'acheteur  et   le    vendeur,  ce   dernier 
touche  les  deux  parties  du  prix  ;  au  cas  contraire,  I'une  est  pergue  par  le 
proprietaire,  I'autre  par  I'entremetteur.     On  devrait  en  dire  autant,  alors 
meme,  que  le  salarie  de  I'agent  place  entre  le  vendeur  et  I'acheteur,  con- 
sisterait  en   une  certaine  quotite   du  prix,  a  quelque   somme  qu'il  s'elevat. 
C'est  precisement  ce  qui  se  passe,  tons  les  jours,  dans  les  ventes  ou   autres 
negociations,  qui  se  font  par  I'intermediaire  de  (tourtiers.     La  commission  ou 
droit  de  courtage  est  de  tant  pour  cent  sur  le  produit  des  operations ;  et  Ton 
n'a  jamais  songe  a  voir  la  des  soeietds,  parce  qu'on  a  bien  senti,  que  la  chose 
dont  la  vente  est  faite,  ne  devient  point  la  copropriete  du  vendeur  et  du 
courtier ;   qu'il  n'y  a  point  de  benefices  proprement  dits  dans  une  pareille 
operation,  car  il  n'y  a  point  augmentation  de  valeur  produite  par  I'eifet 
d'une  mise  en  communaute  ;  que  seulement,  il  y  a  vente  et  distribution  du 
prix  entre  deux  personnes,  qui  y  ont  droit,  a  titre  different.     Lorsque  qua- 
tre  chevaux  appartenant  a  deux  maitres  sont  reunis  pour  etre  vendus,  la 
propriete  de  chacun  restant  separee,  il  est  egalement  e'vident,  qu'il  n'y  a 
point  de  societe ;  car  il  n'y  a  rien  de  mis  en  commun,  il  n'y  a  point  de  copro- 
priete formee  par  la  reunion  de  proprietes  distinctes.     A  la  verite,  la  com- 
binaison  des  contractans  a  pour  but  et  pour  resultat  d'augmenter  la  valeur 
venale  des  choses,  qui  leur  appartiennent ;  mais  la  societe  suppose  I'existence 
d'une  masse  commune  de  benefices,  k  laquelle  chacun  vient  puiser  selon  son 
droit.     Ici,  chacun  et  reste  proprietaire  de  ce,  qui  lui  appartenait  avant  la 
convention,  il  profile  seulement  de  I'excedant  de  valeur,  qui  est  survenu  a 
sa  chose.     Dans  la  troisieme  espece,  oil  Ton  a  voulu  voir  une  societe,  il  n'y 
a  reellement  qu'un   mandat,  ou  I'etablissement  d'un   etat  de   communaute 
transitoire.     Le  fait,  sur  lequel  s'explique  la  loi  romaine  citee  par  Pothier, 
n'est  pas  presente  avec  une  precision  parfaite,  et  lorsqu'on  veut  indiquer  ses 
consequences   avec  I'exactitude  convenable,  on   est   oblige  d'admettre  une 
distinction.     Si  les  deux  voisins,  qui  ont  eu  la  pensee  d'acheter  un  fonds 
place  pres  de  leurs  heritages,  sont  d'accord  sur  la  portion,  que  chacun  y  doit 
prendre  ;  celui  qui  fait  I'acquisition  agit,  pour  partie,  en  son  nom  personnel, 
et,  pour  partie,  comme  mandataire.     II  n'y  a  pas  I'apparence  d'une  societe  ; 
il  n'y  a  pas  meme  communaute,  puisque  le  partage  est  fait  a  I'avance.     Si 
le  lot  de  chacun  n'est  pas  determine,  la  propriete  du  fonds  sera  indivise; 
mais,  on  le  sait,  I'indivision  ne  suffit  point  pour  constituer  la  societe ;   elle 
6tablit  seulement  une  communaute.     Ce  n'est  pour  les  contractans  qu'un 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  93 

ing,  between  foreign  jurists  and   the   municipal  juris- 
prudence  of  the   common  law,  as  to   the  propriety  of 

etat  transitoire  ;  leur  but  est  le  partage,  et  non  la  perception  des  b^n^fices, 
que  la  chose  commune  peut  produire.  L'avantage  que  trouve  cliafiue  ache- 
teur,  dans  la  reunion  a  son  heritage  d'une  partie  du  fonds  acquis  en  com- 
mun,  n'est  pas  un  veritable  benefice  social.  II  est  meme  possible,  qu'il  y  ait 
pour  eux  perte  materielle  dans  I'acquisition,  que  le  fonds  ne  vaille  pas  ce 
qu'ils  I'ont  pave  et  cju'ils  aient  sciemment  fait  un  marche  desavantageux, 
pour  eloigner  un  voisinage  desagreable,  ou  pour  executer  des  ameliorations 
purement  voluptuaires.  On  ne  saurait  trop  insister  sur  la  necessite  de  con- 
server  au  mot  benefices  son  sens  exact  et  rigoureux  ;  car  c'est  parce  que 
Ton  regarde  benefices  et  avantages  comme  des  expressions  equivalentes,  que 
Ton  se  meprend  sur  le  caractere  d'une  foule  de  conventions.  Si  toutes 
celles  qui  procurent  quelques  avantages  aux  contractans,  etaient  des  societes, 
cette  qualification  conviendrait  a  un  nombre  infini  de  contrats.  L'arrange- 
ment  que  font  les  commer^ans  avec  leurs  commis,  lorsqu'ils  donnent  a  ceux-ci, 
au  lieu  d'appointemens,  une  portion  des  benefices  de  leur  maison,  parait,  plus 
que  tout  autre,  reunir  les  elemens  constitutifs  de  la  societe.  L'industrie  du 
commis  ne  forrae-t-elle  pas  sa  mise  ?  Ne  prend-il  point  part  aux  benefices, 
dans  la  veritable  acception  du  mot  ?  Ne  concourt-il  pas  aux  pertes,  puisque 
s'il  n'y  a  pas  de  benefices  il  perd  son  travail  ?  Malgre  cette  reunion  de  oir- 
constances,  les  auteurs  et  les  tribunaux  decident,  qu'il  ne  faut  pas  confondre 
un  commis  interesse  avec  un  veritable  associe.  lis  font  ressortir  les  diffe- 
rences, qui  existent  entre  leur  position  et  leurs  droits.  Le  commis  n'a  point, 
disent-ils,  la  copropriete  du  fonds  social ;  il  n'en  dispose  point  librement  et 
en  maitre  ;  il  reste  soumis  a  I'autorite  et  aux  ordres  de  son  patron ;  il  peut 
etre  renvoye  par  lui,  sauf  dedommagement ;  il  ne  participe  point  aux  pertes ; 
il  n'est  point  person nellement  tenu  envers  les  tiers ;  ainsi  il  n'a  ni  les  pre- 
rogatives ni  les  obligations  d'un  associe.  Ces  observations  sont  justes ; 
eependant  seules  elles  ne  seraient  pas  decisives  et  Ton  pourrait,  a  la  rigueur, 
concevoir  un  associe  redult,  par  des  conventions  particuliercs,  a  une  situa- 
tion k  peu  pr.  s  semblable  a  celle  qui  vient  d'etre  decrite.  Rien  n'empeche, 
en  effet,  de  stipuler,  que  les  choses  mises  dans  la  societe  resteront  la  pro- 
priete  de  I'un  des  associes,  et  que  I'administration  lui  sera  exclusivement 
reservee ;  que  I'autre  participera  aux  pertes,  en  ne  recevant  rien  pour  son 
travail;  et  qu'en  cas  d'insuffisance  du  fonds  "social,  il  ne  sera  point  person- 
nellement  oblige  au  paieraent  des  dettes.  INIais  la  reunion  de  ces  clauses 
fort  extraordinaires  n'etablirait  pas  encore  une  similitude  parfaite  entre 
I'associe  et  le  commis.  D'une  part,  lors  meme  que  les  choses  mises  en 
societe  restent  la  propri6te  de  celui,  qui  les  y  apporte,  leur  jouissance  au 
moins  est  mise  en  commun  et  chacun  des  associes  y  a  droit.  Or  le  commis 
interesse  n'est  point  coproprietaire  des  capitaux  de  celui  qui  I'emploie,  quoi- 
que  ces  capitaux  soient  fournis  en  pleine  propriete,  et  non  pas  seulement 
pour  la  jouissance.  D'un  autre  cote,  I'associe,  qui  donne  son  Industrie  comme 
mise  sociale,  s'engage  a  faire  un  travail  determine  mais  independant ;   il  a 


94  PARTNERSHIP.  [CHAP.  IV. 

the  distinction  above  stated,  certainly  affords  no  slight 
confirmation  of  its  accuracy  and  entire  conformity  to  the 
true  principles,  which  ought  to  regulate  the  subject. 

§  52.  Thus  much,  at  least,  seemed  proper  to  be  said 
in  vindication  of  the  distinction  at  the  common  law, 
and  the  cases  in  support  of  it,  which  have  been  treated 
by  some  learned  minds  (as  we  have  seen),  as  founded 
in  too  much  subtlety  and  refinement,  and  as  not  recon- 
cilable with  acknowledged  principles,  or  just  juridical 
reasoning.^  The  charge  might  be  fairly  retorted,  and 
the  reasoning  pressed,  that  the  rule  itself,  to  which 
the  distinction  is  applied  as  an  exception,  is  open 
to  the  same  objection,  and  to  others  of  a  more  serious 
nature. 

8  53.  But  waivinsr  all  such  discussions,  let  us  now 
proceed  to  the  consideration  of  the  various  cases,  in 
which  the  parties  have  been  held  to  be  partners,  as  to 
third  persons,  even  when  they  were  clearly  not  so,  as 
between  themselves.^  It  is  unnecessary  to  consider  the 
cases,  where  the  parties  intend  a  partnership  between 
themselves ;  for  in  such  cases  they  clearly  are,  or  at 

des  devoirs  a  rempllr  envers  la  soeiete,  mais  il  n'a  point  d'ordres  ^  recevoir 
de  ces  co-associes.  Le  commis,  au  contraire,  s'oblige  a  executer  la  volonte 
du  chef  de  la  maison ;  il  est,  relativement  a  lui,  dans  un  etat  d'inf(£riorite  et 
de  subordination  incompatible  avec  le  caract^re  et  les  droits  d'un  associe. 
Ce  rapprochement,  qu'il  serait  facile  de  pousser  plus  avant,  montre  que, 
sous  des  apparences  semblables,  sont  cachees  des  differences  bien  tranchees ; 
qu'il  ne  faut  pas,  encore  une  fois,  voir  dans  la  participation  a  des  benefices, 
un  sigue  infallible  de  I'existence  d'une  soeiete.  L'associe  et  le  commis 
interesse  ont  cela  de  commun,  qu'ils  sont  I'un  et  I'autre  appeles  a  recueillir 
une  portion  de  benefices;  mais  la  nature  de  leurs  droits  et  la  source  A 
laquelle  ils  les  puisent,  n'en  restent  pas  moins  distinctes  et  separees;  I'un 
participe  au  gain,  parce  qu'il  est  copropriefaire  de  la  chose  qui  le  produit ; 
et  I'autre,  parce  qu'il  a  fait  un  travail  pour  lequel  on  lui  a  promis  cette 
esp^ce  de  salaire."  See  also  the  decisions  of  the  French  tribunals,  cited  by 
Duvergier,  Id.  p.  68,  n.  (2).  See  also  Duranton,  Droit  Civ.  Franc.  Tom. 
17,  n.  320-331. 

1  Ante,  §  48-51.  M^ee  §  49,  note.} 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  95 

least  may  be  held  to  be  partners,  as  to  third  persons.^ 
The  converse  rule,  however,  does  not  reciprocally  apply 
at  the  common  law ;  for  persons  are  often  held  part- 
ners, as  to  third  persons,  where,  either  expressly  or  by 
just  implication,  they  are  not  to  be  deemed  partners 
between  themselves.^ 

§  54.  The  cases  in  which  this  liability  as  partners 
as  to  third  persons  exists,  may  be  distributed  into  the 
following  classes.^     First,  where,  although  there  is  no 

^  Ex  parte  Hodgkinson,  19  Ves.  291,  294. 

"  Mr.  Collyer  seems  to  entertain  some  doubt  as  to  the  terms,  nature,  and 
extent  of  the  doctrine  on  this  point,  and  says :  "  In  the  preceding  cases, 
although  the  parties  manifested,  by  their  agreement,  an  intention  not  to 
contract  the  relation  of  partnership,  yet  it  was  held,  that  such  intention 
could  not  prevail  against  an  exj)ress  stipulation  to  share  the  profits ;  a 
stipulation,  which,  as  we  have  already  seen,  is  the  primary  test  of  a  part- 
nership between  the  parties,  and  renders  them  liable  to  third  persons.  But 
the  authorities  have  gone  still  further,  and  it  has  even  been  held,  that  an 
agreement  to  share  the  profits  of  an  adventure,  although  not  so  expressed  as 
to  create  a  partnership  between  the  parties,  may  nevertheless  create  a  part- 
nership, as  between  them  and  the  world.  In  Waugh  v.  Carver,  there  are 
several  expressions  of  Lord  Chief  Justice  Eyre,  which  lead  to  this  conclu- 
sion ;  and  on  the  authority  of  those  expressions,  the  case  of  Hesketh  v. 
Blanchard  was  decided,  in  which  it  was  held,  that  the  agreement  might  con- 
stitute the  parties  as  partners,  quoad  third  persons,  although  under  the  cir- 
cumstances it  did  not  place  them  in  that  situation  inter  se."  And  again  : 
"  Upon  the  Avhole,  notwithstanding  the  doctrine  laid  down  in  Hesketh  v. 
Blanchard,  and  some  other  cases,  the  general  result  of  the  authorities  seems 
to  be,  that  persons,  who  share  the  profits  of  the  concern  are  prima  facie 
liable  as  partners  to  third  persons ;  but  they  may  repel  the  presumption  of 
partnership  by  showing  that  the  legal  relation  of  partnership  inter  sese  does 
not  exist.  With  reference  to  the  last  of  these  two  positions,  it  may  be  ob- 
served, that,  in  Hoare  v.  Dawes,  the  defendants,  who  were  charged  as  dor- 
mant partners,  rebutted  the  presumption  of  partnersliip,  by  showing  that  they 
had  no  communion  of  profit  with  the  broker.  So,  where  a  person  was 
charged  as  a  dormant  partner  in  the  profits  of  a  lighter,  but  it  turned  out, 
that  he  was  to  have  only  half  the  gross  earnings  as  wages,  it  was  held,  that 
he  was  not  a  partner  with  the  lighter-man,  and  therefore  not  liable  for  the 
repairs."  Coll.  on  F.  B.  1,  c.  1,  §  3,  4,  p.  59,  60,  2d  ed.  It  does  not  aj)pear 
to  me,  that  the  authorities  (juite  justify  the  conclusion  of  !Mr.  Collyer,  how- 
ever reasonable  it  may  seem  to  be.  See  post,  §  56-59  ;  Ex  parte  llowland- 
son,  1   Rose,  89-91  ;    Waugh  v.  Carver,  2  II.  Bl.  235,  246. 

^  {Though  the  author  pi'ofesses,  in  the  preceding  section,  that  he  is  pro- 


96  PARTNERSHIP.  [cHAP.  IV. 

community  of  interest  in  the  capital  stock ;  yet  the 
parties  agree  to  have  a  community  of  interest  or  par- 
ticipation in  the  profit  and  loss  of  the  business  or 
adventure,  as  principals,  either  indefinitely,  or  in  fixed 
proportions.  Secondly,  where  there  is,  strictly  speak- 
ing, no  capital  stock ;  but  labor,  skill,  and  industry  are 
to  be  contributed  by  each  in  the  business,  as  principals, 
and  the  profit  and  loss  thereof  are  to  be  shared  in  like 
manner.  Thirdly,  where  the  profit  is  to  be  shared 
between  the  parties,  as  principals,  in  like  manner ;  but 
the  loss,  if  any  occurs  beyond  the  profit,  is  to  be  borne 
exclusively  by  one  party  only.  Fourthly,  where  the 
parties  are  not  in  reality  partners ;  but  hold  themselves 
out,  or  at  least  are  held  out  by  the  party  sought  to  be 
charged,  as  partners  to  third  persons,  who  give  credit 
to  them  accordingly.  Fifthly,  where  one  of  the  parties 
is  to  receive  an  annuity  out  of  the  profits,  or  as  a  part 
thereof. 

§  55.  And  first,  as  to  cases  where  there  is  no  com- 
munity of  interest  in  the  capital  stock  ;  but  there  is  a 
community  of  interest  or  participation  in  the  profit 
and  loss  of  the  business  or  adventure,  as  principals.^ 
It  is  this  circumstance,  that  the  parties  are  to  act  and 
share,  as lyrincipals^  which  forms  a  prominent  distinction 
between  this  class  of  cases  and  that  where  an  agency 
exists,  with  a  compensation  therefor  out  of  the  profits. 
But  the  other  circumstance  is  also  important,  that  the 

ceeding  to  consider  the  cases  "  in  which  the  parties  have  been  held  to  be 
partners  as  to  third  persons,  even  when  they  were  clearly  not  so  as  between 
themselves,"  it  would  seem  that  in  the  first  two  classes  the  parties  are  partners 
inter  scse,  as  well  as  to  third  persons.  See  §  30,  note.  As  to  the  third  class, 
see  §  60,  note.) 

'  {See  §  54,  note}  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  25  ;  Id.  §  2,  p.  53-55, 
58,  2d  ed. ;  Wat.  on  P.  c.  1,  p.  11,  12,  2d  ed. ;  Id.  p.  33 ;  Ex  parte  Digby,  1 
Deac.  341 ;  s.  C.  2  Mont.  &  A.  735  ;  3  Kent,  31,  32  ;  Ex  parte  Ilodgkinson, 
19  Yes.  291  ;  Winship  v.  Bank  of  U.  S.  5  Pet.  529,  561  ;  Ex  parte  Rowland- 
son,  1  Rose,  89;  Hazard  v.  Hazard,  1  Story,  371. 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  97 

parties  are  to  share  in  the  loss,  as  well  as  in  the  profit. 
Indeed,  this  is  ordinarily  laid  down,  as  the  true  test  of 
partnership  in  this  class  of  cases. ^  A  communion  of 
profit  generally  implies  a  communion  of  loss  in  the 
limited  sense  already  suggested,  that  is,  that  there  can 
be  no  ascertained  profits,  until  after  all  the  losses  are 
deducted  therefrom.^  There  may,  however,  be,  and 
often  is,  a  stipulation  in  partnership  contracts,  that  all 
the  losses  beyond  what^ the  profits  will  meet,  shall  be 
borne  by  one  party  only,  or  borne  in  a  different  pro- 
portion between  the  parties,  from  what  they  take  in 
the  profits.^  But  where  the  agreement  either  expressly, 
or  by  fair  implication,  admits,  that  the  parties  are  to 
share  in  losses,  as  well  as  in  profits,  that  circumstance 
will  ordinarily,  at  the  common  law,  be  held  to  make 
them  partners  as  to  third  persons,  and  in  many  cases 
also  between  themselves,  upon  the  ground,  that  such 
is  the  proper  and  essential  accompaniment  of  a  part- 
nership, and  that  it  is  inconsistent  with  the  notion,  that 
the  share  of  the  profits  is  designed  to  be  a  mere  remu- 
neration for  services.'* 

§  56.  A  few  examples  may  serve  to  illustrate  the 
principle.  Thus,  if  the  owners  of  a  ship,  owned  by 
them  as  tenants  in  common,  should  employ  the  ship  in 
a  particular  trade  or  adventure  upon  joint  account,  and 
were  to  participate  in  proportion  to  their  interests  in  the 
profits  and  losses  of  the  trade  or  adventure ;  they  would 

*  Green  r.  Beesley,  2  Bing.  N.  C.  108;  Waugh  r.  Carver,  2  H.  Bl.  235, 
247;  Holmes  v.  Unit.  Ins.  Co.  2  Johns.  Cas.  329,  331  ;  Perrott  v.  Bryant,  2 
You.  &  C.  Ex.  61,  68;  Meyer  v.  Sharpe,  5  Taunt.  74. 

-  Ante,  §  20-23. 

'  Ante,  §  23,  24;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11,  2d  cd. ;  Gilpin  v. 
Enderbey,  5  B.  &  Aid.  954;  Bond  v.  Pittard,  3  M.  &  W.  357. 

♦  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  19;  Green  v.  Beesley,  Bing.  N.  C.  108; 
M'lver  V.  Humble,  16  East,  173 ;  3  Kent,  26 ;  [Everett  v.  Coe,  5  Denio, 
180.] 


98  PARTNERSHIP.  [cHAP.  IV. 

be  partners  in  the  adventure  inter  sese,  as  well  as  to 
third  persons,  although  they  might  still  remain  tenants 
in  common  of  the  ship.^  The  like  result  would  arise, 
if  several  tenants  in  common  of  goods  should  ship  them, 
to  be  sold  on  joint  account,  and  their  respective  shares 
in  the  proceeds  were  to  be  invested  in  other  goods  on 
their  several  and  not  joint  account,  on  the  return  voy- 
ages, they  would  be  partners  in  the  adventure  on  the 
outward  voyage,  but  not  in  the  return  voyage,  unless 
the  return  goods  were  to  be  sold  on  joint  account.^  So, 
if  the  owner  of  a  ship  should  agree  with  the  master, 
that  the  vessel  should  be  employed  on  a  particular  ad- 
venture or  voyage  for  the  benefit  of  both  parties,  and 
they  were  to  share  the  profits  and  losses  (not  the  gross 
profits  or  proceeds),  indefinitely,  or  in  certain  fixed  pro- 
portions ;  there,  although  the  owner  would  still  remain 
sole  owner  for  the  adventure,  or  the  voyage,  yet  as  both 
were  to  share  the  losses,  as  well  as  the  profits  thereof, 
they  would  be  deemed  partners.^     The  same  doctrine 

'  Mumford  v.  Nicoll,  20  Johns.  611;  Post  v.  Kiniberly,  9  Johns.  470; 
Saville  V.  Robertson,  4  T.  R.  720,  725  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  16,  17, 
2ded. 

*  Holmes  v.  Unit.  Ins.  Co.  2  Johns.  Cas.  329,  331,  332. 

'  Ante,  §  34,  42,  44 ;  Dry  v.  Boswell,  1  Camp.  329,  330.  But  see  Mair  v. 
Glennie,  4  M.  &  S.  240  ;  [Stocker  v.  Brockelbank,  3  Macn.  &  G.  250,  5  Eng. 
Law  &  Eq.  67]  ;  Cheap  r.  Cramond,  4  B.  &  Aid.  663,  668-670. — In  this 
last  case  (which  was  one  of  sharing  commissions),  Lord  Chief  Justice  Abbott, 
in  delivering  the  opinion  of  the  court,  said:  "And  such  an  agreement  is 
perfectly  distinct  from  the  cases,  put  in  the  argument  before  us,  of  remune- 
ration made  to  a  traveller,  or  other  clerk  or  agent,  by  a  portion  of  the  sums 
received  by  or  for  his  master  or  principal,  in  lieu  of  a  fixed  salary,  which  is 
only  a  mode  of  payment  adopted  to  increase  or  secure  exertion.  It  is  dis- 
tinct also  from  the  case  of  a  factor  receiving  for  his  commission  a  percentage 
on  the  amount  of  the  price  of  the  goods  sold  by  him,  instead  of  a  certain 
sum  proportioned  to  the  quantity  of  the  goods  sold,  as  was  the  case  of 
Dixon  V.  Cooper,  3  Wils.  40,  wherein  it  was  held,  that  the  factor  was  a 
competent  witness  to  prove  the  sale.  It  differs  also  from  the  case  of  a  per- 
son receiving  from  a  trader  an  agreed  sum,  in  respect  of  goods  sold  by  his 
recommendation,  as  one  shilling  per  chaldron  on  coals,  or  the  like,  for  there 
there  is  no  mutuality  ;  and  such  a  case  resembles  a  payment  made  to  an  agent 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  99 

would  apply,  if  the  parties  were  to  share  the  profits  or 
the  net  profits  ;  for  in  each  of  these  cases  there  must  be 
a  deduction  first  made  of  all  the  charges  and  losses.^  So, 
if  two  persons  sliould  enter  into  an  agreement,  that  the 
one  should  buy  goods  on  account  of  the  other,  and 
should  proceed  abroad  with  them,  and  there  sell  them, 
and  they  were  to  be  equally  interested  in  the  profit  and 
loss  of  the  adventure ;  this  would  constitute  a  partner- 
ship between  them.^  So,  if  a  person  should  agree  with 
a  broker,  that  the  latter  should  purchase  goods  for  the 
former,  and  should  receive  for  his  trouble  a  certain  pro- 
portion of  the  profits  arising  from  the  sale  of  the  goods, 
and  should  bear  a  certain  proportion  of  the  losses ;  such 
an  agreement,  although  it  would  not  vest  any  property 
in  the  broker  in  the  goods  so  purchased,  or  in  the  pro- 
ceeds thereof,  would  yet,  by  reason  of  his  participation 
in  the  profits  and  losses,  render  him  liable,  as  a  partner, 
to  thu'd  persons.^ 

§  57.  Upon  the  like  ground,  where  A.,  having  neither 
money  nor  credit,  offered  to  B.,  that  if  he  would  order 

for  procuring  orders,  and  has  no  distinct  reference  in  the  terms  of  the  agree- 
ment to  any  particular  coals  purchased  by  the  coal  merchant  for  resale, 
upon  which  a  third  person  may  become  a  creditor  of  the  coal  merchant, 
and  probably  could  not  in  any  instance  be  shown  to  apply  in  its  execution 
to  any  such  particular  purchase."  But  see  Reynolds  v.  Toppan,  1.')  Mass. 
370,  cited  ante,  §  44,  note. 

»  Cheap  V.  Cramond,  4  B.  &  Aid.  663,  668-670 ;  Ex  parte  Rowlandson,  1 
Rose,  89,  91,  92;  Ex  parte  Hodgkinson,  19  Ves.  291,294;  Grace  v.  Smith, 
2  W.  Bl.  998,  1000 ;  Tench  r.  Roberts,  6  Madd.  145,  note ;  BaQey  v.  Clark, 
6  Pick.  372;  Dob  v.  Halsey,  16  Johns.  34;  ante,  §  34;  post,  §  57,  58; 
Bond  V.  Pittard,  3  M.  &  W.  357,  360,  361. 

*  Ex  parte  Rowlandson,  1  Rose,  89-91.  —  In  this  last  case  Lord  Eldon 
said  :  "It  was  impossible  to  say,  as  to  third  persons,  they  wore  not  partners, 
the  ground  being  settled,  that  if  a  man,  as  a  reward  for  his  labor,  chooses 
to  stipulate  for  an  interest  in  the  profits  of  a  business,  instead  of  a  certain 
sum  proportioned  to  those  profits,  he  is  as  to  thii'd  persons  a  partner,  and 
no  arrangement  between  the  parties  themselves  could  prevent  it." 

*  Smith  V.  Watson,  2  B.  &  C.  401 ;  Meyer  v.  Sharpe,  5  Taunt.  74;  Ex 
paiie  Langdale,  18  Yes.  300;  S.  c.  2  Rose,  444. 


100  PARTNERSHIP.  [CHAP.  IV. 

with  him  certain  goods  from  C.  to  be  shipped  upon  a 
foreign  adventure,  and  sold  by  A.  abroad,  if  any  profits 
should  arise  from  them,  B.  should  have  half  the  profits 
for  his  trouble ;  and  the  goods  were  accordingly  ordered 
and  charged  by  C.  to  their  joint  account ;  it  was  held 
that  B.  was  jointly  liable  with  A.,  as  a  partner  to  C. 
And  the  court  there  took  the  distinction,  that  quoad 
third  persons  it  was  a  partnership,  for  B.  was  to  share 
half  the  profits  ;  but  as  between  themselves,  it  was  only 
an  agreement  for  so  much,  as  a  compensation  for  B.'s 
trouble,  and  lending  A.  his  credit.^  So,  where  A.  agreed 
with  B.  to  convey  by  horse  and  cart  the  mail  between 
particular  places,  at  a  certain  price  per  annum,  and  to 
pay  his  proportion  of  the  expense  of  the  cart,  &c. ;  and 
the  money  received  by  the  carriage  of  parcels  was  to  be 
divided  between  the  parties,  and  the  damage  occasioned 
by  the  loss  of  parcels  was  to  be  borne  in  equal  propor- 
tions ;  it  was  held,  that  they  were  partners  inter  sese,  as 
well  as  to  third  persons.  And  upon  that  occasion  Lord 
Chief  Justice  Tindal  observed :  "  I  have  always  under- 
stood the  definition  of  partnership  to  be  a  mutual  par- 
ticipation of  profit  and  loss."^ 

§  58.  Upon  the  like  ground,  where  one  person  ad- 
vanced funds  for  carrying  on  a  particular  trade,  and 
another  furnished  his  personal  services  only  in  carrying 
on  the  trade,  for  which  he  was  to  receive  a  proportion 

*  Hesketh  v.  Blanchard,  4  East,  144,  146;  s.  c.  ante,  §  40;  Meyer  v. 
Sharpe,  5  Taunt.  74.  See  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  50,  59,  60,  2d  ed.  — 
Mr.  CoUyor  thinks,  that  in  Hesketh  v.  Blanchard,  4  East,  144,  the  parties 
were  partners  inter  sese,  as  well  as  to  third  persons  ;  and  there  is  certainly,  in 
other  authorities,  strong  ground  to  support  that  opinion.  {Such  is  Mr.  Lind- 
ley's  opinion  (Lind.  on  P.  732),  at  any  rate  the  remark  of  Lord  Ellen- 
borough  that  they  were  partners  quoad  third  persons  was  only  a  dictum, 
unnecessary  to  the  decision  of  the  case. }  Ante,  §  42,  and  note ;  post,  §  68. 

*  Green  v.  Beesley,  2  Bing.  N.  C.  p.  108.  See  also  Fromont  v.  Coup- 
land,  2  Bing.  170;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  19,  2d  ed. 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  101 

of  the  net  profits  ;  it  was  held,  that  they  were  partners 
inter  sese^  as  well  as  to  third  persons.^  And  the  princi- 
ple was  there  fully  recognized,  which  had  been  estab- 
lished in  prior  cases,  that  he,  who  is  to  take  a  part  of 
the  profits,  shall  by  operation  of  law  be  made  liable  to 
losses,  as  to  third  persons;  because  by  taking  a  part  of 
the  profits,  he  takes  from  the  creditors  a  part  of  that 
fund  which  is  the  security  for  the  payment  of  their 
debts.^  So,  where  A.,  B.,  and  C.  entered  into  partner- 
ship in  the  business  of  tanning  hides,  and  it  was  stipu- 
lated that  A.  should  furnish  one-half  of  the  stock,  to 
keep  the  tannery  in  operation,  and  should  market 
and  receive  one-half  the  leather,  and  that  B.  and  C. 
should  furnish  the  other  half  of  the  stock,  and  receive 
and  market  for  the  other  half  of  the  leather,  and  that  in 
making  purchases  each  should  use  his  own  credit  sepa- 
rately ;  it  was  held,  that  they  were  partners  as  to  third 
persons,  as  well  as  between  themselves,  as  to  stock  sold 
to  one  of  the  partners ;  for  the  stipulation,  as  to  the  di- 
vision of  the  manufactured  article  specifically  among  the 
partners,  was  equivalent  to  a  participation  of  profit  and 
loss.^  So,  where  three  persons  ran  a  line  of  coaches 
from  one  place  to  another,  the  route  being  divided 
among  them  into  three  sections,  the  occupant  of  each 
section  furnishing  his  own  carriages  and  horses,  hiring 
drivers,  and  paying  the  expenses  of  his  own  section,  and 
the  money  received  from  the  passengers,  as  fare,  deduct- 
ing the  tolls  of  the  turnpike  gates,  was  divided  among 
them  in  proportion  to  the  number  of  miles  of  the 
route   run  by  each ;  it  was  held,  that  they  were  part- 

'  Dob  V.  Halsey,  16  Johns.  34,  40 ;  Everett  v.  Coe,  5  Denio,  180 ;  3  Kent, 
24,  25;  Coll.  on  P.  B.  1,  c.  1,  §  2,  2d  ed. ;  ante,  §  34. 

""  Ibid. ;  Grace  w.  Smith,  2  W.  Bl.  998,  1000 ;  Waugh  v.  Carver,  2  H.  Bl. 
235,  245 ;  Hesketh  v.  Blanchard,  4  East,  144 ;  ante,  §  27,  30,  32. 

'  Everitt  v-  Chapman,  6  Conn.  347. 


102  PARTNERSHIP.  [cHAP.  IV. 

ners   as   to   third  persons,   as  well  for   torts,   as  upon 
contracts.^ 

'  Champion  v.  Bostwick,  18  Wend.  175.  [Explained  in  Pattison  v. 
Blanchard,  1  Sel.  186.]  — Mr.  Chancellor  Walworth  on  this  occasion  said: 
"It  is  not  necessary  to  constitute  a  partnership,  that  there  should  be  any 
property  constituting  the  capital  stock,  which  shall  be  jointly  owned  by  the 
partners.  But  the  capital  may  consist  in  the  mere  use  of  property,  owned 
by  the  individual  partners  separately.  It  is  sufficient  to  constitute  a  part- 
nership, if  the  parties  agree  to  have  a  joint  interest  in,  and  to  share  the  profits 
and  losses  arising  from,  the  use  of  property  or  skill,  either  separately  or 
combined.  Here  the  capital,  which  each  (.-ontributed  or  agreed  to  contribute 
to  the  joint  concern,  was  the  horses,  carnages,  harnesses,  drivers,  &c., 
which  were  necessary  to  run  his  part  of  the  route,  and  to  be  fed,  repaired, 
and  paid  at  his  own  expense.  The  only  debts  or  expenses,  for  which  they 
were  to  be  jointly  liable  as  between  themselves,  were  the  tolls  upon  the 
whole  line ;  and  the  joint  profits,  which  they  were  to  divide,  if  any  remained 
after  paying  the  tolls,  was  the  whole  passage  money  received  upon  the  entire 
line.  Although  it  may  be  fairly  inferred,  that  each  party  supposed,  that  the 
expenses  of  running  his  part  of  the  line,  exclusive  of  the  tolls,  would  be 
equal  to  the  distance  run  by  him,  it  by  no  means  follows,  that  any  of  them  . 
supposed,  that  the  actual  passage  money  or  pi-ofits  of  the  different  parts  of 
the  line,  would  be  in  the  same  proportion ;  as  it  is  a  well-known  fact,  that 
the  number  of  passengers,  who  travel  in  public  conveyances,  increase  as 
you  approach  large  market  towns,  or  other  places  of  general  resort.  The 
only  object  of  the  agreement  to  divide  the  passage  money  earned  upon  the 
whole  line,  among  the  different  proprietors,  must  have  been  to  give  to  those, 
who  ran  that  part  of  the  line,  where  there  was  the  least  travel,  a  portion  of 
the  passage  money  on  other  parts  of  the  route,  as  a  fair  equivalent  for  their 
equal  contribution  of  labor  and  expense  for  the  joint  benefit  of  all.  And 
as  all  the  owners  of  the  line  were  thus  interested  in  every  part  of  the  route, 
and  were  liable  to  the  passengers,  if  they  were  unreasonably  detained  on 
the  way,  I  am  inclined  to  think,  that,  if  the  driver  of  either  had  refused  to 
carry  on  the  passengers  over  his  jiart  of  the  line  without  any  sufficient  ex- 
cuse, either  of  the  other  parties,  who  happened  to  be  present,  might  have 
employed  another  driver  at  the  common  expense  to  proceed  with  the  team  to 
the  end  of  that  route,  although  as  betAvcen  themselves  the  owner  of  that 
part  of  the  line  would  be  bound  to  pay  such  extra  expense.  And  the  same 
right  would  have  existed,  if  the  driver,  by  reason  of  intoxication  or  other- 
wise, was  incapable  of  discharging  his  duty  with  safety  to  the  passengers. 
Although  the  title  to  the  coach  and  horses  for  the  time  being  might  not  be 
so  far  vested  in  the  partners,  as  to  authorize  any  of  them  to  take  them  out 
of  the  general  owner  himself  under  similar  circumstances,  the  passengers 
might  imquf'stionably  be  sent  on  by  either  of  the  others  at  his  expense  ;  or 
at  the  expense  of  all  the  owners  of  the  line,  who  were  interested  in  having 
it  done,   if  he   was    unable   to    pay  the    expense."      See  also  Waland  v. 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  103 

§  58  a.  On  the  other  hand,  where  there  was  an  agree- 
ment by  a  raih'oad  company  with  certain  persons,  who 
were  engaged  in  transporting  merchandise  from  New 
York  to  various  places  in  the  West,  by  way  of  Hudson 
River  and  canals,  that  these  carriers  should  deliver  up 
their  freight  to  the  company  at  particular  places,  and 
the  company  should  transport  the  goods  from  thence  to 
their  destination,  and  that  the  carriers  should  pay  the 
company  therefor  a  certain  portion  of  the  freight,  ac- 
cording to  certain  distances ;  it  was  held,  that  this  agree- 
ment did  not  make  the  company  partners  with  the  car- 
riers in  the  transportation  of  the  goods,  either  inter  sese, 
or  as  to  third  persons.^  The  ground  of  this  decision 
seems  to  have  been,  that  there  was  no  community  of 
interests,  or  division  of  the  profits  of  a  joint  concern, 
between  the  parties.  The  railroad  company  had  no 
interest  in  the  profits  or  losses  of  the  transportation 
company,  on  that  part  of  the  route  which  the  latter 
were  to  accomplish ;  nor  the  transportation  comjiany, 
in  the  profit  or  loss  in  the  railroad  portion  of  the  trans- 
portation. Each  company  was  to  receive  a  fixed  pro- 
portion of  the  freight,  whether  the  other  would  lose  or 
gain  on  its  own  portion  of  the  route,  so  that  there  was 
no  community  of.  profit  or  loss.  Many  other  cases 
might  be  cited  to  the  same  eff"ect ;  but  those,  which 
have  been  referred  to,  are  sufficient  to  illustrate  the  doc- 
trine already  suggested  under  this  head. 

§  59.  In  the  next  place,  as  to  the  class  of  cases, 
where,  strictly  speaking,  there  is  no  capital  stock,  but 
labor,  skill,  and  industry  are  to  be  contributed  by  each 

Elkins,  1  Stark.  272,  and  Barton  v.  Hanson,  2  Taunt.  49 ;  Wetmore  v. 
Baker,  9  Johns.  307.  See  Fromont  v.  Coupland,  2  Bing.  170;  Green 
V.  Beesley,  2  Bing.  N.  C.  108.  [See  the  last  two  cases  coiumented  upon, 
in  Pattison  v.  Blanchard,  1  Seld.  186.] 

»  Mohawk  &  Hudson  Railroad  Co.  v.  Niles,  3  Hill,  (N.  Y.)  1G2  ;  {Mer- 
rick V.  Gordon,  20  N.  Y.  93.} 


104  PARTNERSHIP.  [cHAP.  IT. 

party  in  the  trade  or  business,  as  principals,  and  the 
profit  and  loss  are  to  be  shared  in  certain  proportions 
between  them.^  In  this  class  of  cases  the  like  rule  ap- 
plies ;  and  the  parties  are  treated  as  partners,  not  only 
as  to  third  persons,  but  also  inter  sese,  upon  the  plain 
ground,  that  it  is  a  trade  or  business  carried  on  upon 
joint  account,  and  that  there  is  a  complete  communion 
of  interest,  both  in  the  profit  and  loss  thereof  between 
them.  It  has,  therefore,  every  distinctive  mark  of  part- 
nership. One  or  two  cases  will  abundantly  serve  to 
present  this  doctrine  in  a  clear  and  satisfactory  light.^ 
Thus,  if  A.  and  B.  should  agree  to  employ  their  joint 
labor  and  services  and  skill  in  business,  as  insurance 
brokers,  and  to  divide  the  profits  and  losses  between 
them,  they  would  to  all  intents  and  purposes  be  held 
partners  in  that  business.  So,  if  A.  and  B.  should 
agree  to  carry  on  the  business  of  solicitors  upon  joint 
account,  and  to  divide  the  profits  and  losses  thereof  in 
certain  proportions  between  them,  this  would  make 
them  partners,  not  only  as  to  third  persons,  but  inter 
sese.^  Nor  would  the  result  be  varied,  if  the  parties 
agreed  to  share  the  profits  between  them,  omitting  any 
express  provision  as  to  losses  ;  for  in  such  cases  they 
could  by  mere  operation  and  intendment  of  law  share 
the  losses,  upon  the  ground,  that  the  losses  must  first  be 
deducted  before  the  profits  can  be  ascertained ;  and  also 
upon  the  more  general  ground  which  is  so  often  recog- 
nized in  the  authorities,  that  every  man  who  has  a  share 
of  the  profits  of  a  trade  or  business,  ought  also  to  bear 
his  share  of  the  loss."^     Indeed,  all  the  authorities  at  the 

'  {See  §54,  note.} 

^  See  the  reasoning  of  Lord  Chief  Justice  Eyre  in  Waugh  v.  Carver, 
2  H.  Bl.  235. 

'  See  Hopkinson  v.  Smith,  1  Bing.  13 ;  Tench  v.  Roberts,  6  Madd.  145 ; 
[Smith  V.  Hill,  8  English,  173.] 

*  Grace  v.  Smith,  2  W.  Bl.  998,  1009 ;  Ex  parte  GeUar,  1  Rose,  297 ; 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  105 

ccmmon  law  take  the  rule  to  be,  that  sharmg  the  losses 
and  the  profits  constitutes  such  a  communion  and  mu- 
tuality of  interest  therein,  as  creates  a  clear  partnership, 
as  to  third  persons ;  and,  in  the  absence  of  all  contrary 
or  inconsistent  stipulations,  as  between  themselves  also.^ 
Hence  all  the  adventurers  in  a  fishing  voyage,  who  are 
to  share  in  the  profits  and  losses  of  the  adventure  ac- 
cording to  certain  proportions,  and  to  contribute  towards 
the  outfit,  are  deemed  partners  in  the  adventure  to  all 
intents  and  purposes.^  So,  where  a  merchant  in  Lon- 
don was  by  agreement  to  recommend  consignments  to 
a  merchant  abroad,  and  the  commissions  on  all  sales  of 
goods,  recommended  by  the  one  to  the  other,  were  to 
be  equally  divided  between  them,  without  allowing  any 
deduction  for  expenses ;  it  was  held,  that  they  were  not 
only  partners  in  that  business,  as  to  third  persons,  but 
also  as  between  themselves.^ 

§  60.  In  the  next  place,  as  to  the  class  of  cases, 
where  the  parties  are  to  share  the  profits  between 
them,  if  any,  as  principals ;  but  the  losses  are  to  be 
borne  exclusively  by  one  party.'*     It  is  here  that  the 

Waugh  V.  Carver,  2  H.  BI.  235  ;  Cheap  v.  Cramond,  4  B.  &  Aid.  663  ;  Bond 
V.  Pittard,  3  M.  &  W.  357,  360,  361.  See  Finckle  v.  Stacey,  Sel.  Cas.  9  ;  Gow 
on  P.  c.  1,  p.  14,  15,  3d  ed. ;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  54,  2d  ed. ;  ante, 
§  19-24. 

^  Geddes  v.  Wallace,  2  Bligb,  270 ;  Peacock  v.  Peacock,  2  Camp.  45  ;  Gow 
on  P.  12,  13,  3ded. 

*  See  Coppard  v.  Page,  Forrest,  1 ;  Perrott  v.  Bryant,  2  You.  &  C.  Ex. 
61,  68;  ante,  §42. 

»  Cheap  V.  Cramond,  4  B.  &  Aid.  663,  669,  670 ;  Waldeu  v.  Sherburne, 
15  Johns.  409,  421,422. 

*  { See  §  30,  note.  In  only  two  of  the  leading  cases  referred  to  under 
this  class,  viz.,  Waugh  v.  Carver,  2  H.  Bl.  235,  and  Cheap  v.  Cramond,  4  B. 
&  Aid.  663,  was  it  distinctly  said  that  the  alleged  partners  were  not  so  inter 
sese,  although  they  were  so  as  to  third  persons.  Waugh  v.  Carver  must  be 
considered  as  overruled  by  BuUen  v.  Sharp,  Law  Rep.  1  C.  P.  86,  and  other 
recent  cases,  see  §  49,  note ;  and  Cheap  v.  Cramond  is  distinctly  placed  on 
Waugh  V.  Carver,  see  §  61,  note.}  Wats,  on  P.  c.  1,  p.  17-27,  2d  ed. ; 
ante,  §  57. 


106  PARTNERSHIP.  [cHAP.  IV. 

pressure  of  the  general  doctrine,  that  a  participation  in 
the  profits,  as  profits,  creates  a  partnership  between 
them,  is  most  severely  felt,  and  is  most  difficult  to  main- 
tain upon  general  reasoning.  In  all  this  class  of  cases 
it  is  the  intention  of  the  parties,  that  no  partnership 
should  exist  between  themselves  ;  and  the  common  law, 
in  this  respect,  gives  full  force  and  eff'ect  to  that  inten- 
tion. But  in  regard  to  third  persons,  the  common  law 
holds,  that  the  mere  right  to  participate  in  the  profits 
creates  a  partnership  between  the  parties,  notwithstand- 
ing there  is  no  participation  in  the  losses,  ultra  the 
profits,  and  it  is  not  their  intention  to  be  partners.^  The 
doctrine  here  seems  to  be  founded  in  part  upon  the  con- 
sideration, that  even  in  such  a  case  there  is  incidentally, 
and  to  a  limited  extent,  a  participation  in  the  losses,  as 
well  as  in  the  profits ;  for  before  it  can  be  ascertained, 
that  there  are  any  profits,  the  losses  must  first  be  de- 
ducted, and  the  residue  only  shared  as  profits.^  But 
the  main  reason  is,  that,  which  has  been  already  advert- 
ed  to,  as  the  first  foundation  of  the  doctrine,  to  wit,  that 
every  man,  who  has  a  share  of  the  profits  of  the  trade  or 
business,  ought  also  to  bear  his  share  of  the  loss ;  for  if  any 
one  takes  part  of  the  profit,  he  takes  a  part  of  the  fund, 
on  which  the  creditor  of  the  trade  relies  for  his  payment.^ 

»  [See§  49,  note.} 

2  Ante,  §  19-25,  55-57 ;  Cheap  v.  Cramond,  4  B.  &  Aid.  663 ;  Gilpin  v. 
Enderbey,  5  B.  &  Aid.  954 ;  Ex  parte  Langdale,  2  Rose,  444 ;  s.  c.  18  Ves. 
300,  301 ;  Bond  v.  Pittard,  3  M.  &  W.  357. 

«  Ante,  §  27, 28,  32,  36,  notes  ;  Grace  v.  Smith,  2W.B1.  998, 1000.  —Lord 
Eldon,  in  Ex  parte  Langdale,  18  Ves.  300,  s.  c.  2  Rose,  444,  said  :  "  The 
true  criterion  is,  -whether  they  (the  parties)  are  to  participate  in  the  profit. 
That  has  been  the  question  ever  since  Grace  v.  Smith."  Lord  Chief  Jus- 
tice Eyre,  in  Waugh  v.  Carver,  2  H.  Bl.  235,  247,  approved  the  doctrine,  so 
promulgated  in  Grace  v.  Smith,  as  standing  upon  the  fair  ground  of  reason. 
Whether  it  does  so,  may  certainly,  if  the  question  were  new,  admit  of  a  good 
deal  of  argument.  See  ante,  §  48-51,  and  note  3.  The  point,  however, 
now  stands  dryly  upon  the  maxim,  Ita  Lex  scripta  est.  See  Green  v.  Bees- 
ley,  2  Bing.  N.  C.  108  ;  ante,  §  57. 


CHAP.  lY.]  AS    TO    THIRD    PERSONS.  107 

i 

Without  inquiring  into  the  true  force  of  this  mode  of 
reasoning,  a  task,  which  would  be  a  matter  of  superero- 
gation, since,  so  far  as  the  authorities  go,  it  seems  ab- 
sohitely  established,  it  may  be  useful  to  illustrate  it  by 
reference  to  some  of  the  leading  cases,  in  which  it  has 
been  discussed  and  recognized. 

§  61.  Thus,  for  example,  if  one  person  should  en- 
gage with  another  in  any  trade  or  business,  under  an 
arrangement  to  divide  the  profits  between  them ;  but 
if  there  should  not  be  any  profits,  but  a  loss,  then  that 
the  loss  should  be  borne  by  one  only ;  that  would  make 
them  partners,  as  to  third  persons,  at  all  events.^  On 
the  like  ground,  if  two  solicitors  should  carry  on  busi- 
ness on  joint  account,  and  one  should  be  entitled  to 
receive  a  fixed  sum,  and  also  a  share  of  the  profits,  and 
not  be  liable  for  any  losses,  they  would  be  partners 
intei'  sese,  as  well  as  to  third  persons.^  So,  where  two 
merchants  agreed  to  enter  into  partnership  for  a  certain 
term  of  years,  and  each  was  to  furnish  the  same  amount 
of  capital,  and  one  was  to  receive  a  certain  annual  sum 
out  of  the  profits,  if  any,  and  if  none,  out  of  the  capital, 
and  at  the  expiration  of  the  term  he  w^as  to  receive  his 
full  original  capital  by  instalments ;  it  was  held,  that 
they  were  partners  intet^  sese,  and  also  as  to  third  per- 
sons,^ So,  where  two  ship  agents,  at  different  ports, 
entered  into  an  agreement  with  each  other  to  share  in 
certain  proportions  the  profits  of  their  respective  com- 
missions, and  discount  on  tradesmen's  bills,  employed 
by  them  in  repauing  ships  confided  to  their  care,  but 
neither  was  to  be  answerable  for  the  acts  or  losses  of 

^  Ex  parte  Langdale,  18  Ves.  300,  301 ;  Geddes  v.  Wallace,  2  Bligh,  270  ; 
Jordan  v.  Wilkins,  2  Wash.  C.  C.  482  ;  Gow  on  P.  c.  1,  p.  16,  3d  ed.  ;  Gilpin 
V.  Enderbey,  5  B.  &  Aid.  954 ;  Bond  v.  Pittard,  3  M.  &  W.  357. 

^  See  Bond  v.  Pittard,  3  M.  &  W.  357,  360 ;  Tench  v.  Roberts,  6  Madd. 
145,  note. 

'  Gilpin. r.  Enderbey,  5  B.  &  Aid.  954. 


108  PARTNERSHIP.  [CHAP.  IV. 

the  other,  but  each  was  to  bear  his  own ;  it  was  held, 
that  they  were  partners  as  to  third  persons,  although 
not  as  between  themselves.^     So,  where  a  commission 

1  Waugh  V.  Carver,  2  H.  Bl.  235 ;  Cheap  v.  Cramond,  4  B.  &  Aid.  663, 
668  ;  [Emanuel  v.  Draiighn,  1-4  Ala.  303.]  — In  Waugh  v.  Carver,  Lord  Chief 
Justice  Eyre  said  :  "  Whether  these  persons  were  to  interfere  more  or  less 
with  their  advice  and  directions,  and  many  small  parts  of  the  agreement,  I 
lay  entirely  out  of  the  case ;  because  it  is  plain  upon  the  construction  of 
the  agreement,  if  it  be  construed  only  between  the  Carvers  and  Giesler, 
that  thej'  were  not,  nor  ever  meant  to  be,  partners.  They  meant  each  house 
to  carry  on  trade  without  risk  of  each  other,  and  to  be  at  their  own  loss. 
Though  there  was  a  certain  degi'ee  of  control  at  one  house,  it  was  without 
an  idea  that  either  was  to  be  involved  in  the  consequences  of  the  failure  of 
the  other,  and  without  understanding  themselves  responsible  for  any  circum- 
stances that  might  happen  to  the  loss  of  either.  That  was  the  agreement 
between  themselves.  But  the  question  is,  whether  they  have  not,  by  parts 
of  their  agreement,  constituted  themselves  partners  in  respect  to  other 
persons  ?  The  case  therefore  is  reduced  to  the  single  point,  whether  the 
Carvers  did  not  entitle  themselves,  and  did  not  mean  to  take  a  moiety  of  the 
profits  of  Giesler's  house,  generally  and  indefinitely  as  they  should  arise, 
at  certain  times  agreed  upon  for  the  settlement  of  their  accounts.  That 
they  have  so  done  is  clear  upon  the  face  of  the  agreement ;  and  upon  the 
authority  of  Grace  v.  Smith,  he  who  takes  a  moiety  of  all  the  profits  in- 
definitely, shall,  by  operation  of  law,  be  made  liable  to  losses,  if  losses  arise, 
upon  the  principle  that,  by  taking  a  part  of  the  profits,  he  takes  from  the 
creditors  a  part  of  that  fund  which  is  the  proper  security  to  them  for  the 
payment  of  their  debts.  That  was  the  foundation  of  the  decision  in  Grace 
V.  Smith,  and  I  think  it  stands  upon  the  fair  ground  of  reason.  I  cannot 
agree,  that  this  Avas  a  mere  agency,  in  the  sense  contended  for  on  the  part 
of  the  defendants,  for  there  was  a  risk  of  profit  and  loss  :  a  ship  agent  employs 
tradesmen  to  furnish  necessaries  for  the  ship,  he  contracts  with  them,  and  is 
liable  to  them,  he  also  makes  out  their  bills  in  such  a  way  as  to  determine 
the  charge  of  commission  to  the  ship-owners.  With  respect  to  the  commis- 
sion indeed,  he  may  be  considered  as  a  mere  agent,  but  as  to  the  agency 
itself,  he  is  as  much  a  trader  as  any  other  man,  and  there  is  as  much  risk  of 
profit  and  loss  to  the  person  with  whom  he  contracts,  in  the  transactions  with 
him,  as  with  any  other  trader.  It  is  true  that  he  will  gain  nothing  but  his 
discount ;  but  that  is  a  profit  in  the  trade,  and  there  may  be  losses  to  him  as 
well  as  to  the  owners.  If  therefore  the  principle  be  true,  that  he  who  takes 
the  general  profits  of  a  partnership  must  of  necessity  be  made  liable  to 
the  losses,  in  order  that  he  may  stand  in  a  just  situation  with  regard  to  the 
creditors  of  the  house,  then  this  is  a  case  clear  of  all  difficulty.  For  though, 
with  respect  to  each  other,  these  persons  were  not  to  be  considered  as  part- 
ners, yet  they  have  made  themselves  such  with  regard  to  their  transactions 
with  the  rest  of  the  world."     In  this  case,  it  seems  that  the  Court  considered 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  109 

merchant  in  London  agreed  with  another  commission 
merchant  in  Rio  Janeiro,  equally  to  divide  between 
them  the  commissions  on  the  sale  of  all  goods  recom- 
mended by  the  one  house  to  the  other ;  it  was  held, 
that  as  to  third  persons,  they  were  partners  in  this  busi- 
ness.^ 

•'commissions  to  mean  profits;  and  that  the  net  commissions,  and  not  the 
gross  commissions,  were  divisible."     Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  30. 

^  Cheap  V.  Cramond,  4  B.  &  Aid.  663. — In  this  case,  it  is  not  clear, 
whether  the  Court  treated  the  case  as  one  where  the  gross  comnn'ssions,  or 
the  net  commissions  were  to  be  divided,  although  the  commissions  were 
treated  as  if  the  word  had  been  profits,  and  therefore  undistinguishable 
from  profits.  The  language  of  Lord  Chief  Justice  Abbott,  in  delivering 
the  opinion  of  the  Court,  was  as  follows :  "  And  in  support  of  this  propo- 
sition, the  case  of  Waugh  v.  Cai'ver  was  cited  and  relied  on.  And  we  are 
all  of  opinion,  that  the  present  case  cannot  be  distinguished  in  principle 
from  that,  and  that  our  decision  must  be  governed  by  it.  It  is  true,  that  in 
that  case  a  definite  part  of  the  commission  was,  by  agreement  of  the  parties, 
to  be  deducted  as  compensation  for  the  charges  and  expenses  before  a 
division  took  place ;  and  also  that  each  party  was  to  share  in  some  specified 
measure  Avith  the  other,  in  other  parts  of  the  profits  of  their  respective 
business,  such  as  warehouse  rent,  and  discount  upon  tradesmen's  bills.  And 
it  was  contended,  in  this  case,  on  the  part  of  the  plaintiffs,  that  the  bank- 
rupts and  Ruxton  were  to  be  considered  as  dividing  the  gross  proceeds 
only,  and  not  the  net  proceeds  or  profits  of  each  other's  agency  or  factorage  ; 
and  that  a  division  of  gross  proceeds  does  not  constitute  a  partnership. 
We  think,  however,  that  the  previous  deduction  of  a  definite  part  of  the 
commission  before  the  division  in  the  case  cited,  is  an  unimportant  fact.  It 
cannot  have  the  effect  in  all  cases  of  leaving  the  remainder  as  clear  profit, 
because  the  expense  and  charge  cannot  be  in  all  cases  uniformly  the  same, 
but  must  vary  with  the  particular  circumstances  of  each  transaction  ;  so  that 
in  effect  a  part  only  of  the  gross  commission,  or  proceeds  of  the  agency, 
and  not  the  whole,  was  to  be  divided  in  that  case  ;  and  taking  the  definite 
deducted  part  at  a  fifth,  or  any  other  aliquot  part,  the  absent  house,  instead 
of  receiving  one-half,  as  in  the  case  at  bar,  would,  by  the  agreement,  receive 
two-fifths,  or  some  other  definite  part  of  the  whole  gross  sum,  and  not  an 
indefinite  part  thereof,  depending  upon  the  actual  and  clear  profit  of  the 
transaction.  And  although,  in  the  case  of  Waugh  v.  Carver,  the  agreement 
was  not  confined  to  a  division  of  the  commission,  but  extended  also  to  the 
moneys  received  in  certain  other  parts  of  the  transactions  of  the  two  houses, 
yet  the  principle  of  the  decision  is  not  affected  by  that  circumstance,  the 
principle  being,  that  where  two  houses  agree  that  each  shall  share  with 
the  other  the  money  received  in  a  certain  part  of  the  business,  they  are,  as  to 
such  part,  partners  with  regard  to  those  who  deal  with  them  therein,  though 


110  PARTNERSHIP.  [cHAP.  IV. 

§  62.  We  may  conclude  this  head  with  the  remark, 
that  the  Roman  law  did  not  (as  we  have   seen)  ordi- 

they  may  not  be  partners  inter  sese.  By  the  effect  of  such  an  agreement, 
each  house  receives  from  the  other  a  part  of  that  fund  on  which  the  creditors 
of  the  other  rely  for  payment  of  their  demands,  according  to  the  language 
of  Lord  Chief  Justice  De  Grey,  in  the  case  of  Grace  v.  Smith.  And  such 
an  agreement  is  perfectly  distinct  from  the  cases  put  in  the  argument  before 
us  of  remuneration  made  to  a  traveller,  or  other  clerk  or  agent,  by  a  por- 
tion of  the  sums  received  by  or  for  his  master  or  principal  in  lieu  of  a  fixed 
salary,  which  is  only  a  mode  of  payment  adopted  to  increase  or  secure 
exertion.  It  is  distinct  also  from  the  case  of  a  factor  receiving  for  his 
commission  a  percentage  on  the  amount  of  the  price  of  the  goods  sold  by 
him,  instead  of  a  certain  sum  proportioned  to  the  quantity  of  the  goods  sold, 
as  was  the  case  of  Dixon  v.  Cooper,  wherein  it  was  held,  that  the  factor 
was  a  competent  witness  to  prove  the  sale.  It  differs  also  from  the  case  of 
a  person  receiving  from  a  trader  an  agreed  sum,  in  respect  of  goods  sold 
by  his  x'ecommendation,  as  one  shilling  per  chaldron  on  coals,  or  the  like, 
for  there  is  no  mutuality ;  and  such  a  case  resembles  a  payment  made  to  an 
agent  for  procuring  orders,  and  has  no  distinct  reference  in  the  terms  of  the 
agreement  to  any  particular  coals  purchased  by  the  coal  merchant  for  re- 
sale, upon  which  a  third  jjerson  may  become  a  creditor  of  the  coal  merchant, 
and  probably  could  not  in  any  instance  be  shown  to  apply  in  its  execution 
to  any  such  particular  purchase.  But  it  is  to  be  observed,  that,  even  on  a 
case  of  this  nature,  the  inclination  of  Lord  Mansfield's  opinion,  in  Young 
V.  Axtoll,  cited  2  H.  Bl.  242,  was,  that  such  an  agreement  might  constitute 
a  partnership.  Of  the  case  of  Muirhead  v.  Salter,  referred  to  in  the  argu- 
ment, we  have  neither  the  facts  nor  the  ground  of  decision  brought  before 
us  with  sufficient  accuracy,  to  enable  us  to  consider  it  as  an  authority  on 
the  present  question.  It  may  have  been,  that  the  division  of  the  commission 
between  the  two  insurance  brokers  was  a  solitary  instance  ;  that  the  assured 
had  recognized  the  second  broker,  as  being  the  person  employed  by  him- 
self; or  that  the  court  did  not  think  fit,  under  all  the  circumstances  of  the 
particular  case,  to  disturb  the  verdict  of  a  jury  of  merchants,  as  to  the  effect 
of  a  division  of  the  commission  in  that  particular  species  of  agency,  the 
divided  commission  being,  as  I  understand,  payable  for  effecting  the  policy, 
and  not  for  receiving  the  money  from  the  underwriters,  in  the  event  of  the 
loss,  and  payable  whether  any  loss  had  occurred  or  not.  So  that  we  cannot 
consider  that  case  as  having  contravened  or  weakened  the  authority  of  the 
decision  in  Waugh  v.  Carver.  Upon  the  authority  of  this  latter  case,  and 
for  the  reasons  already  given,  Ave  think  the  direction  of  the  learned  judge 
at  the  trial,  and  the  verdict  of  the  jury,  are  right,  and  that  the  rule  for  a 
new  trial  ought  to  be  discharged."  There  is  certainly  some  obscurity  in 
that  part  of  the  opinion,  which  refers  to  the  question  as  to  the  gross  or  the 
net  commissions.  If  the  learned  judge  meant  to  say,  that  a  division  of 
the  gross  commissions  would  make  them  partners,  the  case  certainly  is  in 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  Ill 

narily  contemplate  cases  to  be  cases  of  partnership  ex- 
cept where  the  parties  intended  to  create  a  partnership, 
and  the  losses,  as  Avell  as  the  profits,  were  to  be  shared 
in  some  proportions  by  each  of  them.  The  usual  inter- 
pretation was,  that  if  the  agreement  provided  either  for 
a  distribution  of  the  profits  alone,  or  of  the  losses  alone, 
in  certain  proportions,  the  other,  which  was  omitted, 
would  be  presumed  to  be  intended  to  be  shared  in  the 
same  proportion.  lUud  expedifum  est,  si  in  una  causa 
pars  fuerit  expressa  (veluii  in  solo  lucro,  vel  in  solo 
damno)  in  altera  vero  o^nissa  ;  in  eo  quoque,  quodprce- 
termisswn  est,  eandem  partem  servari}  And  unless 
some  provision  was  found  in  the  agreement  itself,  touch- 
ing the  matter,  the  Roman  law  presumed,  as  a  natural 
result  from  the  contract,  that  the  partners  were  to  share 
in  both,  and  to  share  equally.  Nam  sicuti  lucrum,  ita 
damnum  quoque  commune  esse  oportet ;  quod  non  culpa 
socii  contingit.^  Quoniam  societas,  cum  contrahitur, 
tam  lucri,  quam  damni  communio  initur.^  Still,  how- 
ever (as  we  have  seen),  the  Roman  law,  if  the  parties 
clearly  intended  a  partnership,  did  not  prevent  them 
from  agreeing,  in  consideration  of  peculiar  services  or 
credit  in  aiding  the  partnership,  that  the  partners  should 
share  the  profits  between  them,  if  any,  and  that  the  one 
rendering  such  services,  or  credit,  might  be  exempted 

conflict  Avith  other  authorities.  But  if  he  meant,  that  the  division  was  to  be 
of  the  net  connnissions,  deducting  all  charges,  then  it  Avould  be  in  harmony 
with  those  authorities.  See  ante,  §  34,  44,  5o-60.  Sec  Pearson  t'.  Skelton, 
1  M.  &  W.  504.  The  same  case  is  much  more  fully  reported  in  1  Tyrw.  & 
G.  848,  where  the  distinction  between  an  interest  in  the  gross  profits,  and 
that  in  the  net  profits,  is  clearly  stated.  His  language  on  that  occasion  is 
quoted,  post,  §  220,  note.  Mr.  Collyer  understands  Cheap  v.  Cramond, 
4  B.  &  Aid.  663,  to  have  decided  that  there  is  no  difference  between  a 
division  of  the  gross  and  a  division  of  the  net  commissions. 

1  Inst.  3,  -IQ,  3;  Domat,  1,  8,  1,  art.  5;  ante,  §  27,  50. 

*  D.  17,  2,  52,  4;  Poth.  Pand.  17,  2,  n.  39;  Domat,  2,  1,  1,  art.  1. 

»  D.  17,  2,  67,  Intr. ;  Domat,  1,  8,  1,  art.  1,  3,  4. 


112  PARTNERSHIP.  [CHAP.  lY. 

from  all  losses  beyond  the  profits.^  But  it  does  not  ap- 
pear, that  the  Roman  law  ever  established  a  partnership 
in  favor  of  third  persons,  against  the  intention  of  the 
parties,  from  the  mere  participation  of  profits,  and  a  for- 
tiori^ where  there  was  an  express  provision  against  one 
party  being  liable  for  any  losses.^ 

§  63.  The  principles  established  in  these  three  classes 
of  cases  ^  are  commonly  applied  to  dormant  and  secret 
partnerships,  where  the  ostensible  partners  only  are 
known  or  act,  and  yet  other  persons,  who  are  to  share 
the  profits,  are  held  responsible  as  partners  to  third 
persons,  although  they  may  not  be  so  chargeable  inter 
sese}  Thus,  for  example,  if  A.  and  B.  should  agree 
to  carry  on  any  trade  or  business  for  their  joint  and  mu- 
tual account,  to  divide  the  profits  and  losses  between 
them,  and  A.  alone  was  to  be  known  in  the  trade  and 
business,  and  to  be  solely  responsible  for  the  debts  and 
contracts  thereof,  and  B.  was  to  be  a  secret  dormant 
partner,  B.  would  nevertheless  be  deemed  a  partner  as  to 
third  persons,  and  responsible  to  them  for  all  the  debts 
and  contracts  growing  out  of  such  trade  or  business.^ 
The  same  rule  would  apply  to  a  case,  where  it  was  even 
expressly  agreed  between  the  parties,  that  there  should 
be  no  partnership  between  them ;  but  they  were  merely 
to  share  the  profits  and  losses,  or  the  profits  only,  and 
one  was  to  bear  all  the  losses.^ 

»  D.  17,  2,  29,  1 ;  Domat,  1,  8,  1,  art.  9  ;  ante,  §  37,  50. 
"  Ante,  §  50.  3  ^^^6,  §  55,  59,  60. 

*  3  Kent,  32,  Winship  v.  Bank  of  U.  S.  5  Pet.  529 ;  Etheridge  v.  Binney, 
9  Pick.  272. 

*  Hoare  v.  Dawes,  1  Doug.  371 ;  Winship  v.  Bank  of  U.  S.  5  Pet.  529; 
S.  c.  sub  nom.  U.  S.  Bank  v.  Binney,  5  Mason,  176  ;  Coope  v.  Eyre,  1  H.  Bl. 
37  ;  Geddes  v.  Wallace,  2  Bligh,  270 ;  {Beckham  v.  Drake,  9  M.  &  W.  79  ; 
8.  C.  11  M.  &  W.  315  ;  Lind.  on  P.  273}  ;  [Baring  v.  Crafts,  9  Met.  380; 
Brooke  v.  Washington,  8  Gratt.  248.] 

6  Gow  on  P.  c.  1,  p.  12-18,  3d  ed.;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11-27, 
2d  ed.;    Id.  §  2,  p.  53-67;    Id.   B.  3,  c.  3,  §  3,  p.  368,  370,  371;   Wats. 


CHAP.  IV.]        AS  TO  THIRD  PERSONS.  113 

§  64.  In  the  next  place,  as  to  the  class  of  cases,  where 
the  parties  are  not  in  reality  partners,  but  are  held  out 
to  the  world  as  such  in  transactions  affecting  third  per- 
sons. In  such  cases,  they  will  be  clearly  held  partners, 
as  to  such  persons.^  Tms  doctrine  turns  upon  no  pecu- 
liar principles  of  municipal  jurisprudence  ;  but  is  founded 
in  the  enlarged  principles  of  natural  law  and  justice,  ex 
cBcjuo  et  bono.  For,  wherever  one  of  two  innocent  per- 
sons must  suffer  from  a  false  confidence  or  trust  reposed 
in  a  third,  he  who  has  been  the  cause  of  that  false  con- 
fidence, or  trust,  and  is  to  be  benefited  by  it,  ought  to 
suffer,  rather  than  the  other ;  and  this  must  apply  a 
fortiori,  where  the  credit  is  given  to  a  party  solely  upon 
the  faith  of  the  fraudulent  allegation  of  a  fact,  which  is 
known  to  such  party  at  the  time  to  be  untrue.  The 
reason  of  the  doctrine  is  fully  expounded  by  a  late  emi- 
nent judge  in  the  following  terms.  "  The  definition  of 
a  partnership  cited  from  Pufendorf  is  good,  as  between 
the  parties  themselves,  but  not  with  respect  to  the  world 
at  large.  If  the  question  were  between  A.  and  B., 
whether  they  were  partners,  or  not;  it  would  be  very 
well  to  inquire,  whether  they  had  contributed,  and  in 
what  proportions,  stock,  or  labor,  and  on  what  agree- 
ments they  were  to  divide  the  profits  of  that  contribu- 
tion. But  in  all  these  cases  a  very  different  question- 
arises,  in  which  the  definition  is  of  little  service.  The 
question  is  generally,  not  between  the  parties,  as  to  what 

on  P.  c.  l,p.  17-27,  2d  ed.  ;  Hesketh  v.  Blancliard,  4  East,  144;  [Smith 
V.  Smith,  7  Fost.  244  ;  Hill  v.  Voorhies,  22  Penn.  St.  68  ;  Brooke  v.  Wash- 
ington, 8  Gratt.  248  ;   Grilfith  v.  Buffiim,  22  Vt.  181.] 

'  3  Kent,  32,  83  ;  Post  v.  Kimberly,  9  Johns.  4  70,  489  ;  Ex  parte  Watson, 
19  Ves.  459,  469;  Fox  v.  Clifton,  6  Bing.  7  76  ;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p. 
60-64,  2d  ed. ;  Parker  w.  Barker,  1  Brod.  &  B.  9  ;  Goode  v.  Harrison,  5  B. 
&  Aid.  147;  Bond  v.  Pittard,  3  M.  &  W.  357;  2  Bell,  Comm.  B.  7,  c.  2,  p. 
G23,  624,  5th  ed.  See  Bonfield  v.  Smith,  12  M.  &  W.  405,  the  eonverse  case, 
where  the  firm  name  was  A.  &  Co.,  and  the  defendant  held  himself  out  as 
the  sole  partner  then  in  the  firm. 


114  PARTNERSHIP.  [cHAP.  IV. 

shares  they  shall  divide,  but  respecting  creditors,  claim- 
ing a  satisfaction  out  of  the  funds  of  a  particular  house, 
who  shall  be  deemed  liable  in  regard  to  these  funds. 
Now,  a  case  may  be  stated,  in  which  it  is  the  clear  sense 
of  the  parties  to  the  contract,  that  they  shall  not 
be  partners  ;  that  A.  is  to  contribute  neither  labor  nor 
money,  and,  to  go  still  further,  not  to  receive  any  profits. 
But  if  he  will  lend  his  name  as  a  partner,  he  becomes,  as 
against  all  the  rest  of  the  world,  a  partner,  not  upon  the 
ground  of  the  real  transaction  between  them,  but  upon 
principles  of  general  policy,  to  prevent  the  frauds,  to 
which  creditors  would  be  liable,  if  they  were  to  suppose, 
that  they  lent  their  money  upon  the  apparent  credit  of 
three  or  four  persons,  when  in  fact  they  lent  it  only  to 
two  of  them,  to  whom,  without  the  others,  they  would 
have  lent  nothing.^  Upon  so  clear  and  natural  a  doctrine, 
it  seems  unnecessary  to  cite  at  large  the  authorities  in  its 
support.  They  are  uniform  and  positive  to  the  purpose.^ 
§  65.  This  last  class  of  cases  may  arise  from  the 
express  acknowledgments  of  the  parties,  or  by  impli- 
cation or  presumption  from  circumstances.  Thus,  if  a 
person  should  expressly  hold  himself  out  as  a  partner, 
and  thereby  should  induce  the  public  at  large,  or  par- 
ticular persons,  to  give  credit  to  the  partnership,  he 
would  be  liable  as  a  partner  for  the  debts  so  contracted, 
although  he  should  in  reality  not  be  a  partner.^     On 

•  Lord  Chief  Justice  Eyre  in  Waugh  v.  Carver,  2  H.  Bl.  235,  246. 

2  Coll.  on  P.  B.  1,  c.  1,  §  5,  p.  53-64;  Gow  on  P.  c.  1,  p.  10,  3d  ed. ; 
Wats,  on  P.  p.  83,  34,  2d  ed. ;  3  Kent,  31-33  ;  Hoare  v.  Dawes,  1  Doug.  371 ; 
Young  V.  Axtell,  cited  2  H.  Bl.  242  ;  Ex  parte  Langdale,  2  Rose,  444 ;  s.  c. 
18  Ves.  300,  301 ;  M'lver  v.  Humble,  16  East,  169  ;  Bond  r.  Pittard,  3  M. 
&  W.  357,  359;  {Martyn  v.  Gray,  14  C.  B.  N.  s.  824;  Dutton  ».  Wood- 
man, 9  Cush.  255;  Potter  v.  Greene,  9  Gray,  309,} 

3  Wats,  on  P.  c.  1,  p.  6,  2d  ed. ;  Id.  p.  33 ;  Gow  on  P.  c.  1,  p.  10-13,  3d 
ed.;  Id.  p.  23,  24;  Coll.  on  P.  B.  1,  c.  1,  §  2,  p.  53-67,  2d  ed. ;  Guidon  v. 
Robson,  2  Camp.  302;  Young  v.  Axtell,  cited  2  H.  Bl.  242.  {To  charge 
a  defendant  with  liability  as  a  partner  on  the  ground  of  representation  of 


CHAP.  lY.]  AS    TO    THIRD    PERSONS.  115 

the  other  hand,  if  a  known  partner  should  silently 
withdraw  from  the  partnership,  without  giving  any 
notice  thereof,  he  would  still  remain  liable  to  persons, 
who  should  continue  to  deal  with  it  upon  the  faith  and 
confidence,  that  he  still  remained  a  partner  ;  for  his 
silence,  under  such  circumstances,  would  be  equivalent 
to  an  affirmation  of  a  continuing  partnership/  But 
this  subject  will  naturally  occur  in  other  connections 
in  a  subsequent  part  of  these  Commentaries,  and  needs 
not  here  be  further  dwelt  upon.^ 

§  66.  In  the  next  place  as  to  the  class  of  cases 
where  one  of  the  parties  is  to  receive  an  annuity  out 
of  the  profits,  or  as  a  part  thereof.  And  here  it  may 
be  generally  stated,  that  a  person,  who  lends  money  to 
a  firm,  and  is  to  receive  therefor  a  fixed  interest 
(whether  usurious,  or  otherwise,  is  not  material),  or  an 
annuity,  certain  as  to  amount  and  duration,  will  not 
thereby  become,  as  to  third  persons,  a  partner  in  the 
firm ;  for,  in  such  a  case,  there  is  no  mutuality  of  profit 
with   the    firm,    and   no    general    participation    in   the 

himself  as  a  partner,  it  must  be  proved  either  that  he  has '  represented 
himself  as  a  partner  to  the  plaintiff,  or  has  made  such  a  public  repre- 
sentation of  himself  in  that  character  as  to  lead  the  jury  to  conclude 
that  the  plaintilT,  knowing  of  that  representation,  and  believing  the  defend- 
ant to  be  a  partner,  gave  him  credit  under  that  belief.  Ford  v.  Whitmarsh, 
Hurlst.  &  Walm.  53.  This  rule,  in  spite  of  the  remark  in  Young  v.  Axtell, 
cited  2  H.  Bl.  242,  seems  now  well  settled.  Dickinson  v.  Valpy,  10  B.  &  C. 
128,  140.  Wood  V.  Duke  of  Argyll,  6  M.  &  G.  928,  932  ;  Lake  v.  Duke  of 
Argyll,  6  Q.  B.  477;  Shott  v.  Strealfield,  1  M.  &  Rob.  8;  Baird  r.  Planque, 
1  Fost.  &  Finl.  344;  Fitch  v.  Harrington,  13  Gray,  468;  Wood  r.  Pennell, 
51  Me.  52 ;  Irvin  v.  Conklin,  36  Barb.  64  ;  Bowie  v.  Maddox,  29  Ga.  285  ; 
Lind.  on  P.  41-52;  Metcalf  on  Contr.  113;  1  Sm.  Lead.  Gas.  (6th  Am.  ed.) 
1190;  Smith's  Merc.  Law,  (5th  ed.)  23,  note  (r.)} 

'  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  368-376,  2d  ed. ;  Godfrey  v.  Turnbull,  1 
Esp.  371  ;  AVhitman  v.  Leonard,  3  Pick.  177;  Griswold  v.  AVaddington,  15 
Johns.  57  ;  Parkin  v.  Carruthers,  3  Esp.  248;  Stables  v.  Eley,  1  Car.  &  P. 
614  ;  Graham  v.  Hope,  1  Peake,  154. 

*  {See  §  158-163.} 


116  PART>'ERSHIP.  [chap.  IV. 

casual  and  indefinite  profits,  which,  as  we  have  seen, 
constitutes  one  of  the  ingredients  of  partnership.^ 
Cases  of  this  kind  often  occur  upon  the  retirement  of 
a  partner,  leaving  money  or  funds  in  the  hands  of  the 
firm,  and  upon  the  decease  of  a  partner,  who  bequeathes 
an  annuity  to  his  widow  out  of  the  profits  ;  and  in 
neither  case  will  the  retiring  partner,  or  the  widow,  be 
held  a  partner  as  to  third  persons,  as  he  or  she  cer- 
tainly is  not,  as  to  the  partners  themselves.^  It  is 
true,  that  it  may  be  said,  that  the  retiring  partner  or 
widow  has,  in  a  certain  sense,  an  interest  in  the  profits. 
But  the  same  suggestion  may  be  made  as  to  creditors 
of  the  firm.  If  any  one  advances  or  lends  money  to  a 
trader,  it  is  only  lent  on  his  general  personal  security. 
It  is  no  specific  lien  upon  the  profits  in  the  trade ;  and 
yet  the  lender  is  generally  interested  in  those  profits. 
He  relies  on  them  for  repayment.  And  there  is  no 
difference,  whether  money  be  lent  de  novo,  or  be  left 
behind  in  the  trade  by  a  retiring  partner ;  or,  whether 
the  terms  of  the  loan  be  kind,  or  be  harsh.^ 

§  67.  The  true  criterion,  by  which  we  are  to  distin- 
guish cases  of  this  kind  from  cases  in  which  there  is  a 
partnership  as  to  thhd  persons,  is  to  ascertain,  whether 
the  retiring  partner,  or  lender,  or  annuitant,  is  to 
receive  a  share  of  the  profits,  as  profits,  or  whether  the 
profits  are  relied  on  only  as  a  fund  of  payment ;  or,  in 
other  words,  whether  the  profit,  or  premium,  or  annuity, 
is  certain  and  defined,  or  is  casual,  indefinite,  and  de- 
pending on  the  accidents  of  trade.  In  the  former  case, 
it  is  a  loan ;  in  the  latter,  a  partnership.  The  hazard 
of  profit  or  loss  is  not  equal  and  reciprocal,  if  the  retir- 

'  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  26.  2d  ed. 

=  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  26,  27,  2d  ed.     Grace  v.  Smith,  2  W.  Bl. 
9  98,  1000;  Waugh  v.  Carver,  2  H.  Bl.  235,  245. 
=>  Grace  v.  Smith,  2  W.  Bl.  998,  1000. 


CHAP.   IV.]  AS    TO    THIRD    PERSONS.  117 

ing  partner,  or  lender,  or  annuitant,  can  receive  a 
limited  sum  only  for  the  profits  of  the  loan  or  other 
fund  ;  and  therefore  the  law  will  not  deem  him  or  her 
a  partner,  since  there  is  an  utter  want  of  mutuality  of 
right  and  interest  in  the  profit.^ 

§  68.  There  may  be,  and  indeed  sometimes  is  great 
nicety  in  the  application  of  the  doctrine  ;  but,  never- 
theless, the  distinction  itself  is  ordinarily  clear  and 
satisfactory.  Thus,  if  a  person  is  to  receive  an  annuity 
in  lieu  of  profits,  he  will  not  be  held  to  be  a  partner  as 
to  third  persons ;  because  such  words  negative  the 
presumption,  that  the  annuity  is  to  be  paid  out  of  the 
profits  ;  since  it  is  not  to  vary  in  its  amount  with  the 
profits,  nor  to  depend,  as  to  its  duration,  on  the  term 
or  continuance  of  the  partnership.-  But  if  he  is  to 
receive  a  certain  percentage  on  the  profits,  or  on  the 
amount  of  the  business  done,  he  will  clearly  be,  as  to 
third  persons,  a  partner,  since  the  amount  to  be 
received  would  rise  and  fall  with  the  amount  of  the 
profits  or  business.^     So  (it  has  been  said),  if  a  retiring 

»  Grace  v.  Smith,  2  W.  Bl.  998,  1000;  Waugh  i-.  Carver,  2  H.  Bl.  235, 
247.  {In  McDonald  v.  Millaudon,  5  La.  (Miller),  403  ;  Sheridan  v.  Medara, 
2  Stockt.  469  ;  Pierson  v.  Steinmeyer,  4  Rich.  309  ;  and  Wood  v.  Vallette, 
7  Ohio  St.  172,  persons  who  had  lent  money  for  a  share  in  the  profits  were 
held  liable  as  partners.  In  the  first  two  cases  the  contracts,  unless  they 
■were  contracts  for  partnership,  were  usurious ;  see  note  infra.  In  the  last 
case,  the  one  who  advanced  the  money  also  furnished  services,  and  the  con- 
tract is  said  by  the  court  to  be  not  a  contract  of  loan,  but  of  actual  partner- 
ship. In  Pierson  r.  Steinmeyer,  p.  319,  the  court  recognized  the  distinction 
between  participation  in  the  profits  as  profits,  and  the  receiving  of  a  sum 
proportionable  to  the  profits  in  cases  of  agency,  but  they  refused  to  apply 
the  distinction  in  the  case  of  a  loan.     O'Xeall,  J.,  dissented. 

On  the  other  hand,  in  Gibson-  r.  Stone,  43  Barb.  285,  and  Williams  i: 
Soutter,  7  Iowa,  435,  a  loan  for  a  share  of  profits  was  held  not  to  create 
liability  as  a  partner.  See  §  49,  note ;  §  70,  note ;  Wall  v.  Balcom,  9 
Gray,  92.} 

*  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  27,  28,  2d  ed. 

»  Young  V.  Axtell,  cited  2  H.  Bl.  242;  Waugh  v.  Carver,  2  H.  Bl.  235, 
246,  247  ;  [Buckner  v.  Lee,  8  Ga.  285,  288.] 


118  PARTNERSHIP.  [CHAF.  IV. 

partner  is  entitled  to  receive  a  certain  interest  on  the 
funds,  which  he  leaves  in  the  partnership,  and  also  a 
fixed  annuity  for  a  certain  number  of  years,  if  the 
partner  shall  so  long  live,  in  lieu  of  the  profits  of  the 
trade,  with  a  right  to  inspect  the  books  of  the  partner- 
ship, he  will  be  deemed  a  partner ;  for,  taking  the 
whole  transaction  together,  it  is  apparent,  that  he  is  to 
be  paid  out  of  the  profits.^ 

§  69.  It  is  upon  a  similar  ground,  that,  where  a 
person  is  to  receive  an  annuity  of  a  fixed  sum  out  of 
the  profits  of  a  trade  or  business,  he  is  held  to  be  a 
partner  as  to  third  persons ;    for  in  such    a    case  the 

1  Bloxham  v.  Pell,  cited  2  W.  Bl.  999  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  28, 
2d  ed. ;  Id.  §  2,  p.  54. —  This  case  seems  to  stand  upon  the  utmost  verge  of 
the  law,  even  if  it  be  at  all  maintainable.  It  differs  from  Grace  v.  Smith,  2 
W.  Bl.  998,  principally  in  the  circumstance,  that  the  annuity  was  determina- 
ble upon  the  contingency  of  the  death  of  the  partner,  and  there  was  a  right 
to  inspect  the  books.  But  as  the  interest  was  fixed,  and  the  annuity  for  a 
determinate  term,  although  liable  to  be  defeated  by  the  happening  of  the 
contingency  of  the  death  of  the  party,  it  does  not  seem  easy  to  see,  how 
either  the  interest  or  the  annuity  can  be  properly  treated  as  a  payment  to  be 
made  exclusively  out  of  the  profits.  The  right  to  inspect  the  books  may 
seem  more  strongly  to  indicate  a  partnership  ;  but  ought  it  to  be  decisive  ? 
See  Gow  on  P.  c.  1,  p.  21,  22,  3d  ed. ;  Gary  on  P.  p.  3,  14,  171.  Certainly 
an  annuity  of  a  fixed  sum,  determinable  on  the  death  of  the  annuitant,  or  of 
the  partner,  cannot,  per  se,  be  treated  as  creating  a  partnership  as  to  third 
persons,  when  payable  in  lieu  of  the  profits  of  the  trade ;  for  there  is  no 
mutuality  in  the  profits,  and  no  sharing  of  profit  and  loss ;  as  it  is  not  made 
payable  out  of  the  profits  exclusively.  See  Ex  parte  Chuck,  8  Bing.  469  ; 
Young  V.  Axtell,  cited  2  H.  Bl.  242;  Holyland  v.  De  Mendez,  3  Mer.  184; 
Watson  on  P.  c.  1,  p.  11,  12,  2d  ed.  {In  Grace  v.  Smith,  2  W.  Bl.  998,  the 
judgment  in  which  "  has  always  been  regarded  as  the  great  authority  for  the 
proposition,  that  a  person  who  shares  profits  shall  be  liable  to  third  parties 
as  if  he  were  in  fact  a  partner,"  the  decision  was  that  an  annuitant  was  not, 
under  the  circumstances,  liable  as  a  partner.  Mr.  Lindley  regards  the  cases 
of  Gilpin  V.  Enderbey,  5  B.  &  Aid.  954,  and  Fereday  v.  Hordei-n,  Jac.  144  as 
decisions  on  the  law  of  usury  rather  than  on  the  law  of  partnership,  and  the 
case  of  Bloxham  v.  Pell,  2  W.  Bl.  999,  as  resting  on  the  reason  given  by 
Lord  Mansfield  that  "  it  shall  not  lie  in  the  defendant  Pell's  mouth  to  say  it  is 
usury  and  not  a  partnership,"  and  on  the  maxim  Quum  quod  ago  non  valet  ut 
agam,  valeat  quantum  valere  potest.  Lind.  on  P.  18,  35.  See  Ex  parte 
Briggs,  3  Deac.  &  Ch.  3G7 ;  ante,  §  49,  note.} 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  119 

annuity  will  be  payable  out  of  the  net  profits,  and  will 
rise  and  fall  accordiiig  to  the  profits,  if  there  be  not 
enough  profits  to  pay  the  annuity ;  and  there  will  also 
be  a  lien  on  the  profits  therefor.^  In  short,  in  all  cases 
of  this  kind,  the  real  question  to  be  solved  is,  whether 
the  party  is  in  effect  to  participate  in  the  rise  or  fall  of 
the  profits,  and  has  an  interest  in  the  profits,  as  such ; 
or,  whether  he  only  looks  to  profits  as  a  fund  for  pay- 
ment of  the  annuity ;  but  not  exclusively  to  that  fund. 
In  the  former  case  he  is  a  partner ;  in  the  latter  he  is 
not.  Questions  of  this  sort  also  sometimes  arise  in 
cases  where  a  simulated  partnership  is  resorted  to, 
in  order  to  disguise  a  loan  upon  usurious  interest; 
and  then  the  court  will  look  astutely  to  the  real 
nature  of  the  transaction.  It  may  be  clearly  a  case 
of  usury  between  the  parties,  which  will  create  no 
legal  partnership  as  between  themselves,  although 
they  may  as  clearly  be  liable  as  partners  to  third 
persons.^ 

§  70.  We  may  conclude  this  part  of  our  subject  with 
the  remark,  that  persons  may  not  only  be  partners  as 
to  third  persons,  but  also  inter  sese,  where  they  are  not 
interested  personally,  but  are  concerned  in  an  official 
capacity  only  in  the  partnership,  for  the  use  and 
benefit  of  others.  Thus,  where  a  trustee  for  third 
persons  is  concerned  in  a  partnership,  but  derives  no 
profit  personally  therefrom,  or  an  executor  or  adminis- 
trator is,  in  pursuance  of  partnership  articles,  admitted 
into  the  partnership  after  the  death  of  a  deceased 
partner,  he  will  be  deemed  to  all  intents  and  purposes, 
as  to  the  other  partners,  as  well  as  to  third  persons,  a 

>  Bond  i:  Pittard,  3  M.  &  W.  357,  361  ;  In  re  Colbeck,  Buck,  48  ;  Ex  parte 
Chuck,  8  Bing.  469;  Ex  parte  Hamper,  17  Ves.  403,  412;  ante,  §  66,  67. 

-  Gilpin  r.  Enderbey,  5  B.  &  Aid.  954  ;  Morse  i\  Wilson,  4  T.  R.  353  ; 
Coll.  on  P.  B.  l,c.  1,  §  1,  p.  38-41,  2d  ed.  See  also  Poth.  de  Soc.  n.  22-27 ; 
{Sheridan  v.  Medara,  2  Stockt.  469.} 


120  PARTNERSHIP.  [CHAF.  IV. 

partner.^  But  if  a  person  is  not  in  the  firm,  and  has 
no  control  or  authority  or  interest,  either  in  the  capital 
stock  or  in  the  profits  thereof,^  and  his  cestui  qite  trust 
is  the  party  in  interest  (whether  he  be  infant  or  an 
adult),  the  mere  reservation  to  such  person  of  a  right 
to  an  account  of  the  profits,  and  that  the  partnership 
shall  be  governed  by  his  advice,  will  not  (it  should 
seem)  constitute  him  a  partner  in  any  respect  whatso- 
ever. Thus,  where  it  appeared,  that  a  father,  on  the 
formation  of  a  partnership,  invested  a  sum  of  money  in 
the  partnership  firm  on  behalf  of  his  son,  who  was  a 
minor ;  and  it  was  stipulated,  that  the  other  partners 
should  account  with  the  father,  as  the  trustee  of  his  son, 
for  one-third  profit  of  his  son's  capital,  or  any  loss,  that 
might  accrue,  and  should  be  governed  and  directed  by 
his  advice  in  all  matters  relative  to  the  business ;  it  was 
determined,  that  this  did  not  constitute  the  father  a 
partner,  the  jury  having  found,  that  the  money  was  not 
invested  by  him  for  his  own  benefit,  and  that  he  had 
not  reserved  to  himself  the  power  of  drawing  out  the 
principal  or  profits,  as  trustee  for  his  son.^ 

'  Gow  on  P.  c.  1,  §  ],  p.  16,  3d  efl. ;  Wightman  v.  Townroe,  1  M.  &  S. 
412;  Ex  parte  Garland,  10  Ves.  110;  Barker  v.  Parker,  1  T.  R.  287,  295; 
Coll.  on  P.  B.  3,  c.  3,  §  4,  p.  427, 428,  2d  ed. ;  Owen  v.  Body,  5  Ad.  &  E.  28. 
{But  see  Gibson  v.  Stevens,  7  N.  H.  352.  If  a  debtor  assigns  his  property  to 
trustees  for  the  benefit  of  creditors,  with  power  in  the  trustees  to  carry  on  the 
business,  and  divide  the  net  profits  among  the  creditors  in  proportion  to  their 
debts,  the  creditors  becoming  parties  to  the  deed  are  not  liable  as  partners  for 
debts  contracted  by  the  trustees  in  carrying  on  the  business.  Cox  v.  Hickman, 
8  H.  L.  C.  268,  s.  c.  sub  nom.  Wheatcroft  iJ.  Hickman,  9  C.  B.  n.  s.  47,  revers- 
ing Hickman  v.  Cox,  in  the  Exchequer  Chamber,  3  C.  B.  N.  s.  523,>which 
affirmed  the  judgment  of  the  Court  of  Common  Pleas  in  the  same  case,  18  C.  B. 
617.  See  Re  Stanton  Iron  Co.  21  Beav.  164  ;  Owen  v.  Body,  5  Ad.  &  E.  28  ; 
M'Alpine  V.  Mangnall,  3  C.  B.  496  ;  Janes  v.  Whitbread,  11  C.  B.  406  ;  Sul- 
len V.  Sharp,  Law  Rep.  1  C.  P.  86  ;  ante,  §  49,  note  ;  Conkling  v.  Washington 
University,  2  Md,  Ch.  497  ;  Drake  v.  Ramey,  3  Rich.  37  ;  Brundred  v.  Muzzy, 
1  Dutch,  268.} 

2  [See  Price  v.  Groom,  2  Exch.  542.] 

^  Barklie  v.  Scott,  1  Huds.  &  Br.  83,  cited  Gow  on  P.  Suppl.  London, 
1841,c.  l,§l,p.  1. 


CHAP.  IV.]  AS    TO    THIRD    PERSONS.  121 

{Note.  Sub-partnership.  —  If  several  persons  are  partners,  and  one  of 
them  agrees  to  share  profits  with  a  stranger,  this  does  not  make  the  stranger 
a  partner  in  the  principal  firm.  Ex  parte  Barrow,  2  Rose,  252  ;  Bray  v. 
Fromont,  6  Madd.  5  ;  Lind.  on  P.  52  ;  Coll.  on  P.  (3d  Am.  ed.)  §  194  ;  3 
Ross,  Lead.  Cas.  697.     See  Drake  v.  Ramey,  3  Rich.  37. 

Whether  a  sub-partner  is  liable  to  third  persons  for  the  debts  of  the  prin- 
cipal firm  is  not  clearly  settled.  Mr.  Collyer  (Coll.  on  P.  3d  Am.  ed.  §  194) 
and  Mr.  Lindley  (Lind.  on  P.  53)  are  of  opinion  that  a  sub-partner  Is  not 
liable,  and  it  is  so  held  in  Reynolds  v.  Hicks,  19  Ind.  113.  In  Fitch  v. 
Harrington,  13  Gray,  468,  A.  and  B.  were  members  of  a  firm,  and  an  action 
was  brought  against  A.,  B.,  and  C.  for  a  partnership  debt ;  it  was  alleged  that 
C.  shared  profits  with  B.,  and  was  liable  as  a  partner.  The  jury  was  in- 
structed that  "  if  there  was  a  sub-partnership  between  B.  and  C,  by  which  C. 
was  to  share  in  the  profits  of  the  firm,  to  which  profits  B.  was  entitled,  this 
alone  would  not  make  C.  liable  for  the  debts  of  the  firm."  The  jury  returned 
a  verdict  in  favor  of  C,  and  the  plaintiff  excepted.  The  exceptions  were 
sustained  on  the  ground  that  this  instruction,  "  given,  as  it  was,  without  any 
explanation,  may  have  misled  the  jury."  The  court  say :  "  An  agreement 
between  one  copartner  and  a  third  person,  that  he  shall  i^articipate  in  the 
profits  of  the  firm,  as  profits,  renders  him  liable,  as  a  partner,  to  the  creditors 
of  the  firm,  although,  as  between  himself  and  the  members  of  the  firm,  he  is 
not  their  copartner ;  but  if  such  third  person,  by  his  agreement  with  one 
member  of  the  firm,  is  to  receive  compensation  for  his  labor,  services,  &c.,  in 
proportion  to  the  profits  of  the  business  of  the  firm,  without  having  any 
specific  lien  on  the  profits,  to  the  exclusion  of  other  creditors,  he  is  not  liable 
for  the  debts  of  the  firm."  But  can  a  joartner  give  a  stranger  a  specific  lien  on 
the  profits  of  the  partnership  to  the  exclusion  of  other  creditors  ?  In  Sir  Charles 
Raymond's  Case,'  as  cited  by  Lord  Eldon  in  Ex  parte  Barrow,  2  Rose,  252,  255, 
it  was  held  that  a  sub-partner  "  had  no  demand  against  it  [the  partnership], 
had  no  account  in  it,  and  that  he  must  be  satisfied  with  a  share  of  the  profits 
arising  and  given  "  to  the  sub-partner  with  whom  he  had  entered  into  tho 
sub-partnership.     And  see  §  49,  note.} 


122  PARTNERSHIP.  [CHAP.  V. 


CHAPTER  V, 

PARTNERSHIP DIFFERENT    SORTS    OF. 

{§71.  Preliminary. 

72.  Universal  partnerships. 

73.  In  the  Roman  law; 

74.  General  partnerships. 

75.  Special  partnerships. 

76.  Private  partnerships  and  public  companies. 

77.  Unincorporated  companies  and  corporations. 

78.  Classification  of  partnerships  in  the  French  law. 

79.  In  the  Scottish  law. 

80.  Ostensible,  nominal,  and  dormant  partners. 

81.  Objects  of  partnership. 

82.  Partnerships  concerning  land. 

83.  PecuHar  character  of  such  partnerships. 

84.  Duration  of  partnership. 

85.  Roman  law. 

86.  Mode  of  formation  of  partnerships. 
8  7.  Foreign  law. } 

§  71.  Having  thus  ascertained  the  true  nature  of  the 
contract  of  partnership  ;  the  persons  who  are  in  law 
capable  of  being  partners,  or  not ;  and  what  will  con- 
stitute a  partnership  inter  sese,  and  what  merely  as  to 
third  persons ;  we  may  now  proceed  to  other  consider- 
ations touching  the  subject,  which  seem  necessary  to  be 
adverted  to,  as  preliminaries  to  the  more  full  discussion 
of  the  rights,  duties,  interests,  powers,  and  responsibili- 
ties of  partners,  as  well  iiitei"  sese,  as  in  respect  to  thu'd 
persons. 

§  72.  Partnerships  then  at  the  common  law  may,  in 
respect  to  their  character  and  extent,  be  divided  into 
three  classes  ;  universal  partnerships ;  general  partner- 
ships ;  and  limited  or  special  partnerships.  By  univer- 
sal partnerships  we  are  to  understand  those,  where  the 


CHAP.  Y.J  DIFFERENT    SORTS    OF.  123 

parties  agree  to  bring  into  the  firm  all  their  property, 
real,  personal,  and  mixed,  and  to  employ  all  their  skill, 
labor,  services,  and  diligence  in  trade  or  business,  for 
their  common  and  mutual  benefit,  so  that  there  is  an 
entire  communion  of  interest  between  them.  Such  con- 
tracts are  within  the  scope  of  the  common  law  ;  but 
they  are  of  very  rare  existence.^ 

§  73.  The  Roman  law  fully  recognized  the  same  classi- 
fication. Societates  confraJmnfur,  sive  imiversorum  bo- 
norum,  sive  negotiationis  aliciijus,  sive  vectigalis,  sive 
etiam  rei  unius.^  And  in  neither  case  was  it  necessary 
that  the  parties  should  contribute  in  equal  proportions. 
Societas  autem  co'iri  i^otest^  et  valet  etiam  inter  eos,  qui 
non  sunt  cequis  facultatlhus,  cum  plerumque  2^ai(perior 
opera  suppleai^  quantum  ei  per  comparationem  i^citri- 
monii  deest.^  In  that  law  universal  partnerships  were 
distinguished  into  two  sorts ;  first,  those,  which  were  of 
all  the  property  of  the  parties,  present  and  future  (  Uni- 
versorum  honorum^) ;  and,  secondly,  those  which  extend 
only  to  all  the  gains,  earnings,  and  profits  of  all  the 
busmess  done  by  them.     (  Universorum^  quae  ex  qucestu 

^  [Lyman  v.  Lymau,  2  Paine,  11  ;  Rice  r.  Barnard,  20  Yt.  479.  —  In  this 
case  the  partnership  was  said  to  be,  "  not  strictly  a  partnership,  but  rather  a 
universal  hotchpot  of  all  the  property  and  liabilities,  present  and  prospective, 
of  both  the  persons  concerned."]  In  U.  S.  Bank  v.  Binney,  5  Mason,  176, 183, 
the  court  said :  "  In  respect  to  the  general  law  regulating  partnerships,  there 
does  not  seem  any  real  dispute  or  difficulty.  Partnerships  are  usually  divided 
into  two  sorts,  general  and  limited.  The  former  is,  where  the  parties  are 
partners  in  all  their  commercial  business ;  the  latter,  where  it  is  limited  to 
some  one  or  more  branches,  and  does  not  include  all  the  business  of  the  part- 
ners. There  is,  probably,  no  such  thing  as  a  universal  partnership,  if,  by  the 
terms,  we  are  to  understand,  that  every  thing  done,  bought,  or  sold,  is  to  be 
deemed  on  partnership  account.  Most  men  own  some  real  or  personal  estate, 
which  they  manage  exclusively  for  themselves." 

^^  D.  17,  2,  5;  Both.  Pand.  17,  2,  n.  11  ;  Inst.  3,  26. 

3  D.  17,  2,  5;  Poth.  Pand.  17,  2,  n.  12. 

"  Poth.  de  Soc.  n.  28,  29,  43  ;  D.  17,  2,  5-12;  Poth.  Pand.  17,  2,  n.  13-18  ; 
Domat,  1,  8,  3,  art.  1,  4. 


124  PARTNERSHIP.  [CHAP.  V. 

veniiint})  The  former  sort  was  never  deemed  to  be  in- 
tended, unless  it  was  explicitly  stipulated ;  the  latter 
was  ordinarily  presumed  from  the  mere  formation  of  a 
partnership.^  In  societate  omnium  honorum  omnes 
res,  qucB  coeuntium  sunt,  continuo  commiinicantur.^ 
Cowl  societatem  et  shnpUciter  licet.  Et  si  non  fuerit 
distinctum,  videtur  coita  esse  universorum,  quce  ex  quces- 
tu  veniunt ;  hoc  est,  si  quod  lucrum  ex  einj^tione,  vendi- 
tione,  loccdione,  conducfione  descendit^  Qucesius  enim 
inteUigitur,  qui  ex  opera  cujusque  descendit.^  Sed  et  si 
adjiciatur,  ut  et  qucesius  et  lucri  socii  sint,  verum  est, 
non  ad  aliud  lucrum,  qicam  quod  ex  qucestu  venii,  hanc 
quoque  adjectionem  pertinere.^ 

§  7-i.  General  partnerships  are  properly  such,  where 
the  parties  carry  on  all  their  trade  and  business,  what- 
ever it  may  be,  for  the  joint  benefit  and  profit  of  all  the 
parties  concerned,  whether  the  capital  stock  be  limited 
or  not,  or  the  contributions  thereto  be  equal  or  unequal.^ 
But  where  the  parties  are  engaged  in  one  branch  of 
trade  or  business  only,  the  same  appellation  is  ordinarily 
applied  to  it.  Thus,  if  two  merchants  are  engaged  in 
mercantile  commerce  and  business  on  joint  account, 
and  also  in  manufacturing  and  other  business  solely  on 
joint  account,  it  is  properly  a  general  partnership.  But, 
if  the  same  merchants  carry  on  no  other  business  than 
that  of  commerce  on  joint  account,  they  would  be  usu- 

1  Poth.  de  Soc.  n.  43  ;  Domat,  1,  8,  3,  art.  2  ;  1  Voet,  ad  Pand.  17,  2,  n.  4, 
p.  749 ;  Vinn.  ad  Inst.  3,  26,  Intr. 

2  Poth.  de  Soc.  n.  29,  43;  Domat,  1,  8,  3,  art.  2,  3;  Poth.  Pand.  17,  2, 
n.  20,  21. 

D.  17,  2,  1 ;  Poth.  Pand.  17,  2,  n.  13. 

*  D.  17,  2,  7;  Poth.  Pand.  17,  2,  n.  20;  Poth.  de  Soc.  n.  29,  43. 

*  D.  17,  2,  8;  Poth.  Pand.  17,  2,  n.  20. 

«  D.  17,  2,  13 ;  Poth.  Pand.  17,  2,  n.  20 ;  Domat,  1,  8,  3,  art.  2,  3  ;  Poth. 
de  Soc.  n.  43-45. 

'  Willett  V.  Chambers,  Cowp.  814,  816;  2  Bell,  Comm.  B.  7,  c.  2,  p.  621, 
5th  ed. 


CHAP,  y.]  DIFFERENT  SORTS  OF.  125 

ally  spoken  of  as  engaged  in  a  general  partnership. 
The  former  case  approaches  very  nearly  to  that  of  a 
general  partnership  in  the  Roman  law,  universorum^ 
quce  ex  qi(cestu  venhmt}  The  latter  would  be  distin- 
guished by  the  Roman  law,  as  a  particular  partnership, 
negotiafionis  almijus.  The  like  distinctions  prevail  in 
the  foreign  law.^ 

§  To.  Special  partnerships,  in  the  sense  of  the  com- 
mon law,  are  those  which  are  formed  for  a  special  or 
particular  branch  of  business,  as  contradistinguished 
from  the  general  business  or  employment  of  the  parties, 
or  of  one  of  thera.^  They  are  more  commonly  called 
limited  partnerships,  when  they  extend  to  a  single  trans- 
action or  adventure  only  ;  such  as  the  purchase  and  sale 
on  joint  account  of  a  particular  parcel  of  goods,  or  the 
undertaking  of  a  voyage  or  adventure  to  foreign  parts 
upon  joint  account.^  But  the  appellation  may  be  ap- 
plied indifferently,  and  without  discrimination  to  both 
classes  of  cases.  They  therefore  fall  within  the  denomi- 
nation of  the  Roman  law,  Societas  sive  negotiationis 
alicKJus,  sive  vectigalis,  sive  eticmi  rei  unius.^ 

§  76.  At  the  common  law  partnerships  are  also  some- 


'  Ante,  §  73,  Poth.  de  Soc.  n.  43. 

2  Ante,  §  73  ;  Poth.  de  Soc.  n.  54,  55  ;  Domat,  1,  8,  3,  art.  1 ;  Wats,  on  P. 
c.  1,  p.  1,  2d  ed. ;  2  Bell,  Coram.  B.  7,  c.  2,  p.  621,  5tli  ed. ;  1  Yoet,  ad  Pand. 
17,  2,  n.  5,  p.  750  ;  Yinn.  ad  Inst.  3,  26,  Intr.;  3  Kent,  30,  note  (a)  ;  Civil 
Code  of  France,  n.  1836-1842  ;  Civil  Code  of  Louisiana,  art  2795-2805. 

=*  Willett  V.  Chambers,  Cowp.  814,  816  ;  2  Bell,  Coram.  B.  7,  c.  2,  p.  621, 
5th  ed.;  \_In  re  Warren,  Daveis,  320,  323.] 

*  {Partnerships  in  commandite  as  established  by  the  laws  of  the  several 
States  are  often  called  limited  partnerships.     See  §  78. } 

5  Ante,  §  73 ;  Poth.  de  Soc.  n.  54 ;  1  Voet,  ad  Pand.  17,  2,  n.  5,  p.  750. 
[But  an  association  of  pereons,  who  agree  in  writing  to  pay  a  particular  sum 
for  the  erection  of  a  house  of  worship,  or  other  public  building,  whicii  wlien 
complete  is  to  be  owned  by  the  subscribers  in  proportion  to  the  amount  paid 
by  each,  is  not  even  a  special  partnership.  Woodward  v.  Cowing,  41  Mo.  9.] 
{See§  144.} 


126  PARTNERSHIP.  [CHAP.  V. 

times  divided  into  other  kinds.  (1.)  Private  partner- 
ships, which  are  composed  of  two  or  more  partners  for 
some  merely  private  undertaking,  trade,  or  business ; 
and  (2.)  Public  companies,  where  a  large  number  of 
persons  are  concerned,  and  the  stock  is  divided  into  a 
large  number  of  shares,  the  object  of  the  undertaking 
being  of  an  important  nature,  and  often  embracing  pub- 
lic, as  well  as  private  interests  and  benefits.^  The  latter 
are  also  subdivided,  (1.)  into  unincorporated  companies, 
or  associations ;  and  (2.)  into  incorporated  companies, 
fraternities  (or  guilds,  as  they  were  anciently  called), 
and  corporations  existing  under  a  charter  of  the  crown 
or  government,  and  having  special  powers  and  rights 
conferred  thereby."  In  both  cases,  however,  the  part- 
nership, although  commonly  called  a  public  company  or 
association,  is  not,  in  contemplation  of  law,  more  than  a 
mere  private  partnership  ;  for  in  the  sense  of  the  law  no 
company  is  a  public  company  or  association,  whose  in- 
terests do  not  exclusively  belong  to  the  public,  and  are 
not  exclusively  subject  to  the  regulation  and  government 
of  the  legislature,  or  other  proper  public  functionaries. 
Thus,  for  example,  a  college,  a  bank,  a  turnpike  com- 
pany, a  bridge  company,  a  manufacturing  company,  a 
company  for  mining,  or  for  foreign  trade  or  commerce, 
whether  incorporated  or  not,  is  still  but  a  mere  private 
association.^  Whereas  a  town,  a  parish,  a  hundred,  a 
board  of  trade,  or  a  treasury  department,  created  by 
the  government  for  public  purposes,  and  exclusively 
regulated  thereby,  would  be  strictly  a  public  company, 
whether  incorporated  or  not. 

'  Wats,  on  p.  c.  1,  p.  3,  4,  2d  ed. ;  Coll.  on  P.  B.  5,  c.  1-3,  p.  721-793,  2d 
ed. ;   Gow  on  P.  c.  1,  p.  2-4,  3d  ed. 

2  Wats,  on  P.  c.  1,  p.  3,  4,  2d  ed. ;  Comyn's  Dig.  Trade,  B.  D. 

'  Trustees  of  Dartmouth  College  v.  Woodward,  4  Wheat.  518;  Terrett 
V.  Taylor,  9  Cranch,  43,  52. 


CHAP.  Y.]         DIFFERENT  SORTS  OF.  127 

§  77.  Unincorporated  companies  and  associations  dif- 
fer in  no  material  respect,  as  to  their  general  powers, 
rights,  duties,  interests,  and  responsibilities,  from  mere 
private  partnerships,  nnless  otherwise  expressly  provid- 
ed for  by  statute,  except  that  the  business  thereof  is 
usually  carried  on  by  directors,  or  trustees,  or  other 
officers,  acting  for  the  proprietors  or  shareholders  ;  and 
they  usually  extend  to  some  enterprise,  in  which  the 
public  have  an  ultimate  concern.^  But  incorporated 
companies,  or  corporations,  are  governed  strictly,  as  to 
their  powers,  rights,  duties,  interests,  and  responsibili- 
ties, by  the  terms  of  their  respective  charters  ;  and  the 
shareholders,  or  stockholders,  are  not  personally  or  in- 
dividually liable  in  their  private  capacities,  unless 
expressly  so  declared  by  their  charters,  for  the  acts,  or 
doings,  or  contracts  of  the  officers,  or  members  of  the 
company,  or  corporation ;  ^  whereas  in  unincorporated 
companies  and  associations  the  shareholders  and  stock- 
holders are  personally  responsible  in  their  individual 
capacities  for  all  acts  of  the  officers  and  company,  or 
association,  in  the  same  manner,  and  to  the  same  extent, 
as  private  partners  are.^ 

§  78.  In  the  French  law,  partnerships  are  distin- 
guished into  three  sorts.  (1.)  Partnerships  under  a 
collective  name,  that  is,  where  the  trade  or  business  of 
the  partnership  is  carried  on  under  a  particular  social 
name  or  firm,  containing  the  names  of  some  or  of  all 

»  Wats,  on  P.  c.  1,  p.  3,  4,  2d  ed. ;  Coll.  on  P.  B.  5,  c.  l,§4,p.  764-7  71, 
2d  ed. ;  Id.  c.  1,  §  2,  p.  734 ;   2  Bell,  Comm.  B.  7,  c.  2,  p.  627,  628,  5th  ed. 

"  Wats,  on  P.  c.  1,  p.  4,  2d  ed. 

3  Wats,  on  P.  c.  1,  p.  3,  4,  2d  ed. ;  Coll.  on  P.  B.  5,  c.  1,  §  1-4 :  Id.  c.  2 : 
Id.  c.  3,  p.  721-783,  2d  ed.  —  Mr.  Collyer,  in  the  chapters  above  cited,  has 
given  a  very  full  view  of  joint-stock  companies,  both  at  common  law,  and  by 
statute,  as  well  as  of  mining  companies.  See  also  2  Bell,  Comm.  B.  7,  c.  2, 
p.  627-630,  5th  ed. 


128  PARTNERSHIP.  [cHAP,  V. 

of  the  partners.^  (2.)  Partnerships  in  commandite^  or 
in  commendam,  that  is,  limited  partnerships,  where  the 
contract  is  between  one  or  more  persons,  who  are  gen- 
eral partners,  and  jointly  and  severally  responsible,  and 
one  or  more  other  persons,  who  merely  furnish  a  par- 
ticular fund  or  capital  stock,  and  thence  are  called  cotii- 
7)iandataire,  or  commandataires^  or  partners  in  com- 
mandite;  the  business  being  carried  on  under  the  social 
name,  or  firm  of  the  general  partners  only,  composed  of 
the  names  of  the  general  or  complementary  partners, 
the  partners  in  commcindlte  being  liable  to  losses  only  to 
the  extent  of  the  funds  or  capital  furnished  by  them.^ 
(3.)  Anonymous  partnerships  are,  where  all  the  partners 
are  engaged  in  the  common  trade  or  business,  but  there 
is  no  social  name  or  firm,  but  a  name  designating  the 
objects  of  the  association,  and  the  trade  or  business  is 
managed  by  directors.^  They  correspond  with  our  ordi- 
nary joint-stock  companies,  and  other  unincorporated 
associations.  Similar  distinctions  are  adopted  in  many 
other  foreign  countries,  and  in  the  Laws  of  Louisiana.* 
Special  partnerships  i7i  commandite  have  also  been  re- 
cently introduced  by  statute  into  the  jurisprudence  of 
several  States  in  the  Union.^  But  the  regulations  ap- 
plicable to  such  partnerships  vary  in  different  countries 
and  States,  and  are  strictly  local,  and  therefore  seem 
unnecessary  to  be  brought  further  under  examination  in 
the  present  Commentaries. 

§  79.  In  the  Scottish  law,  partnerships  are  sometimes 

'  Code  of  Commerce,  art.  20,  21 ;  Wats,  on  P.  c.  1,  p.  2,  2d  ed.;  Poth. 
de  Soc.  n.  57. 

2  Code  of  Commerce,  art.  23,  24  ;  Wats,  on  P.  c.  1,  p.  2,  2d  ed. ;  Poth.  de 
Soc.  n.  60,  102. 

3  Code  of  Commerce,  art.  29,  30;  Wats,  on  P.  c.  1,  p.  2,  2d  ed. 

*  Code  of  Louisiana,  art.  2796,  2810,  2883. 

*  3  Kent,  34,  35  ;   {Parsons  on  P.  526.} 


CHAP,  v.]  DIFFERENT    SORTS    OF.  129 

divided  into  ordinary  partnerships,  acting  under  a  social 
name  or  firm ;  and  joint  adventures,  where  no  firm  is 
used ;  and  public  companies.  But  in  truth  the  two 
former  are  generally  governed  by  the  same  rules.  And 
therefore  it  may  be  properly  said,  that,  in  the  Scottish 
law,  partnerships  are  divisible  into  three  classes;  (1.) 
Ordinary  partnerships  ;  (2.)  Joint-stock  companies  ; 
(3.)  Public  companies.^  In  the  former,  the  firm  consti- 
tutes a  distinct  person  in  contemplation  of  law,  capable 
independently  of  maintaining  with  third  persons,  as 
well  as  with  the  individual  partners,  the  relation  of 
debtor  and  creditor ;  and  the  partners,  although  jointly 
and  severally  liable  for  all  the  debts  and  contracts  of 
the  firm,  are  so,  not  as  primary  or  principal  debtors  or 
contractors,  but  rather  as  guarantors  or  sureties  of  the 
firm.^  Such  a  partnership  may  be  either  general  or 
special.  By  general  partnership  the  Scottish  law  does 
not  intend  the  societas  universorinn  honoriun  of  the 
Roman  law,  but  a  partnership  in  the  whole  trade  or 
manufacture  carried  on  by  the  parties.^  By  special 
partnership,  in  the  Scottish  law,  is  intended  a  partner- 
ship limited  to  a  particular  branch  of  business,  or  ex- 
cluding a  particular  branch,  which  would  otherwise  be 
included  in  a  general  partnership.^  The  second  class, 
joint-stock  companies,  difi"ers  in  several  respects  from 
the  former  class.  (1.)  By  the  credit  raised  with  the 
public  being  placed  entirely  on  the  joint-stock  of  the 
company,  as  indicated  by  its  descriptive  name.  (2.)  By 
a  diff"erence  in  the  management  and  operation  of  the 
association,  as  conducted,  not  by  the  shareholders  per- 
sonally, but  by  directors  or  other  ofiicers  appointed  by 

1  2  Bell,  Comm.  B.  7,  p.  612,  621,  649,  656,  5th  ed. 

2  2  Bell,  Comm.  B.  7,  p.  619,  620,  5th  ed. 

3  2  Bell,  Comm.  B.  7,  p.  621,  5th  ed. 
*  2  Bell,  Comm.  B.  7,  p.  621,  5th  ed. 

9 


130  PARTNERSHIP.  [cHAP.  V. 

the  association,  and  made  publicly  known.  (3.)  By  the 
shares  being  made  transferable.  In  joint-stock  compa- 
nies, the  liability  of  the  shareholders  to  creditors  is,  by 
the  common  law  of  Scotland,  limited  to  the  amount  of 
their  respective  shares,  and  they  are  not,  as  in  ordinary 
partnership,  jointly  and  severally  responsible  for  all  the 
debts  of  the  firm.^  The  third  class,  public  companies, 
embraces  such  as  are  created  by  royal  or  parliamentary 
authority ;  and  therefore  they  have  conferred  upon  them 
such  powers,  privileges,  and  exemptions  only,  as  by  the 
charter  and  by  law  properly  belong  to  them.^ 

§  80.  In  this  connection  it  seems  proper  also  to 
advert  to  the  various  denominations  given  to  partners, 
and  which  in  our  subsequent  inquiries  should  be  kept 
steadily  in  view,  to  prevent  any  mistakes  and  embar- 
rassments in  the  application  of  cases  and  principles. 
Partners,  then,  are  ordinarily  divided  as  follows:  (1.) 
Ostensible  partners,  or  those,  whose  names  are  made 
known  and  appear  to  the  world  as  partners,  and  who 
in  reality  are  such.^  (2.)  Nominal  partners,  or  those 
who  appear,  or  are  held  out  to  the  world  as  partners ; 
but  who  have  no  real  interest  in  the  firm  or  business.^ 
(3.)  Dormant  partners,  or  those  whose  names  are  not 
known,  or  do  not  appear  as  partners,  but  who  never- 
theless are  silent  partners,  and  partake  of  the  profits, 
and  thereby  become  partners,  either  absolutely  to  all 
intents  and  purposes,  or  at  all  events,  in  respect  to 
third  persons.^  Dormant  partners,  in  strictness  of  lan- 
guage, mean  those  who  are  merely  passive  in  the  firm, 

•  2  Bell,  Comm.  B.  7,  p.  627,  628,  5th  ed. 

2  2  Bell,  Comm.  B.  7,  p.  656,  5th  ed. 

3  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  3,  2d  ed. ;  1  Mont,  on  P.  c.  2,  §  1,  2 ;  Gow 
on  P.  c.  1,  p.  12,  3d  ed.;  3  Kent,  31.  "  Ibid. 

5  Ibid ;  {North  v.  Bloss,  30  N.  Y.  374  ;  Mitchell  v.  Dall,  2  Harr.  &  G.  159, 
172;  Waite  v.  Dodge,  34  Vt.  181  ;  Deford  v.  Reynolds,  36  Penn.  St.  325.} 


CHAP,  v.]  DIFFERENT    SORTS    OF.  131 

whether  known  or  unknown,  in  contradistinction  to 
those  who  are  active,  and  conduct  the  business  of  the 
firm,  as  principals.^  Unknown  partners  are  properly 
secret  partners ;  but  in  common  parlance,  they  are  us- 
ually designated  by  the  appellation  of  dormant  partners.^ 

'  [And  it  has  been  thought  that  although  some  of  the  partners  are  active 
managing  partners,  and  have  given  public  notice  of  their  interest  in  the 
firm,  yet  if  the  business  is  conducted  under  the  individual  name  of  one  of 
the  firm,  the  others  are  dormant  partners;  so  far  at  least,  that  it  is  not 
necessary  to  join  them  in  a  bill  to  enforce  a  debt  due  the  firm,  contracted  by 
one  ignorant  of  their  interest  in  the  concern ;  Bank  of  St.  Marys  v.  St.  John, 
25  Ala.  566.] 

2  Coll.  on  P.  B.l,  c.  1,  §  1,  p.  3,  2d  ed.;  1  Mont,  on  P.  c.  2,  §  1,  2;  Gow 
on  P.  c.  1,  p.  12,  3d  ed. ;  3  Kent,  31  ;  Hoare  r.  Dawes,  1  Doug.  371  ;  U.  S. 
Bank  v.  Binney,  5  Mason,  176,  185.  —  In  this  last  case  the  Court  said:  "It 
has  been  said,  that  this  is  the  case  of  a  secret  partnership ;  that  it  was  the 
intention  of  the  Binneys,  that  their  connection  with  it  should  be  kept  secret, 
and  that  the  management  of  the  business  in  the  name  of  'John  Winship' 
shows  this  intention.  In  point  of  fact,  there  is  no  covenant  or  declaration  in 
the  articles  of  copartnership,  by  which  the  partners  have  bound  themselves 
to  keep  it  secret;  or  that  the  names  of  the  Binneys  should  never  be  disclosed 
to  any  persons  dealing  with  Winship  in  the  partnership  concerns.  In  point 
of  fact,  too,  if  the  evidence  is  believed,  Winshiji,  immediately  after  its  forma- 
tion, and  during  its  continuance,  constantly  avowed  it,  and  made  it  known, 
and  obtained  credit  in  the  business  of  the  firm  thereby.  He  stated  the 
Binneys  to  be  partners ;  and  this  statement  was  generally  known  and 
believed  by  the  public,  and  especially  by  persons  dealing  with  Winship 
in  respect  to  the  business  of  the  firm.  If  the  jury  believe  this  evidence, 
then  in  point  of  fact,  whatever  was  the  original  intention  of  the  parties,  this 
was  not  a  secret  partnership  in  the  common  meaning  of  the  terms.  I  under- 
stand the  common  meaning  ef  secret  partnership  to  be,  a  partnership  where  the 
existence  of  certain  persons  as  partners  is  not  avowed  or  made  known  to  the 
pubHc  by  any  of  the  partners.  Where  all  the  partners  are  publicly  made 
known,  whether  it  be  by  one,  or  all  the  partners,  it  is  no  longer  a  secret  partner- 
ship ;  for  this  is  generally  used  in  contradistinction  to  notorious  and  open  part- 
nership. And  it  makes  no  difierence  in  this  particular,  whether  the  business  of 
the  firm  be  carried  on  in  the  name  of  one  person  only,  or  of  him  and  com- 
pany. Even  if  some  of  the  partners  intend  to  be  such  secretly,  and  their 
names  are  disclosed  against  their  wishes  and  intentions ;  still,  when  generally 
known  and  avowed  by  any  other  of  the  partners,  the  partnei-ship  is  no  longer 
a  secret  partnership.  If,  therefore,  in  the  present  case,  Winship,  against  the 
wishes  and  intention  of  the  Binneys,  did  in  the  course  of  the  business  of  the 
firm  make  known  that  they  were  partners,  and  who  all  the  partners  were,  so 
that   they  became  public  and   notorious,  I  should  say,  it  was  no  longer  a 


132  PARTNERSHIP.  [CHAP.  V. 

Similar     designations     also     prevail     in     the     Scottish 


1 


aw/ 

§  81.    In   respect  to  the   objects  of  partnerships,   it 

may  be  generally  stated,  that  they  are  not  confined  to 
mere  commercial  business  or  trade  ;  but  may  extend  to 
manufactures,  and  to  all  other  lawful  occupations  and 
employments,  and  to  professional  and  other  business ;  ^ 
as,  for  example,  they  may  embrace  the  business  of  at- 
torneys, solicitors,  conveyancers,  surgeons,  apothecaries, 
physicians,  mechanics,  artisans,  engineers,  owners  of 
stage-coaches,  farmers,  drovers,  brokers,  bankers,  factors, 
consignees,  and  even  of  artists  and  sculptors  and  paint- 
ers. They  may  extend  to  all  the  business  of  the  par- 
ties ;  or  to  a  single  branch  thereof,  or  to  a  single  adven- 
ture, or  even  to  a  single  thing.^  And  so  (as  we  have 
seen)  stood  the  doctrine  in  the  Roman  law.  Societates 
contraliuntur  sive  universorum  bonorum,  sive  negotia- 
tionis  aliciijus,  sive  vectigalis,  sive  etiam  rei  iiniiis} 
But  there  cannot  lawfully  be  a  partnership  in  a  mere 
personal  ofiice,  especially  when  it  is  of  a  public  nature, 
and  involves  a  distinct  personal  confidence  in  the  skill 
and  integrity  of  the  particular  party. ^ 

§  82.  There  may  also  be  a  partnership  in  some  cases 
touching  interests  in  lands,  or  in  a  single  tract  of  land, 

secret  partnership  in  the  common  sense  of  the  terms ;  if  secret  in  any  sense, 
it  must  be,  under  such  circumstances,  in  a  peculiar  sense.  Sometimes  dor- 
mant and  secret  partners  are  used  as  synonymous.  But  I  take  it,  that  dor- 
mant is  generally  used  in  contradistinction  to  active,  and  secret  to  open 
or  notorious.  However,  nothing  important  turns  in  this  case  upon  the  accu- 
racy of  definitions,  since  it  must  be  decided  upon  the  principles  of  law  appli- 
cable to  such  a  partnership  as  this  in  fact  was,  and  is  proved  to  be,  whatever 
may  be  its  denomination." 

1  2  Bell,  Comm.  B.  7,  c.  2,  p.  622,  623,  5th  ed. 

-  3  Kent,  28  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  29-32,  2d  ed.;  Gow  on  P.  c.  1, 
p.  5,  3d  ed. ;   [Livingston  v.  Cox,  6  Penn.  St.  360,  364.] 

3  Ante,  §  73.  ■>  D.  17,  2,  5;  Poth.  Pand.  17,  2,  n.  11-26. 

*  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  31,  32,  2d  ed. 


CHAP,  v.]  DIFFERENT  SORTS  OF.  133 

which  will  be  governed  by  the  ordinary  rules,  applica- 
ble to  partnership  in  trade  or  commerce.^  Thus,  for 
example,  there  may  be  a  partnership  in  the  working  of 
a  mine ;  for  Courts  of  Equity  constantly  treat  the  Mork- 
ing  of  a  mine  as  a  species  of  trade  ;  and  apply  the  same 
remedial  justice  to  such  cases  as  they  do  to  ordinary 
partnerships.^  So,  real  estate,  held  for  general  partner- 
ship purposes,  has  attributed  to  it  the  common  qualities 
of  partnership  property,  in  whosesoever  name  the  title 
may  stand  in  law.^  In  short  (as  has  been  well  ob- 
served), in  the  working  of  mines  (such  as  a  colliery), 
it  seems  difficult  to  establish,  that  there  is  an  interest 
in  the  land,  distinct  from  the  partnership  in  trade  ;  a 
mere  interest  in  land,  in  which  a  partition  could  take 
place.  For,  when  persons,  having  purchased  such  an 
interest,  manufacture  and  bring  to  market  the  produce 
of  the  land,  as  one  common  fund,  to  be  sold  for  their 
common  benefit,  it  may  fairly  be  contended,  that  they 
have  entered  into  an  agreement,  which  gives  to  that 
interest  the  nature,  and  subjects  it  to  the  doctrines,  of  a 
partnership  in  trade.'* 

'  '[See  Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  458,  474  ;  Jones  i'. 
Neale,  2  P.  &  H.  339];  {Darby  i-.  Darby,  3  Drew.  495;  Kramer  v.  Arthurs, 

7  Penn.  St.  165;  Heirs  of  Ludlow  v.  Cooper's  Devisees,  4  Ohio  St.  1; 
Clagett  i:  Kilbourne,  1  Black,  346.} 

"  Coll.  on  P.  B.  5,  c.  3,  p.  783,  784,  2d  ed. ;  Williams  v.  Attenborough, 
Turn.  &  R.  70,  73 ;  Story  r.  Lord  Windsor,  2  Atk.  630 ;  Wren  r.  Kirton, 

8  Ves.  502;  Crawshay  v.  Maule,  1  Swans.  495;  Fereday  v.  Wightwiok, 
Taml.  250;  [Sage  v.  Sherman,  2  Comst.  417];  Jefferys  v.  Smith,  1  Jac.  & 
W.  298;  1  Story,  Eq.  Jur.  §  674. 

3  Gow  on  P.  c.  1,  p.  32-35,  3d  ed. ;  Id.  c.  5,  §  2,  p.  232;  Id.  §  4,  p.  340 ; 
Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  82-102,  2d  ed.;  3  Kent,  37-39;  Randall  v. 
Randall,  7  Sim.  271  ;  Cookson  v.  Cookson,  8  Sim.  529;  Sigourney  v.  Munn, 
7  Conn.  11  ;.  Hoxie  v.  Carr,  1  Sumn.  173,  182,  186;  [Dale  t'.  Hamilton,  5 
Hare,  369  ;  Lancaster  Bank  v.  Myley,  13  Penn.  St.  544.] 

••  Per  Lord  Eldon,  in  Crawshay  v.  Maule,  1  Swans.  518,  523,  526,  527.— 
Mr.  Collyer  has  a  valuable  chapter  on  the  subject  of  partnerships  in  mines, 
which  contains  a  summary  of  the  general  doctrines  of  Courts  of  Ecpiity 
touching  them.     See  Coll.  on  P.  B.  5,  c.  3,  p.  783-792,  2d  ed. 


134  PARTNERSHIP.  [CHAP.  V. 

§  83.  But  although  there  is  no  positive  incompetency 
at  th-e  common  law  of  creating  a  partnership  in  the  buy- 
ing and  selling  of  lands  on  joint  account,  and  for  the 
joint  benefit  of  the  parties,  by  way  of  commercial  spec- 
ulation and  commercial  adventure ;  yet  such  a  contract 
must,  from  the  nature  of  the  case,  and  the  positive 
rules  of  law  and  the  Statute  of  Frauds,  be  reduced  to 
writing  ;  and  then  the  stipulations  of  the  parties  will 
constitute  the  sole  rule  to  ascertain  their  intent,  and  to 
enforce  their  respective  rights.^  The  general  rules  of 
law,  applicable  to  ordinary  commercial  partnerships,  are 
not  applied  to  them ;  ^  nor  are  the  ordinary  remedies 
thereof  enforced  either  at  law,  or  in  equity,  inter  sese, 
or  as  to  third  persons.^  Thus,  for  example,  the  ordinary 
doctrine  of  the  liability  of  dormant  partners  does  not 
extend  to  partnerships  formed  for  speculations  in  the 
purchase  and  sale  of  lands. "*     The  present  Commenta- 

'  Smith  V.  Burnham,  3  Sumn.  435,  458-471  ;  [In  re  Warren,  Daveis,  320, 
323.  In  England,  the  Vice-Chancellor,  in  an  elaborate  judgment,  reviewing 
the  authorities,  has  sustained  an  agreement  for  such  a  partnership,  without  any 
writing  within  the  Statute  of  Frauds.  Dale  v.  Hamilton,  5  Hare,  369.  See 
also  Smith  v.  Tarlton,  2  Barb.  Ch.  336  ;  Fall  River  Whaling  Co.  v.  Borden, 
10  Cush.  458,  474]  ;  { Dale  v.  Hamilton  was  affirmed  by  Lord  Cottenham,  c.  2, 
Phil.  266.  See  also  Forster  v.  Hale,  3  Ves.  696  ;  S.  C.  5  Ves.  308,  Cowell  v. 
Watt,  2  Hall  &  Tw.  224.  But  in  Caddick  v.  Skidmore,  2  De  G.  &  J.  52, 
Lord  Cranworth,  C,  says  that  an  agreement  between  A.  and  B.  to  become 
partners  in  a  colliery  for  the  purpose  of  demising  it  in  royalties  to  be  divided 
between  them  would  be  within  the  operation  of  the  Statute  of  Frauds.  See 
Lind.  on  P.  82-84.  See  also  Hale  v.  Henrie,  2  Watts,  143;  HaniFt'.  How- 
ard, 3  Jones,  Eq.  440;  Jones  v.  McMichael,  12  Rich.  176.  In  this  last 
case  a  partnership  agreement  was  held  void,  both  "because  it  was  not  to  be 
performed  within  a  year  and  because  it  related  to  interests  in  land.  See  §  93, 
note  (V.  1,  A.)} 

2  [Patterson  v.  Brewster,  4  Edw.  Ch,  352.] 

'  [In  Olcott  V.  AVing,  4  McLean,  15,  it  was  held  that  the  same  principles 
governed  partnerships  for  buying  and  selling  land  as  ordinary  partnerships, 
and  that  a  Court  of  Equity  would  decree  a  sale  of  the  lands  after  dissolution, 
and  a  division  of  profit  or  loss,  according  to  the  terms  of  the  partnership.] 

*  Pitts  V.  Waugh,  4  Mass.  424  ;  Smith  v.  Burnham,  3  Sumn.  435,  470,  471. 
[But  see  Brooke  v.  Washington,  8  Gratt.  248,  contra.'] 


CHAP,  v.]         DIFFERENT  SORTS  OF.  135 

lies  are  designed  to  treat  principally  of  partnerships  in 
the  ordinary  business  of  trade,  navigation,  commerce, 
manufactures,  and  arts ;  and  other  cases  will  be  inci- 
dentally discussed  by  way  of  illustration  only,  or  to 
distinguish  them  from  the  general  rules  belonging  to 
common  partnerships. 

§  84.  And  here  it  may  be  proper  to  say  a  few  words, 
as  to  the  extent  and  duration  of  partnerships  in  point 
of  time,  and  also  as  to  the  different  modes,  in  which 
they  may  be  formed.  As  to  the  first  point,  as  partner- 
ships are  formed  by  the  voluntary  consent  of  the  par- 
ties, they  may  be  for  life,  or  for  a  specific  period  of  time, 
or  conditional,  or  indefinite  in  their  duration,  or  for  a 
single  adventure  or  dealing ;  and  therefore  dependent 
upon  the  mutual  will  or  pleasure  of  the  parties.^  The 
period  may  be  fixed  by  express  stipulation,  or  it  may 
be  implied  from  circumstances.^  If  no  particular  period 
is  fixed  by  the  parties  for  the  duration  of  a  partnership, 
it  is  deemed  to  exist  during  their  mutual  pleasure  only, 
and  of  course  is  dissoluble  by  either  of  them,  at  any 
time  when  he  chooses  to  withdraw  therefrom.^  When 
a  particular  term  is  fixed,  it  is  presumed  to  endure  until 
that  period  has  elapsed ;  when  no  term  is  fixed,  it  is 
presumed  to  endure  for  the  life  of  the  parties,  unless 
previously  dissolved  by  some  act  or  notice  of  one  of  the 
parties,  or  by  operation  of  law.  But  in  no  case  will  the 
law  presume,  that  the  partnership  is  intended  to  con- 
tinue beyond  the  life  of  the  parties  ;   and  therefore  if 

1  Wats,  on  p.  c.  7,  p.  379,  2d  ed. ;  Coll.  on  P.  B.  1,  c.  2,  §  1,  p.  68,  2d  ed. ; 
Gow  on  P.  c.  5,  p.  219-22G,  3d  ed. ;  Poth.  de  Soc.  n.  64;  3  Kent,  52-54; 
2  Bell,  Comm.  B.  7,  c.  2,  p.  630-633,  5th  ed. 

"  Coll.  on  P.  B.  1,  c.  2,  §  1,  p.  68,  2d  ed. ;  Crawshay  v.  Maule,  1  Swans. 
495,  521,  525  ;  Alcock  v.  Taylor,  Taml.  506. 

3  Ibid.;  Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  307,  308;  Ex  parte 
Nokes,  cited  in  Wats,  on  P.  c.  7,  p.  380,  2d  ed. ;  Peacock  c.  Peacock,  1 6  Ves. 
49  ;  2  Bell,  Comm.  B.  7.  c.  2,  p.  630-634,  5th  ed. 


136  PARTNERSHIP.  [cHAP.  V. 

such  is  the  object,  it  must  be  provided  for  by  some  ex- 
press stipuhition.^  The  causes,  which  will  constitute  a 
dissolution,  or  a  cause  of  dissolution,  will  naturally  come 
under  review  in  our  subsequent  pages. 

§  85.  The  Koman  law  fully  recognized  the  like  prin- 
ciples. Tamdiu  societas  durat,  quamdiu  consensus 
partium  integer  perseverat.^  So,  in  the  Institutes  it  is 
said:  Manet  cmtem  societas  eo  usque,  donee  in  eodem 
consensu  2)e7'severaverint.  At,  cum  aliquis  renunciaverit 
societati,  solvitur  societas.^  And  again  in  the  Digest: 
Societas  co'iri  potest  vel  in  perpetumn,  id  est,  dmn  vi- 
vunt,  vel  ad  tempus,  vel  ex  tempore,  vel  sub  conditioned 
The  Roman  law  went  further  than  ours;  and  positively 
prohibited  the  duration  of  any  partnership  beyond  the 
life  of  the  parties ;  and  therefore  a  provision,  that  the 
heir  of  one  should  share  in  the  partnership,  was  held 
wholly  void.  JSfidla  societatis  in  cdernum  coitio  est.^ 
Nemo  potest  societatem  hcEredi  suo  sic  parere,  ut  ipse 
hceres  socius  sit.^  Idem  [Pa^nnianus)  resjjondit,  socie- 
tatem non  posse  ultra  mortem  porrigi?  The  French 
law,  and  in  general  the  law  of  the  other  nations  of  con- 
tinental Europe,  adopt  similar  principles.^ 

§  86.  In  the  next  place,  as  to  the  different  modes  in 
which  partnerships  may  be  formed.  At  the  common 
law,  no  particular  forms  or  solemnities  are  required  to 
constitute  a  partnership  between  the  parties.     It  is  suf- 

1  Crawsbay  v.  Maule,  1  Swans.  495,  521  ;  s.  c.  1  Wils.  Ch.  181.   {  See  §  196.} 

-  Cod.  4,  37,  5;  Domat,  1,  8,  5,  art.  1,  2;  Id.  1,  8,  3,  art.  8,  9. 

^  Inst.  8,  26,  4. 

■*  D.  17,  2,  1  ;  Poth.  Pand.  17,  2,  n.  10 ;  Poth.  de  Soc.  n.  64,  65 ;  Domat, 
1,  8,  5,  art.  1,  2;  Id.  1,  8,  13,  art.  8,  9. 

s  D.  17,  2,  70;  Poth.  Pand.  17,  2,  n.  10;  1  Swans.  509,  note  (a);  Vinn. 
ad  Inst.  3,  26,  §  4,  n.  1,  p.  698. 

«  D.  17,  2,  35;  Poth.  Pand.  17,  2,  n.  56  ;  Domat,  1,  1,  2,  art.  2-5. 

''  D.  17,  2,  52,  9  ;  Poth.  Pand.  17,  2,  n.  56,  57. 

8  Civ.  Code  of  France,  art.  1865-1871;  Poth.  de  Soc.  n.  64,  65;  Id.  u. 
146-154. 


CHAP,  v.]  DIFFERENT    SORTS    OF.  137 

ficient,  that  it  is  formed  by  the  voluntary  consent  of 
the  parties,  whether  that  be  express  or  implied ; 
whether  it  be  by  written  articles,  or  by  unsolemn  writ- 
ings ;  or  whether  it  be  by  tacit  approbation,  or  by  parol 
contract,  or  even  by  mere  acts.^  It  is  indeed  usual  to 
have  some  writings  pass  between  the  parties,  when  a 
partnership  is  formed  for  a  specific  term,  or  even  during 
the  pleasure  of  the  parties,  if  the  business  is  expected 
to  be  of  a  permanent  nature,  or  of  long  duration.  But 
this  is  a  matter  resting  in  the  mere  discretion  and  choice 
of  the  parties,  and  is  by  no  means  made  indispensable 
by  the  law.  And  this  also  seems  to  have  been  the  rule 
of  the  Roman  law.  Sociefatem  co'tre  et  re,  et  verbis, 
et  ^;er  nuntium,  i^osse  nos,  duhium  non  est^  Voet 
has  expressed  the  same  doctrine  in  broader  language. 
Societas  dividitur  primo  in  expressam,  quce  ex  expressa 
conventione  fit,  et  tacitam,  quce  re  contrahi  dicitur,  dum 
rebus  ijjsis  et  factis,  shnul  emendo,  vendendo,  hccra  et 
damna  dimdendo,  socii  ineundoi  societatis  voluntatem 
declarant.^ 

§  87.  The  old  French  law  required,  that  all  general 
partnerships  and  partnerships  in  commandite  should  be 
reduced  to  writing  and  registered,  unless  when  the 
concern  was  under  one  hundred  livres  in  value.'*     And 

'  {The  creation  of  a  partnership  by  an  agent  without  authority,  if  ratified 
by  the  person  so  made  a  partner,  establishes  that  relation,  and  will  cut  off 
the  intervening  rights  of  third  persons,  if  the  doctrine  is  applied  for  the  pro- 
tection of  a  superior  equity  ;  and  the  partnership  assets  must  be  first  ajjplied 
to  the  payment  of  the  partnership  debts.  Williams  v.  Butler,  35  111.  544. 
See  also  Buckingham  v.  Hanna,  20  Ind.  110} ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  2, 
3,  2d  ed.;  Wats,  on  P.  c.  1,  p.  4,  5,  2d  ed. ;  GowonP.  c.  1,  p.  4,  5,3d  ed.; 
2  Bell,  Comm.  B.  7,  c.  2,  p.  621-623,  5th  ed.  [And  it  is  sufficient  evidence  to 
prove  a  person  to  be  in  partnership,  that  he  and  others  had  agreed  to  form 
a  company,  and  that  business  had  been  carried  on,  on  the  basis  of  such  agree- 
ment.    Owen  V.  Van  Uster,  10  C.  B.  318  ;  1  Eng.  L.  &  Eq.  39G.] 

"  D.  17,  2,  4 ;  Potb.  Pand.  14,  2,  n.  6 ;  Domat,  1,  8,  3,  art.  6. 

^  1  Voet,  ad  Pand.  17,  2,  §  2,  p.  748 ;  ante,  §  50. 

■»  Poth.  de  Soc.  n.  79-81. 


138  PARTNERSHIP.  [CHAP.  V. 

r 

this  continues  in  substance  to  be  the  rule  under  the 
modern  Code  of  France.^  Similar  regulations  are  to 
be  found  in  the  laws  of  some  other  nations ;  but  the 
Roman  law  seems  more  generally  to  have  been  fol- 
lowed.- 

*  Code  of  Commerce,  art.  39-44. 

2  3  Kent.  24,  note  (a)  ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  621-623,  5th  ed. ; 
1  Voet,  ad  Band.  1 7,  2,  §  2,  p.  748 :  1  Tapia,  Elem.  de  Jur.  Merc.  Lib.  2,  c. 
2,  §  1,  p.  83,  84 ;  Van  Leeuwen's  Comm.  B.  4,  c.  23,  §  1,  3. 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.  139 


CHAPTER  VI. 

RIGHTS     AND      INTERESTS      OF      PARTNERS      IN     PARTNERSHIP 

PROPERTY. 

{  §  88.  Preliminary. 

89.  Joint  tenancy,  tenancy  in  common. 

90.  Partnership  neither  of  the  two. 

91.  Partners  are  joint  owners  of  partnership  property. 

92.  93.  Real  estate  of  a  partnershijj. 

94.  Power  of  pai'tners  over  partnership  property. 

95.  Roman  law. 

96.  Scottish  law. 

97.  Lien  on  the  partnership  property. 

98.  What  constitutes  partnership  property. 

99.  Good-will  of  the  partnership. 
100.  Right  to  use  the  firm  name.} 

§  88.  Having  disposed  of  these  preliminary  matters, 
we  shall  next  proceed  to  the  consideration  of  the  rights 
and  interests,  powers  and  authorities,  duties  and  obh- 
gations,  liabilities  and  exemptions,  of  partners  between 
themselves,  as  well  as  in  relation  to  third  persons.  In 
treating  of  these  points,  so  far  as  respects  the  partners 
themselves,  we  shall  keep  mainly  in  ^dew  cases  where 
a  real  partnership  exists  according  to  the  intention  of 
the  parties,  and  there  is  a  community  of  interest  in  the 
property,  as  well  as  in  the  profits  of  the  trade  or  busi- 
ness, without  any  special  stipulations,  which  may  vary 
the  application  of  the  general  principles  of  law.  Of 
course,  where  any  such  stipulations  exist,  which  are 
lawful  in  their  nature  or  character,  they  properly  con- 
stitute exceptions  to  those  principles,  and  ^j?'o  tanto 
may  create  new  and  peculiar  relations  and  obligations.^ 

1  Ante,  §  lG-29. 


140  PARTNERSHIP.  [cHAP.  VI. 

§  89.  And  first  in  relation  to  the  rights  and  inter- 
ests of  the  partners  inter  sese,  in  the  partnership  capital, 
stock,  funds,  and  effects.  Partners  differ  from  mere 
part-owners  of  goods  and  chattels  in  several  respects. 
The  latter  are  either  joint  owners,  or  tenants  in  com- 
mon, each  having  a  distinct,  or  at  least  an  independent, 
although  an  undivided  interest  in  the  property  ;  and 
neither  can  transfer  or  dispose  of  the  whole  property, 
or  act  for  the  others  in  relation  thereto  ;  but  merely  for 
his  own  share,  and  to  the  extent  of  his  own  several 
right  and  interest.^  In  cases  of  joint-tenancy  of  goods 
or  chattels,  indeed,  the  joint-tenants  are  said  to  be  seised 
or  possessed  ^9er  my  et  2^er  tout,  by  the  half  or  moiety 
and  by  all ;  that  is,  they  each  of  them  have  the  entire 
possession,  as  w^ell  of  every  parcel,  as  of  the  whole ;  ^ 
or,  as  Bracton  has  expressed  it :  Quilihet  totiim  tenet,  et 
nihil  tenet;  scilicet,  totum  in  communi,  et  nihil  se'pa- 
ratim  ])er  se?  Hence  it  is  said,  that  in  joint-tenancy 
there  is  a  fourfold  unity,  unity  of  interest,  unity  of  title, 
unity  of  time,  and  unity  of  possession  ;  "^  and  the  right  to 
the  whole  belongs  to  the  survivor.^  But  still  each  joint- 
tenant  has  an  independent,  and,  in  a  certain  sense,  a 
distinct  right  and  interest  in  the  property  during  his 
lifetime,  which  cannot  be  disposed  of  by  the  other 
joint-tenant,  but  which  he  may  severally  himself  dispose 
of,  and  thus  sever  the  joint-tenancy ;  and  he  may  now 
by  statute,  although  not  at  common  law,  have  an  action 
of  account  against  the  other  for  his  share  of  the  profits 

*  Com.  Dig.  E&lale,  K.  1-10  ;  Litt.  §  321 ;  Co.  Litt.  200,  a;  [Woodward  i\ 
Cowing,  41  Me.  9,  12.] 

2  2  Bl.  Comm.  182,  399  ;  Litt.  §  288  ;  Co.  Litt.  1 86,  a ;  Bac.  Abr.  Joint-ten- 
ancy and  Tenancy  in  Common  (C). 

^  Bracton,  Lib.  5,  tr.  5,  c.  26,  p.  430  ;  Co.  Litt.  186,  a. 

*  2  Bl.  Comm.  180,  399. 

"  2  131.  Comm.  183,  184 ;  Com.  Dig.  Estate,  K.  3,  4 ;  Litt.  §  281,  282 ;  Co. 
Litt.  181,  182,  a. 


CHAP.  YI.]       PARTNERSHIP  PROPERTY.  141 

deriYed  from  the  common  property.^  On  the  other 
hand,  tenants  in  common  hold  undivided  portions  of 
the  property  by  several  titles,  or  in  several  rights, 
although  by  one  title ;  but  they  have  their  possession 
in  common  and  undivided  ;  so  that  there  may  be  an 
entire  disunion  of  interest,  of  title,  and  of  time  among 
them.^  Hence  it  is  said,  that  tenants  in  common 
properly  take  by  distinct  moieties,  and  have  no 
entirety  of  interest;  and  therefore  there  is  no  sur- 
vivorship between  them ;  but  the  share  of  the  deceased 
tenant  in  common  goes  to  his  personal  or  real  repre- 
sentative.^ 

§  90.  From  the  resemblances  thus  existing  between 
cases  of  joint-tenancy  and  tenancy  in  common  and  part- 
nerships, it  has  been  sometimes  said,  that  partners  are 

'  2  Bl.  Coram.  183  ;  Com.  Dig.  Accompt,  B.  —  There  is  no  small  subtlety 
in  tlie  language  of  our  Law  Books  on  this  subject.  Thus,  Blackstone  uses 
language  to  the  effect,  that  the  interest  of  two  joint-tenants  is  not  only  equal 
or  similar,  but  it  is  one  and  the  same ;  that  survivorship  is  the  natural  and 
necessary  consequence  of  the  union  and  entirety  of  their  interests ;  that  one 
has  not  a  distinct  moiety  from  the  other ;  and  that  if  by  any  subsequent  act, 
as  by  alienation  or  forfeiture  of  either,  the  interest  becomes  separate  and 
distinct,  the  joint-tenancy  instantly  ceases.  2  Bl.  Coram.  183,  184.  And 
yet  it  is  palpable,  that  one  joint-tenant  may  transfer  or  alien  his  own  right 
severally,  and  thereby  sever  the  joint-tenancy.  And  therefore  it  has  been 
well  observed  by  Lord  Coke,  after  quoting  the  language  of  Bracton  (already 
cited),  that  joint-tenants  hold  per  my  et  per  tout:  "And  albeit  they  are  so 
seised,  yet  to  divers  purposes  each  of  them  hath  but  a  right  to  a  moiety,  as  to 
enfeoff,  give  or  demise,  or  to  forfeit."  Co.  Litt.  186,  a.  And  afterwards  he 
adds :  "  And  where  all  the  joint-tenants  join  in  a  feoffment,  every  one  of 
them  in  judgment  of  law  doth  but  give  his  part.  If  an  alien  and  a  subject 
purchase  land  jointly,  the  king  upon  office  found  shall  have  a  moiety ;  and 
Littleton  afterwards  in  this  chapter  (§  291)  saith,  that  one  joint-tenant  hath 
one  moiety  in  law,  and  the  other  the  other  moiety."  Co.  Litt.  186,  a.  Now, 
what  is  this  but  admitting,  that  joint-tenants  have  in  reality  distinct  and 
independent  interests,  capable  of  a  distinct  alienation ;  and  that  each  has  but 
a  moiety,  concurrent  and  undivided,  with  tiie  other  in  the  property,  with 
a  right  of  survivorship  in  case  no  severance  takes  place  ? 

2  Com.  Dig.  Estate,  K.  8  ;  2  Bl.  Coram.  192 ;  Litt.  §  292 ;  Co.  Litt.  188,  b. 

'  Com.  Dig,  Estate,  K.  8 ;  2  Bl.  Comui.  194,  309;  Abbott  on  Ship.  c.  3, 
p.  68,  Am.  ed.  1829. 


142  PARTNERSHIP.  [cHAP.  YI. 

either  tenants  in  common  of  the  partnership  effects,  or 
joint-tenants  without  the  benefit  of  survivorship.^  But 
this  language  is  by  no  means  accurate ;  and  perhaps 
no  case  could  better  exemplify  the  truth  of  the  maxim, 
jSfidhnn  simile  est  idem.  Partnership  differs  from  joint- 
tenancy  in  two  important  particulars.  In  the  first 
place,  joint-tenants  cannot  dispose  of  the  interest  of 
each  other  in  the  joint  property,  although  they  hold 
jjer  my  et  per  tout ;  but  each  has  the  sole  power  of  dis- 
posing of  his  own  interest  therein  ;  ^  whereas,  in  cases 
of  partnership,  each  partner  is  not  only  a  joint  owner 
with  the  others  of  the  partnership  property,  but  he 
also  has  full  power  to  dispose  of  the  entire  right  of  all 
the  partners  therein,  for  the  purposes  of  the  partner- 
ship, and  in  the  name  of  the  firm.  In  the  next  place, 
there  is  no  survivorship  in  cases  of  partnership,  as  there 
is  in  joint-tenancy.  This  has  been  the  doctrine  of  the 
common  law  for  more  than  three  centuries,  and  indeed 
is  probably  coeval  with  the  business  of  joint  trade  and 
commerce  in  England.  Thus,  Lord  Coke,  in  speaking 
of  joint-tenancy  in  chattels  and  debts,  contracts  and 
duties,  where  the  right  of  survivorship  ordinarily  exists, 
adds :  "  An  exception  is  to  be  made  of  two  joint  mer- 
chants ;  for  the  wares,  merchandises,  debts,  or  duties, 
that  they  have  as  joint  merchants,  or  partners,  shall 
not  survive,  but  shall  go  to  the  executors  of  him,  that 
deceaseth ;  and  this  is  ^:)e?'  legem  mercatoriam^  which 
(as  hath  been  said)  is  a  part  of  the  laws  of  this  realm 
for  the  advancement  and  continuance  of  commerce  and 
trade,  which  is  ^;ro  hono  j^uhlico  ;  for  the  rule  is,  that 
Jus  accrescendi  inter  mercatores  2)ro  heneficio  co7nmercii 

»  Wats,  on  P.  c.  2,  p.  65,  2d  ed. ;  Gow  on  P.  c.  2,  §  1,  p.  32,  3d  ed. ; 
West  V.  Skip,  1  Ves.  Sr.  239,  242;  3  Kent,  36,  37, 

'^  Co.  Litt.  186,  a;  Litt.  §  291 ;  ante,  §  89,  note  b;  West  v.  Skip,  1  Ves. 
Sr.  239,  242. 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.   ^  143 

locum  non  habet."  ^  It  might  be  added,  that  otherwise 
partnerships  would  never  have  been  formed  for  purposes 
of  trade,  since  the  death  of  either  partner  might  bring 
want  or  ruin  upon  his  family,  and  the  whole  business 
would  be  full  of  perils  and  hazards,  which  might  occa- 
sion losses  far  beyond  any  hope  of  reasonable  gains 
and  profits.  Within  the  benefit  of  the  rule,  all  persons 
engaged  in  any  trade,  foreign  or  domestic,  were  origin- 
ally deemed  merchants ;  ^  and  now  it  is  applied  to  all 
employments  and  business  between  two  or  more  per- 
sons on  joint  account  and  benefit,  whether  they  fall 
under  the  denomination  of  merchants,  or  not.^  So 
strong  is  this  doctrine,  that  even  where  persons  are 
clearly  joint-tenants  of  any  property,  and  it  is  after- 
wards by  them  deliberately  embarked  in  trade  and 
business  on  joint  account,  as  partners,  such  property 
will  cease  to  be  held  by  them  in  joint-tenancy,  and  will, 
in  case  of  the  decease  of  either,  be  no  longer  subject  to 
the  jus  accrescendi ;  for  the  joint-tenancy  is  thereby 
severed,  and  a  partnership  established  in  the  property 
in  lieu  thereof'*  Partnership  differs  quite  as  much 
from  a  tenancy  in  common ;  for  in  a  tenancy  in  com- 
mon each  party  has  a  separate  and  distinct,  although 
an  undivided  interest,  and  possesses  (as  it  is  technically 
expressed)  the  whole  of  an  undivided  moiety  of  the 
property,  and  not  an  undivided  moiety  of  the  whole 
property ;  ^    whereas    in   partnership    the    partners    are 

'  Co.  Litt.  182,  a;  Com.  Dig.  Merchant,  D. ;  2  Brownl.  99  ;  Coll.  on  P. 
B.  2,  c.  1,  §  1,  p.  80,  81,  2d  ed.;  Jackson  v.  Jackson,  7  Ves.  535;  s.  C.  9 
Ves.  591. 

*  2  Brownl.  99  ;  Com.  Dig.  Merchant,  A. 

^  Jackson  v.  Jackson,  9  Ves.  591,  596,  597;  Jefferys  r.  Small,  1  Vern. 
217 ;  Coll,  on  P.  B.  2,  c.  1,  §  1,  p.  76,  7  7,  80-82,  2d  ed. ;  2  Bl.  Comm.  404. 

*  Jackson  v.  Jackson.  7  Ves.  535;  S.  C.  9  Ves.  591  ;  Hall  r.  Digbv,  4 
Bro.  P.  C.  224 ;  s.  c.  4*Bro.  P.  C.  by  Tomlins,  577 ;  CoU.  on  P.  B.  2,  c.  1,  § 
1,  p.  80,  81,  2d  ed. 

*  2  Bl.  Comm.  182,  191-19  3. 


144  ^  PARTNERSHIP.  [cHAP.  VI. 

joint  owners  of  the  whole  property.  A  tenant  in  com- 
mon can  dispose  only  of  his  own  share  in  the  property ; 
whereas  (as  we  have  seen),  each  partner  may,  in  the 
partnership  name,  dispose  of  the  entirety  of  the  prop- 
erty for  partnership  purposes. 

§  91.  The  true  nature,  character,  and  extent  of  the 
rights  and  interests  of  partners  in  the  partnership 
capital,  stock,  funds,  and  effects,  is,  therefore,  to  be 
ascertained  by  the  doctrines  of  law  applicable  to  that 
relation,  and  not  by  the  mere  analogies  furnished  by 
joint-tenancy,  or  by  tenancy  in  common.  It  may, 
therefore,  be  said,  that  in  cases  of  real  partnerships, 
unless  otherwise  provided  for  by  their  contract,  part- 
ners are  joint  owners  and  possessors  of  all  the  capital, 
stock,  funds,  and  effects  belonging  to  the  partnership, 
as  well  those  which"  are  acquired  during  the  partner- 
ship, as  those  which  belong  to  it  at  the  time  of  its  first 
formation  and  establishment.^  So,  that,  whether  its 
stock,  funds,  or  effects  be  the  product  of  their  labors  or 
manufactures,  or  be  received  or  acquired  by  sale,  barter, 
or  otherwise,  in  the  course  of  their  trade  or  business, 
there  is  an  entire  community  of  right  and  interest 
therein  between  them  ;  each  has  a  concurrent  title  in 
the  whole,  or,  as  Bracton  says  :  Tenet  toimn  in  commu- 
nis et  nihil  separatim  j^er  se.^ 

§  92.  Nor  is  there  in  reality,  as  between  the  partners 
themselves,  any  difference,  whether  the  partnership 
property,  held  for  the  purposes  of  the  trade  or  busi- 
ness consists  of  personal  or  movable  propert}%  or  of 
real  or  immovable  property,  or  of  both,  so  far  as  their 
ultimate    rights    and   interests  therein    are   concerned.^ 

>  3  Kent,  36,  37 ;  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  76,  77,  2d  ed, ;  Wats,  on 
P.  c.  2,  p.  66,  2d  ed. 

2  Ante,  §  89 ;  Bract  c.  26,  p.  430 ;  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  78,  2d  ed. 

3  Wats,  on  P.  c.  2,  p.  72-77 ;  Gow  on  P.  c.  2,  §  1,  p.  32-36,  3d  ed. ;  Sage 
V.  Sherman,  2  Comst.  417.  —  There  are  some  differences,  however,  arising 


CHAP.  VI.]  PARTNERSHIP   PROPERTY.  145 

It  is  true,  that  at  law,  real  or  immovable  propertv  is 
deemed  to  belong  to  the  persons,  in  whose  name  the 
title  by  conveyance  stands.  If  it  is  in  the  name  of  a 
stranger,  or  of  one  partner  only,  he  is  deemed  the  sole 
owner  at  law  ;  ^  if  it  is  in  the  names  of  all  the  partners, 
or  of  several  strangers,  they  are  deemed  joint-tenants, 
or  tenants  in  common,^  according  to  the  true  in- 
terpretation of  the  terms  of  the  conveyance.^  But, 
however   the    title    may   stand    at   law,    or   in    whose- 

from  the  very  nature  and  character  of  the  particular  property.  Each  partner,  as 
we  shall  presently  see  (and  indeed,  as  has  been  already  intimated),  may  sell  or 
dispose  of  the  entirety  of  any  personal  property  of  the  partnei-ship  in  the 
name  of  the  firm.  But  if  real  estate  has  been  conveyed  to  both  partners  for 
the  partnership  account,  they  ordinarily  become  tenants  in  common  thereof 
at  law,  and  each  can  convey  by  deed  only  his  own  share  or  moiety,  and  not 
that  of  the  other.  So,  that  while  one  partner  may  in  the  name  of  the  firm 
sell  the  whole  of  any  goods  or  articles  belonging  to  the  partnership,  both 
must  join  in  order  to  convey  the  entirety  of  the  real  estate  thereof.  Coles 
V.  Coles,  15  Johns.  159,  161  ;  Wats,  on  P.  c.  2,  p.  72,  73,  2d  ed. ;  2  Bell, 
Comm.  B.  7,  c.  1,  p.  613-615,  5th  ed. ;  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  82-101, 
2ded. 

'  [Cox  v.  McBurney,  2  Sand.  561.  —  In  equity  he  might  be  considered 
as  holding  in  trust  for  the  partnership,  if  the  property  is  paid  for  from 
partnership  funds.  McGuire  i-.  Ramsey,  4  Eng.  (Ark.)  518 ;  Peck  v.  Fisher, 
7  Cush.  386  ;  Jarvis  v.  Brooks,  7  Fost.  37.  The  legal  title,  however,  is  un- 
disturbed, except  so  far  as  to  protect  the  equitable  rights  of  the  respective 
partners.  Lang  v.  Waring,  25  Ala.  625.  And  see  Black  v.  Black,  15  Ga. 
445;  Galbraith  v.  Gedge,  16  B.  Mon.  631.] 

"  [See  Lancaster  Bank  v.  Myley,  13  Penn.  St.  544;  Jones  v.  Neale,  2  P. 
&  H.  339.  In  Massachusetts  it  is  settled  that  real  estate  conveyed  to  and 
held  by  partners  as  tenants  in  common,  although  purchased  with  partnership 
funds,  and  for  partnership  use,  is  to  be  considered  at  law  as  the  several 
property  of  the  individual  partners,  and  liable  to  be  levied  on  for  their 
separate  debts ;  but  if  so  taken,  it  will  be  considered  in  equity  as  held  by  the 
creditor  in  trust,  to  be  applied,  so  far  as  may  be  necessary,  to  the  payment  of 
partnership  debts.  Peck  v.  Fisher,  7  Cush.  386  ;  see  Burnside  r.  Merrick.  4 
Met.  537  ;  Dyer  c.  Clark.  5  Met.  562;  Howard  v.  Priest,  5  Met.  582.] 

^  Anderson  v.  Tompkins,  1  Brock.  456,  465.  See  Blake  v.  Nutter,  19 
Me.  16.  [And  parol  evidence  has  been  held  inadmissible  to  show  that  real 
estate  conveyed  to  two  as  tenants  in  common  was  purchased  and  paid  for  by 
them  as  partners,  and  was  partnership  property.  Ridgway's  Appeal,  15  Penn. 
St.  17  7.] 

10 


146  PARTNERSHIP.  [CHAP.  VI. 

soever  name  or  names  it  may  be,  the  real  estate 
belonging  to  the  partnership  will  in  equity  be  treat- 
ed as  belonging  to  the  partnership,  like  its  personal 
funds,  and  disposable  and  distributable  accordingly ; 
and  the  parties,  in  whose  names  it  stands,  as  owners 
of  the  legal  title,  will  be  held  to  be  trustees  of  the  part- 
nership, and  accountable  accordingly  to  the  partners, 
according  to  their  several  shares  and  rights  and  inter- 
ests in  the  partnership,  as  cestuis  que  trust,  or  beneficia- 
ries of  the  same.^  Hence  in  equity,  in  case  of  the  death 
of  one  partner,  there  is  no  survivorship  in  the  real  estate 
of  the  partnership  ;  but  his  share  will  go  to  his  proper 
representatives.''' 

§  93.  Indeed,  so  far  as  the  partners  and  their  cred- 
itors are  concerned,  real  estate  belonging  to  the  part- 
nership is  in  equity  treated  as  mere  personalty,  and 
governed  by  the  general  doctrines  of  the  latter.^  x\nd 
so  it  will  be  deemed  in  equity,  to  all  other  intents  and 
purposes,  if  the  partners  themselves  have,  by  their 
agreement  or  otherwise,  purposely  impressed   upon   it 

*  1  Story  Eq.  Jur.  §  674;  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  82,  83,  2d  ed. ; 
Hoxie  V.  Carr,  1  Sumn.  173;  Gaines  t'.  Catron,  1  Humph.  514;  [Smith  r. 
Danvers,  5  Sand.  669  ;  Boyce  v.  Coster,  4  Strobh.  Eq.  25  :  Fall  River  Whal- 
ing Co.  V.  Borden,  10  Cush.  458;  Andrews  v.  Brown,  21  Ala.  437;  Ludlow 
V.  Cooper,  4  Ohio  St.  1  ;  Roberts  v.  McCarty,  9  Ind.  16  ;  Buchan  v.  Sumner, 
2  Barb.  Ch.  165;  Delmonico  v.  Guillaume,  2  Sand.  Ch.  366;  Rice  r.  Bar- 
nard, 20  Vt.  479  ;  Moreau  r.  SafFarans,  3  Sneed,  595.] 

2  Lake  v.  Craddock,  3  P.  Wm.  158 ;  s.  C.  1  Eq.  Cas.  Abr.  290 ;  Morris  v. 
Barrett,  3  You.  &  J.  384 ;  Jackson  v.  Jackson,  9  Ves.  591 ;  Coll.  on  P.  B.  2 
c.  1,  §  1,  p.  82-102,  2d  ed. ;  Wats,  on  P.  c.  2,  p.  72-77,  2d  ed. ;  1  Story  Eq. 
Jur.  §  674;  3  Kent,  37,  38. 

3  Thornton  v.  Dixon,  3  Bro.  Ch.  199,  and  Mr.  Belt's  note  (1);  Balmain 
V.  Shore,  9  Yes.  500,  507-509  ;  [Matlock  v.  Matlock,  5  Ind.  403]  ;  Ripley  v. 
Waterworth,  7  Ves.  425;  [Rice  v.  Barnard,  20  Vt.  479];  Cookson  v.  Cook- 
son,  8  Sim.  529;  Fereday  i-.  Wightwick,  1  Russ.  &  M.  45;  Houghton  v. 
Houghton,  11  Sim.  491  ;  [Buchan  v.  Sumner,  2  Barb.  Ch.  165,  200]  ;  1  Story 
Eq.  Jur.  §  674.  [And  a  lease  thereof  by  one  partner  in  his  own  name  will 
enure  for  the  benefit  of  the  firm.    Moderwell  v.  MuUison,  21  Penn.  St.  257.] 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.  147 

the  character  of  personalty.^  But  a  question  has  been 
made  whether,  in  the  absence  of  any  such  agreement, 
or  other  act,  affectmg  its  general  character,  real  estate, 
held  as  a  part  of  the  partnership  funds,  or  stock,  ought 
to  devolve  upon,  or  descend,  as  real  estate,  to  the  heir 
or  devisee,  or  ought  to  belong  as  personalty  to  the  exe- 
cutor or  administrator,  upon  the  death  of  the  partner. 
Upon  this  point  there  has  been  a  diversity  of  judicial 
opinion,  as  well  as  of  judicial  decision  ;  some  judges 
holding,  that  in  such  a  case  it  retained  its  original  char- 
acter of  real  estate,  and  passed  to  the  heirs  or  devisees 
accordingly;  and  others  holding,  that  it  was  to  be 
treated  throughout,  as  partnership  property,  and  there- 
fore as  personalty,  and  belonged  to  the  executor  or  ad- 
ministrator. The  doctrine  under  these  circumstances 
must  be  considered  as  open  to  many  distressing  doubts.^ 

^  [But  it  seems  the  property  should  be  purchased  for  partnership  uses 
as  well  as  with  partnership  funds,  in  order  to  constitute  it  personalty.  Gal- 
braith  v.  Gedge,  16  B.  Mon.  631  :  Coder  v.  Ruling,  27  Penn.  St.  84.  And 
see  10  Cush.  458.     But  see  Ludlow  v.  CoojDer,  4  Ohio  St.  1,  9.] 

^  Lord  Thurlow  held  the  former  opinion  in  Thornton  v.  Dixon,  3  Bro. 
Ch.  199.  and  Belf s  note  (1)  ;  and  Sir  AVilliam  Grant,  in  Bell  r.  Phyn, 
7  Yes.  4o3,  and  Balmain  v.  Shore,  9  Ves.  oUO,  adopted  the  same  opinion. 
On  the  other  hand.  Lord  Eldon,  in  Selkrig  v.  Davies,  2  Dow,  230,  242, 
held  the  opposite  opinion,  that  all  property,  involved  in  a  partnership 
concern,  ought  to  be  considered  as  personal ;  and  again  affirmed  it  in 
Townsend  v.  Devaynes,  reported  in  1  Mont,  on  P.  Appx.  97  ;  3  Bro.  Ch. 
199,  Belt's  note  (1 ) .  Sir  John  Leach,  in  Fereday  v.  Wightwick,  1  Buss.  &  M. 
45,  and  Phillips  v.  Phillips,  1  Myl.  &  K.  649,  and  Broom  v.  Broom,  3  Myl. 
&  K.  443,  was  of  the  same  opinion  as  Lord  Eldon.  Mr.  Baron  Alderson, 
in  ^Morris  v.  Kearsley,  2  You.  &  C.  Ex.  139,  acted  on  the  same  opinion.  More 
recently,  Yice-Chancellor  Shadwell  has  upheld  the  doctrine  of  Sir  Wm. 
Grant.  Cookson  v.  Cookson,  8  Sim.  529.  Mr.  Collyer,  in  his  valu.ible 
Treatise  on  Partnership,  has  discussed  at  large  the  whole  learning  applicable 
to  this  point.  See  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  82-102.  Mr.  Bell  has 
summed  up  the  Scottish  law  on  these  points  as  follows  :  "  The  property  of 
the  company  is  comuion ;  held  p?o  indiviso  by  all  the  partners,  as  a  stock, 
and  in  trust ;  responsible  for  the  debts  of  the  concern ;  and  subject,  after 
the  debts  are  paid,  to  division  among  the  partners  according  to  their  agree- 
ment.    This  is  a  great  point  in  the  doctrine  of  partnership,  and  important 


1-iS  PARTNERSHIP.  [cHAP.  YI. 

§  94.    In  virtue  of  this  community  of  rights  and  in- 
terests in  the  partnership  stock,  funds,  and  effects,  each 

consequences  are  deducible  from  it.  The  common  stock  includes  all  lands, 
houses,  ships,  leases,  commodities,  money;  whatever  is  contributed  by  the 
partners  to  the  company  use.  It  comprehends  also  -whatever  is  created  by 
the  joint  exertions  of  the  company,  or  acquired  in  the  course  of  the  employ- 
ment of  their  capital,  skill,  and  industry.  All  this,  by  the  operation  of  law, 
and  the  nature  and  effect  of  the  contract,  becomes  common  property  ;  is  held 
by  all  the  partners  jointly  for  the  uses  of  the  partnership ;  and  is  directly 
answerable  as  a  stock  for  the  payment  of  its  debts.  1.  Vesting  of  the 
Stock. — The  stock  or  common  fund  is  held  by  the  i>a.rtneTS  pro  indiviso. 
And,  1.  This^^ro  indiviso  right  implies,  as  between  the  parties  themselves, 
a  right  of  retention  in  each  partner  over  the  stock,  for  any  advances,  which 
he  may  have  made  to  the  company,  or  for  any  debt  due  by  the  company, 
for  which  he  may  be  made  responsible.  2.  It  also  implies,  in  relation  to  the 
public  at  large,  creditors  of  the  company,  a  trust  in  the  several  partners,  as 
joint  trustees  for  payment,  in  the  first  place,  of  the  company  debts.  And 
on  this  point  rests,  (1),  the  preference,  which  the  creditors  of  the  company 
have  over  the  company  funds  ;  none  of  the  partners,  nor  any  one  in  their 
right,  as  individual  creditors  or  otherwise,  being  entitled  to  more  than  the 
reversion  after  the  purposes  of  the  trust  are  fulfilled:  and,  (2),  the  peculi- 
arity, that  hereditable  subjects  belonging  to  and  held  by  a  company,  are 
considered  not  as  hereditable  in  succession,  but  as  movable  ;  consisting  of 
the  jus  crediti  only.  3.  In  this  respect,  the  contract  of  partnership  has  the 
effect  of  a  direct  conveyance  of  property  to  the  company,  of  whatever  is 
engaged  to  be  given,  or  by  clear  evidence  is  contributed  to  the  use  of  the 
company  by  any  of  the  partners,  to  whom  it  belongs.  The  contract  does 
not  indeed  supersede  the  necessity  of  the  completion  of  the  transference  by 
tradition  or  otherwise  ;  but  it  operates  as  a  conveyance  (fittdii.s  transferendi 
dominii),  which,  when  followed  by  tradition,  possession,  intunation,  and  the 
other  methods  of  completing  a  transference  by  law,  vests  the  property  in 
the  partners,  jointly  for  the  purposes  already  expressed.  '  Society,'  says 
Lord  Stair, '  is  not  so  much  a  permutative  as  a  commutative  contract,  whereby 
the  contractors  communicate  to  each  other  some  stock,  work,  or  profit. 
The  effect  of  society  is,  that  thereby  something,  which  before  was  proper, 
becometh,  or  is  continued  to  be,  common  to  the  copartners.'  He  adds : 
'  Yet  this  communication  is  not  effectual  to  transfer  the  property  in  part,  or 
to  comnmnicate  it  without  delivery  or  possession,  by  which  property  by 
positive  law  is  transferred.'  This  distinction  is  of  some  consequence.  Where 
the  question  is  between  the  parties  and  their  representatives,  as  to  what 
shall  be  considered  as  the  estate  of  the  company,  but  without  involving  any 
competition  with  third  parties,  Avhatever  falls  under  the  fair  construction  of 
the  contract  will,  as  a  personal  right,  belong  to  the  company  and  its  creditors. 
But  where  there  arises  a  competition  depending  on  the  question  of  real 
right,  it  will  be  determined  according  to  that  criterion  of  real  right,  which 


CHAP.  VI.]  PARTNERSHIP    PROPERTY.  149 

partner  possesses  full  power  and  authority  to  sell, 
pledge,  or  otherwise  to  dispose  of  the  entirety  of  any 

the  law  has  appointed  in  cases  of  transference.  But  in  determining  what 
shall  amount  to  an  engagement  to  contribute,  and  consequent  conveyance 
of  a  particular  subject,  it  is  not  always  the  use  of  the  subject  that  will  settle 
the  point.  In  one  case,  certain  subjects,  of  which  the  use  was  given  to  the 
company,  were  held  to  be  fairly  intended  as  part  of  the  stock,  from  the  way 
in  which  they  were  mentioned  in  the  inventories.  In  another  nearly  similar 
case,  the  same  inference  was  avoided,  the  partnership  not  being  of  a  perma- 
nent character,  but  a  momentary  joint  adventure  merely.  In  respect  to 
movables,  all  commodities  comprehended  within  the  partnership,  and  in 
possession  of  the  partner,  to  whom  they  previously  belonged,  are  held,  as 
by  traditio  brevis  manns,  to  be  vested  in  the  company ;  for  the  partners 
having  power  to  hold  for  the  company  as  prcspositi,  their  possession  will  be 
presumed  to  be  for  the  common  behoof.  But  money  due  by  a  third  party 
to  an  individual  partner,  or  commodities  in  the  hands  of  third  parties,  con- 
tributed by  the  owner  as  part  of  his  stock,  will  not  be  transferred  without 
delivery  or  intimation.  The  creditors  of  the  owner,  using  attachment  by 
diligence  before  intimation  of  the  partnership,  would  attain  a  preference 
over  the  company.  Ships  must  be  transferred  according  to  the  directions 
of  the  statute.  4.  As  to  land  and  other  property,  which,  by  the  forms  of 
territorial  conveyance,  require  to  be  transferred  by  deed,  the  partnership 
will  acquire  by  the  contract  nothing  more  than  the  jus  ad  rem.  If,  for 
example,  a  cotton-mill  is,  by  the  agreement,  contibuted  as  his  share  of  stock, 
on  the  part  of  the  owner,  this  will  not  feudally  transfer  to  the  company  the 
property  of  the  mill,  so  as  to  entitle  them  to  exclude  the  adjudication  of 
the  separate  creditors  of  the  projjrietor  trusting  to  the  record.  But  it  will, 
like  a  general  disposition,  confer  on  the  company  a  jus  ad  rem,  by  virtue  of 
which  they  may,  in  a  declarator  and  adjudication  in  implement,  have  that 
property  declared  and  adjudged  to  the  partners  jointly,  or  to  a  trustee,  as 
part  of  the  stock  of  the  concern.  5.  Such  personal  property  as  may  have 
been  acquired  in  the  name  of  the  society,  becomes  eo  ipso  the  property  of 
the  partnership,  although  purchased  by  an  individual  partner  with  his  own 
money.  He  is  prcepositus  of  the  company,  and  entitled  to  advance  money 
and  acquire  projierty  directly  for  the  common  behoof.  6.  Such  personal 
property  as  a  partner  acquires,  even  in  his  own  name,  provided  it  be  bene- 
ficial acquisition  and  in  the  company's  line  of  trade,  is,  according  to  the 
spirit  of  the  contract  of  partnership,  to  be  held  as  acquired  for  the  com- 
pany ;  and  the  company  will  be  entitled  to  claim  it.  But  it  would  rather 
seem,  that  in  such  a  case  the  property  would  pass  to  the  partner  in  real 
right,  with  a  jus  ad  rem  to  the  company  and  its  creditors.  7.  A  partner, 
who  binds  himself  to  pay  a  sum  or  fungible  into  the  stock,  is  debtor  to 
the  company ;  and  the  loss  of  the  money  or  fungible,  beibre  being  put  into 
stock,  is  his  private  loss.  If  he  has  engaged  to  put  in  a  specific  subject 
into  stock,  and  it  perish,  the  loss  is  to  the  company,  unless  the  partners  shall 


150  PARTNERSHIP.  [CHAP.  VI. 

particular  goods,  wares,  merchandise,  or  other  personal 
effects  belonging  to  the  partnership,  and  not  merely  of 

be  in  mora.'''  2  Bell,  Comm.  B.  7,  c.  1,  p.  613-615,  5th  ed.  Mr.  Chancel- 
lor Kent,  in  his  learned  Commentaries  (Vol.  3,  37-40),  has  discussed  the 
subject  at  large ;  and  after  referring  to  the  American  authorities,  which  are 
as  much  in  conflict  with  each  other  as  the  English,  he  e.xpresses  his  own 
opinion  to  be,  that  the  weight  of  authority  is,  that  equity  will  consider  the 
person,  in  whom  the  real  estate  is  vested,  as  trustee  for  the  whole  concern, 
and  the  property  will  be  entitled  to  be  distributed  as  personal  estate.  3  Kent, 
37-39  ;  and  the  authorities  cited  in  the  notes,  Id.  See  Gow  on  P.  c.  2,  p. 
32-35,  3d  ed. ;  Wats,  on  P.  c.  2,  p.  81-89,  2d  ed. ;  Gow  on  P.  Suppl.  1841, 
to  3d  ed.  c.  2,  §  1,  8-13. 

{Real  Estate  of  a  Partnership. — I.  The  interest  of  a  partnership 
in  real  estate  can  only  be  equitable.  The  legal  title  must  be  either  in  all 
the  partners  as  individuals,  or  in  one  or  more  of  them,  or  in  a  stranger. 
Coles  V.  Coles,  15  Johns.  159;  1  Am.  Lead.  Cas.  494,  4th  ed.  The 
holders  of  the  legal  title  may  be  either  joint-tenants  or  tenants  in  common, 
according  to  the  terms  of  the  conveyance  to  them.  JefFereys  v.  Small,  1  Vern. 
217;  Elliott  ?;.  Brown,  3  Swans.  489.  The  equitable  interest  of  a  partner  in 
real  estate  cannot  of  course  be  availed  of  in  ejectment.  Collins  v.  Warren, 
29  Mo.  236 ;  Lowe  v.  Alexander,  15  Cal.  296.  In  Moreau  v.  SafFarans, 
3  Sneed,  595,  it  was  held,  that  a  conveyance  to  J.  S.  &  Company  vested  the 
legal  title  in  J.  S.  On  the  partition  of  partnership  real  estate,  see  Greene  v. 
Graham,  5  Ohio,  264;  Patterson  v.  Blake,  12  Ind.  436.  See  also  Ensign 
V.  Briggs,  6  Gray,  329;  Whitman  v.  Boston  &  Maine  R.  R.  Co.,  3  All. 
133. 

II.  The  equitable  interest  of  a  partner  in  partnership  real  estate  is  the 
right  to  have  the  use  of  it,  the  right  to  have  it  employed,  if  necessary,  for 
the  payment  of  partnership  debts,  and  of  any  balance  due  him  from  his  copart- 
ners, and  after  such  payments,  a  share  in  it  proportional  to  his  interest  in 
the  partnership.  1  Am.  Lead.  Cas.  494,  4th  ed. ;  1  Lead.  Cas.  in  Eq. 
229,  230  [152-154],  240,  3d  Am.  ed.  and  cases  there  cited.  Thus,  though 
the  partners  are  at  law  joint-tenants,  there  will  be  no  jus  accrescendi  allowed 
in  equity.  Lake  v.  Craddock,  3  P.  Wm.  158.  If  one  of  the  partners  has 
a  one-third  interest  and  the  other  a  two-thirds  intei'est  in  the  partnership, 
they  will  have  that  same  proportionate  interest  at  equity  in  partnership 
lands,  though  the  lands  were  conveyed  to  them  in  equal  shares  as  tenants  in 
common.  Putnam  v.  Dobbins,  38  111.  394.  So  one  holding  the  legal  title 
to  partnership  real  estate,  cannot  be  compelled  in  equity  to  convey  a  moiety 
of  the  estate  to  his  copartner,  when  the  balance  of  accounts  is  against  the 
latter.     Williams  u.  Love,  2  Head,  81. 

III.  1.  As  in  all  cases  of  real  estate  held  on  trust,  one  who  purchases 
real  estate  ffrom  the  partner  having  the  legal  title,  with  notice  that  it  is 
partnership  property,  will  take  the  land  subject  to  the  equities  of  the  part- 
ners and  partnership  creditors  ;  but  a  purchaser  who  has  no  such  notice  will 


CHAP.  VI.]  PARTNERSHIP    PROPERTY.  151 

his  own  share  thereof,  for  purposes  within  the  scope  of 
the  partnership.^     In  respect  to  his  own  sluirc  thereof, 

take  the  land  discharged  of  such  equities.  1  Am.  Lead.  Cas.  497  4th  ed. ; 
1  Lead.  Cas.  in  Eq.  240,  3d  Am.  ed. ;  Hoxie  v.  Carr,  1  Sumn.  173 ;  Til- 
linghast  v.  Champliu,  4  R.  I.  173;  Frink  v.  Branch,  16  Conn.  260;  Buchan 
V.  Sumner,  2  Barb.  Ch.  165 ;  M'Dermot  v.  Laurence,  7  S.  «&  R.  438 ;  Mat- 
lack  V.  James,  2  Beasl.  126  ;  Forde  v.  Herron,  4  Munf.  316  ;  Divine  v. 
Mitchum,  4  B.  Mon.  488 ;  Buck  v.  Winn,  11  B.  Mon.  320 ;  Reeves  v.  Ayers, 
38  111.  418.     But  see  Treadwell  v.  Williams,  9  Bosw.  649. 

2.  So,  also,  as  in  other  trdsts,  partnership  equities  will  be  enforced 
against  the  heirs,  devisees,  or  widow  of  the  partner  who  held  the  legal  title. 
Burnside  v.  Merrick,  4  Met.  537  ;  Dyer  v.  Clark,  5  Met.  562 ;  Howard  v. 
Priest,  5  Met.  582;  Sumner  v.  Hampson,  8  Ohio,  328.  In  Smith  v.  Jack- 
son, 2  Edw.  Ch.  28,  the  claim  for  dower,  of  the  widow  of  a  deceased  partner 
who  held  the  legal  title  to  partnership  real  estate,  was  held  paramount  to 
the  equities  of  the  other  partners ;  but  this  decision  stands  alone,  and  finds 
no  support  in  the  other  cases.  But  though  the  claim  of  the  widow  for 
dower  must  yield  to  the  trust  for  the  partnership,  yet  if  the  land  is  purchased 
by  one  without  notice  of  the  partnership,  and  is  therefore  held  discharged 
of  the  trust,  the  right  of  the  vendor's  widow  to  dower  revives,  and  will  be 
enforced  against  the  purchaser.  Markham  v.  Merrett,  7  How.  Miss.  437. 
But  when  partnership  land  is  conveyed  for  a  partnership  debt,  the  party  to 
whom  it  is  conveyed  will  hold  it  free  from  any  claim  of  dower  by  the  widow 
of  one  of  the  partners.     Duhring  v.  Duhring,  20  Mo.  174. 

3.  Partnership  real  estate  will  be  held  bound  to  the  partnership  creditors 
in  preference  to  the  creditors  of  the  separate  partners.  1  Am.  Lead. 
Cas.  497,  498,  4th  ed. ;  1  Lead.  Cas.  in  Eq.  240,  3d  Am.  ed. ;  Crooker 
V.  Crooker,  46  Me.  250 ;  Jones  v.  Neale,  2  P.  &  H.  339.  At  law  the  sepa- 
rate creditor  will  not  be  postponed  to  a  partnership  creditor.  Blake  v. 
Nutter,  19  Me.  16.  See  Goodwin  v.  Richardson,  11  Mass.  469.  But  a 
separate  creditor  who  has  levied  at  law  will  hold  the  land  in  trust  for  the 
partnership.     Peck  v.  Fisher,  7  Cush.  386. 

In  Hale  v.  Henrie,  2  Watts,  143,  and  Ridgway's  Appeal,  15  Penn.  St. 
177,  it  was  held,  that  if  the  land  be  recorded  as  owned  by  A.  and  B.,  and 


1  Wats,  on  P.  c.  2,  p.  91-93,  2d  ed. ;  Gow  on  P.  c.  2,  §  2,  p.  51-54,  3d 
ed. ;  Coll.  on  P.  B.  3,  c.  1,  §  1,  p.  263-268,  2d  ed. ;  Id.  B.  2,  c.  1,  §  2,  p. 
113;  Fox  V.  Hanbury,  Cowp.  445;  3  Kent,  44;  [Woodward  v.  Cowing,  41 
Me.  9.]  Of  course  we  are  to  except  from  this  doctrine  all  cases,  where, 
although  the  property  originally  belonged  to  the  partnership,  it  has  become 
the  property  of  an  individual  partner  by  the  consent  of  the  firm ;  for  in  such 
cases,  the  property  is  to  all  intents  and  purposes  to  be  treated  as  the  private 
property  of  that  partner,  and  is  disposable  by  him  alone  accordingly  in  the 
same  manner,  as  if  it  never  had  belonged  to  the  partnersliip.  Coll.  on  P. 
B.  2,  c.  1,  §  2,  p.  113,  114,  2ded. 


152  PARTNERSHIP.  [cHAP.  VI. 

he  may  be  properly  deemed  to  do  all  acts  of  this  sort, 
as  owner ;  in  respect  to  the  shares  of  his  copartners,  he 

there  is  no  notice  on  record  that  A,  and  B.  are  partners,  a  separate  creditor 
of  A.  can  hold  A.'s  undivided  moiety  of  the  land  against  the  creditors  of 
the  partnership.  Contra,  Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  458. 
Hale  V.  Henrie  and  Ridgway's  Appeal  are  questioned,  and  it  would  seem 
with  reason,  in  1  Lead.  Cas.  in  Eq.  241,  3d  Am.  ed.,  as  contravening  the 
general  rule  that  creditors  can  take  only  the  equities  of  their  debtors. 

IV.  1.  A  partner  cannot,  of  course,  give  a  good  legal  title  to  that  part 
of  the  partnership  real  estate  in  which  he  has  only  an  equitable  interest. 
Dillon  V.  Brown,  11  Gray,  179;  Davis  v.  Christian,  15  Gratt.  11.  And  a 
purchaser  of  such  interest  takes  it  subject  to  all  equities,  though  unknown 
to  him.     Kramer  v.  Arthurs,  7  Penn.  St.  165. 

A  surviving  partner,  however,  has  authority  over  the  real  estate  of  the 
firm,  and  can  sell  it  for  partnership  debts  ;  and,  if  he  has  only  the  equitable 
interest,  equity  will  compel  the  heir  of  the  deceased  partner  to  convey  the 
legal  title.  Andrews'  Heirs  v.  Brown's  Administrators,  21  Ala.  437  ;  Del- 
monico  v.  Guillaume,  2  Sand.  Ch.  366 ;  Pierce's  Adm'r  v.  Trigg's  Heirs, 
10  Leigh,  406  ;  Galbraith  v.  Gedge,  16  B.  Mon.  631.  Though  the  purchaser 
is  not  obliged  to  see  to  the  application  of  the  purchase-money,  yet  if  he  is 
cognizant  that  the  action  of  the  surviving  partner  is  fraudulent,  he  will  not 
be  protected  in  his  purchase.  Tillinghast  v.  Champlin,  4  R.  I.  173 ;  Hol- 
land V.  Fuller,  13  Ind.  195  ;  Lang  v.  Waring,  25  Ala.  625.  In  Dujjuy  v. 
Leavenworth,  17  Cal.  262,  where  one  partner  had  absconded,  the  other 
partner  was  Jield  authorized  to  sell  the  partnership  real  estate,  and  a  bona 
fide  purchaser  from  him  could  compel  a  conveyance  from  one  who  had  pur- 
chased with  notice  from  the  absconding  partner.  See  Moran  v.  Palmer, 
13  Mich.  367. 

2.  Whether  a  conveyance  by  one  partner  of  the  real  estate  of  the 
partnership  for  a  firm  debt  without  the  assent  of  the  other  partners  is  valid 
is  a  question  which  arises  in  two  classes  of  cases  which  do  not  seem  suffi- 
ciently distinguished  in  the  books. 

First.  When  the  partner  has  the  legal  title  to  a  part  only  of  the  real 
estate,  as  when  he  is  tenant  in  common  with  his  copartners.  In  this  case  he 
can  convey  only  so  much  as  he  has  title  to,  for  the  legal  title  can  be  conveyed 
only  by  deed,  and  one  partner  cannot  bind  the  others  by  deed.  §  117-122 ; 
Dillon  V.  Brown,  11  Gray,  179;  Haynes  v.  Seachrest,  13  Iowa,  455.  The 
assent  of  the  other  partners  may  be  proved  to  have  been  given  before  the 
conveyance,  or  they  may  be  proved  to  have  ratified  it  afterward.  Juggee- 
wundas  Keeka  Shah  v.  Ramdas  Brijbooken  Das,  2  Moo.  Ind.  App.  487 ; 
Lowery  v.  Drew,  18  Tex.  786  (which  was  the  case  of  a  bond  for  a  deed)  ; 
Wilson  V.  Hunter,  14  Wis.  683. 

Secondly.  When  the  partner  has  the  legal  title  to  the  whole  estate. 
There  is  no  technical  obstacle  to  such  a  partner  conveying  the  title  to  a 
partnership  creditor,  and  the  only  objection  is  that  indicated  in  §  94  of  the 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.  153 

may  be  properly  deemed  to  do  such  acts,  as  their  agent, 
and  as  the  accredited  representative  of  the  firm.     The 

text  of  a  fundamental  difference  in  the  power  of  partners  over  real  and 
personal  estate.  In  spite  of  the  statement  in  the  text,  which  has  been  fol- 
lowed by  the  text-books  generally,  it  may  be  doubted  whether  this  distinc- 
tion exists.  The  authority  cited  in  the  text  is  Coles  v.  Coles,  15  Johns. 
159,  but  in  that  case  the  partners  were  at  law  tenants  in  common.  The 
other  cases  commonly  cited  in  support  of  this  doctrine  are  Anderson  v. 
Tompkins,  1  Brock.  456 ;  Tapley  v.  Butterfield,  1  Met.  515 ;  Dyer  v. 
Clark,  5  Met.  562  ;  Tillinghast  v.'  Champlin,  4  R.  1. 173  ;  but  none  of  these, 
when  examined,  will  be  found  to  decide  the  point.  In  Sharp  v.  Milligan,  22 
Beav.  606,  there  is  a  semhle  that  if  a  partnership  is  formed  for  no  fixed 
period,  a  partner  cannot  bind  the  firm  by  a  lease  for  twenty-one  years,  but 
the  remark  is  not  based  on  any  thing  in  the  peculiar  nature  of  real  estate. 
Lawrence  v.  Taylor,  5  Hill,  (N.  Y.)  107.  On  the  other  hand,  there  is  a 
dictum  in  Jones  v.  Neale,  2  P.  &  H.  339,  that  a  conveyance  by  a  partner 
having  the  legal  title  to  a  partnership  creditor  passes  the  property  to  the 
land  as  against  other  pai-tnership  creditors.  Mr.  Lindley  (Lind.  on  P. 
229)  says,  "  The  writer  is  not  aware  of  any  decision  in  which  an  equitable 
mortgage  made  by  one  partner  by  a  deposit  of  deeds  relating  to  partnership 
real  estate,  has  been  upheld,  or  the  contrary ;  he  can  therefore  only  venture 
to  submit,  that  such  a  mortgage  ought  to  be  held  valid  in  all  cases  in  which 
it  is  made  by  a  partner  having  an  implied  power  to  borrow  on  the  credit  of 
the  firm.  See  Ex  parte  Lloyd,  1  Mont.  &  Ayr.  494."  On  the  whole,  it  is 
submitted  that  the  rule  as  laid  down  in  the  text  is  co-extensive  only  with 
the  rule  that  one  partner  cannot  bind  another  by  deed,  and  that  an  attempt 
to  push  it  beyond  such  latter  rule  to  a  case  in  which  a  partner  having  the 
legal  title  to  partnership  property  sells  or  pledges  it  for  a  partnership  debt 
has  no  support  either  in  the  decided  cases  or  on  principle.  In  Moderwell 
V.  Mullison,  21  Penn.  St.  257,  259,  Woodward,  J.,  says  :  "  Partners  are  the 
agents  of  each  other  in  partnership  transactions ;  and  when  real  estate  is 
brought  into  the  partnership  business,  it  is  treated  in  equity  as  personal 
estate  ;  and  a  lease  of  it  by  one  partner  is  as  much  a  partnership  transaction, 
as  a  sale  of  partnership  goods  by  him  would  be." 

V.  The  chief  question  which  has  arisen  with  regard  to  partnership  real 
estate  is  to  determine  wlien  land  becomes  partnership  property. 

1.  Real  estate  2)tircJtased  ivith  partner shiiJ  funds. 

A.  Real  estate  purchased  by  the  partnership  funds  for  partnership  pur- 
poses is  partnership  property,  and  this  whether  the  legal  title  is  taken  in  the 
name  of  one  or  of  all  of  the  partners.  Lind.  on  P.  555 ;  1  Am.  Lead. 
Cas.  495,  4th  ed. ;  1  Lead.  Cas.  in  Eq.  231,  232  [155,  156],  3d  Am.  ed. ; 
Phillips  V.  Phillips,  1  i\Iyl.  &  K.  649 ;  Fereday  v.  Wightwick,  1  Russ.  & 
M.  45 ;  Townsend  v.  Devaynes,  1  Mont,  on  P.  App.  97  ;  Broom  r.  Broom, 
3  Myl.  &  K.  443  ;  Morris  v.  Kearsley,  2  You.  &  C.  Ex.  139  ;  Bligh  v.  Brent, 


154  PARTNERSHIP.  [CHAP.  VI. 

law,  however,  treats  each  partner,  without  any  nicety 
of  discrimination  of  this  sort,  as  possessing  a  dominion 

Id.  268;  Houghton  v.  Houghton,  11  Sim.  491 ;  Hoxie  v.  Carr,  1  Sumn.  173, 
181 ;  Burnside  v.  Merrick,  4  Met.  537  ;  Dyer  v.  Clark,  5  Met.  562 ;  How- 
ard V.  Priest,  5  Met.  582  ;  Crooker  v.  Crooker,  46  Me.  250  ;  Buffum  v.  Buf- 
fum,  49  Me.  108 ;  Jarvis  v.  Brooks,  7  Fost.  37 ;  Willis  v.  Freeman,  35  Vt. 
44;  Delmonico  v.  Guillaume,  2  Sand.  Ch.  366;  Buchan  v.  Sumner,  2  Barb. 
Ch.  165  ;  Smith  v.  Tarlton,  2  Barb.  Ch.  336  ;  Matlack  v.  James,  2  Beasl. 
126  ;  Baldwin  v.  Johnson,  Saxt.  Ch.  441  ;  Abbott's  Appeal,  50  Penn.  St. 
234;  Robertson  v.  Baker,  11  Fla.  192;  Greene  v.  Greene,  1  Ohio,  535; 
Matlock  V.  Matlock,  5  Ind.  403.  See  Fall  River  Whaling  Co.  v.  Borden, 
lOCush.  458;  Carlisle's  Adm'rs  v.  Mulhern,  19  Mo.  56.  In  Duhring  v. 
Duhring,  20  Mo.  174,  where  the  case  states  that  the  land  was  bought  with 
partnershijj  funds,  "  to  be  held  as  an  investment,"  until  the  firm  closed  busi- 
ness, the  land  was  held  to  be  partnership  property;  but  it  is  plain  from  the 
report  that  the  firm  occupied  part  of  the  premises,  and  that  the  main  use  of 
the  land  was  for  partnership  purjioses,  and  the  land  was  finally  sold  for  a 
partnership  debt. 

So  if  land  is  bought  with  partnership  funds  with  the  intention  of  using 
it  for  partnership  purposes,  though  in  fact  it  is  never  so  used,  it  is  partner- 
ship property.  Erwin's  Appeal,  39  Penn.  St.  535.  A  partnership  consisted 
of  four  members,  two  of  whom  were  dormant,  the  ostensible  partners 
bought  lands  to  be  used  in  the  partnership  business  in  their  own  name.  A 
small  part  only  of  the  price  was  paid  ;  but  what  little  was  paid  came  out  of 
the  partnership  funds.  The  partners,  (including  the  dormant  members) 
were  held  liable  for  the  remainder  of  the  purdhase-money.  Brooke  v. 
Washington,  8  Gratt.  248.  On  the  other  hand,  in  N.  Penn.  Coal  Co.'s  Ap- 
peal, 45  Penn.  St.  181,  land  was  bought  by  one  partner  in  his  own  name, 
and  he  gave  a  bond  and  mortgage  for  part  of  the  price,  the  remainder  of 
the  price  was  paid  out  of  the  partnership  funds,  and  the  land  was  used  in 
the  business  of  the  firm ;  yet,  on  the  ground  that  the  vendor  had  given 
credit  to  the  individual  partner,  the  firm  was  held  not  liable  for  the  unpaid 
purchase-money.  See  also  Pitts  v.  Waugh,  4  Mass.  424.  See  Forsyth  v. 
Clark,  3  Wend.  637  ;  Dewey  v.  Dewey,  35  Vt.  555 ;  Lacy  v.  Hall,  37  Penn. 
St.  360;  Boyers  v.  Elliott,  7  Hump.  204;  infra  2.  B. 

B.  Real  estate  purchased  with  partnership  funds,  but  not  for  partnership 
purposes,  is  presumed  to  belong  to  the  partners  in  proportion  to  their  in- 
terest in  the  partnership.  (In  New  York,  however,  it  is  otherwise,  implied 
trusts  having  been  abolished  by  statute.  Cox  v.  McBurney,  2  Sand.  561.) 
But  this  presumption  may  be  rebutted  ;  and  it  may  be  shown  that  the  real 
estate  belongs  to  the  partner  in  whose  name  the  legal  title  was  taken. 
Smith  V.  Smith,  5  Ves.  193.     See  Hunt  v.  Benson,  2  Humph.  459. 

Though  real  estate  purchased  with  partnership  funds,  but  not  for  part- 
nership purposes,  belongs  to  the  partners,  in  the  absence  of  evidence  to 


CHAP.  VI.]  PARTNERSHIP    PROPERTY.  155 

over  the  entirety  of  the  property,  and  not  merely  over 
his  own  share,  and,  therefore,  as  clothed  with  all  the  or- 

the  contrary,  yet  it  seems  to  be  tlie  better  opinion  that  the  land  lielongs  to 
the  partners  separately,  and  not  to  the  partnership.  Wooldridge  v.  Wil- 
kins,  3  How.  Miss.  360. 

There  are  dicta  to  the  same  effect  in  Bell  v.  Phyn,  7  Ves.  453;  Randall 
V.  Randall,  7  Sim.  271  ;  Sigourney  v.  Munn,  7  Conn.  11  ;  Coder  v.  Haling, 
27  Penn.  St.  84,  Lind.  on  P.  552 ;  Am.  1  Lead.  Cas.  495,  4th  ed. ;  1 
Lead.  Cas.  in  Eq.  235,  236,  [159-162],  241,  3d  Am.  ed.  On  the  other 
hand,  in  Galbraith  v.  Gedge,  16  B.  Mon,  631,  land  purchased  with  partner- 
ship funds,  though  there  was  no  evidence  that  it  was  bought  for  sale,  and 
though  apparently  it  was  not  used  for  partnership  purposes,  was  considered 
as  partnership  property  ;  and  in  Buck  v.  Winn,  11  B.  Mon.  320,  it  is  said 
that  land  bought  with  partnership  funds,  not  for  the  firm  use,  but  as  a  specu- 
lation, or  a  safe  investment,  is  partnership  property.  In  Sumner  v.  Hamp- 
son,  8  Ohio,  328,  and  Andrews'  Heirs  v.  Brown's  Adm'r,  21  Ala.  437, 
it  does  not  appear  whether  the  land  was  used  for  partnership  purposes  or 
not. 

In  Fall  River  ^Vhaling  Co.  v.  Borden,  10  Cush.  458,  467,  470,  lands  were 
purchased  by  partners,  and  the  deed  taken  to  them  as  tenants  in  common. 
"  The  cost  of  the  purchase  went  into  the  partnership  accounts.  The  estates 
were  entered  into  the  company  books  as  company  property.  As  portions 
were  sold  for  profit,  from  time  to  time,  the  proceeds  were  merged  in  the 
general  funds  of  the  copartnership.  These  lands  were  avowedly  purchased 
for  speculation."  It  was  held,  that  the  lands  were  partnership  property. 
The  court  say :  "In  order  to  affect  lands  with  partnership  equities,  it  is  not 
necessary  that  such  land  should  be  the  incident  merely  of  a  commercial 
partnership ;  but  it  may  be  in  part,  at  least,  the  distinct  substratum  of  a  co- 
partnership." See  Hoxie  v.  Carr,  1  Sumn.  173 ;  Dilworth  v.  Mayfield,  36 
Miss.  40. 

When  land  is  bought  by  a  commercial  partnei-ship  from  partnership  funds 
for  the  purpose  of  selling  to  pay  firm  debts,  it  is  partnership  property.  Ileii's 
of  Pugh  V.  Currie,  5  Ala.  446.  And  when  land  is  taken  for  a  partnership  debt, 
it  becomes  partnership  property,  though  it  be  not  used  in  partnership  business. 
Buchan  v.  Sumner,  2  Barb.  Ch.  165  ;  Collumb  v.  Read,  24  N.  Y.  505  ;  Put- 
nam V.  Dobbins,  38  111.  394.  See  Moran  v.  Palmer,  13  Mich.  367.  Contra, 
Goodwin  v.  Richardson,  11  Mass.  469.  But  this  last  case  seems  partly- 
based  on  a  State  statute,  and  was  a  decision  at  law.  See  the  comments  of 
Story,  J.,  in  Hoxie  v.  Carr,  1  Suran.  173,  185. 

2.     Heal  estate  not  purchased  icith  part  nershijJ  funds. 

A.  A  partnership  may  be  formed  by  an  oral  agreement ;  and  though 
the  Statute  of  Frauds  requires  that  an  agreement  concerning  land  should  be 
in  writing,  yet  if  the  existence  of  a  partnership  be  once  proved,  whether  by 
writing  or  by  parol,  and  the  fact  that  land  has  been  purchased  by  partner- 


156  PARTNERSHIP.  [CHAP.  VI. 

dinary  attributes  of  ownership.^  This  doctrine,  indeed, 
seems  indispensable  to  the  security  and  convenience  of 

ship  funds  be  also  proved,  whether  by  writing  or  parol,  then  a  trust  for  the 
partnership  attaches  to  such  land,  because  it  comes  within  the  general  class 
of  implied  trusts,  which  it  has  long  been  settled  (whether  wisely  or  not  it 
would  be  now  vain  to  inquire)  are  excepted  out  of  the  statute. 

But  in  those  cases  in  which  the  purchase  is  not  made  from  partnership 
funds,  and  there  is  therefore  no  resulting  trust,  it  becomes  important  to 
consider  the  effect  of  the  Statute  of  Frauds. 

If  a  partnership  is  formed  under  written  articles  which  provide  for  the 
purchase  of  land,  it  may  be  shown  by  parol  evidence  that  land  standing  in 
the  name  of  one  of  the  pai'tners  was  bought  for  partnership  purposes,  and 
was  partnership  property.  Frederick  v.  Cooper,  3  Iowa,  171.  And  in 
Fall  River  Whaling  Co.  v.  Borden,  10  Cush.  458,  it  is  said  that  if  a  part- 
nership be  proved  to  exist  by  any  memorandum  in  writing,  or  by  books 
or  other  written  transactions,  a  partnership  trust  will  attach  to  land 
treated  as  partnership  property ;  but  in  this  case  it  would  seem  that  the 
land  was  purchased  with  partnership  funds,  and  therefore  came  within  the 
general  class  of  resulting  trusts.  Though  a  partnership  for  the  purchase 
and  sale  of  lands  must  be  evidenced  originally  by  writing,  yet  the  fact  of 
the  substitution  of  two  partners  in  the  place  of  two  of  the  original  partners 
may  be  proved  by  parol.  Rowland  v.  Boozer,  10  Ala.  690.  In  Bird  v. 
Morrison,  12  Wis.  138,  the  question  is  very  fully  discussed,  and  the  court 
conclude  that  whatever  may  be  the  law  where  the  alleged  partners  are 
tenants  in  common  of  the  land,  or  where  the  land  is  an  incident  to  the  part- 
nership, yet  that  a  partnership,  to  consist  in  dealings  in  real  estate,  cannot 
be  proved  by  oi-al  evidence  so  as  to  affect  lands  purchased  by  one  of  the 
alleged  partners  in  his  own  name,  even  though  the  alleged  partners  are,  in 
fact,  partners  in  a  commercial  partnership  under  written  articles.  In  Fowler 
V.  BaiUey,  14  Wis.  125,  it  does  not  appear  whether  the  partnership  was 


'  3  Kent,  44.  —  Mr.  Chancellor  Kent  here  says :  "  With  respect  to  the 
power  of  each  partner  over  the  partnership  property,  it  is  settled  that  each  one, 
in  ordinary  cases,  and  in  the  absence  of  fraud  on  the  part  of  the  purchaser, 
has  the  complete  jus  disponendi  of  the  whole  jDartnership  interests,  and  is 
considered  to  be  the  authorized  agent  of  the  firm.  He  can  sell  the  effects,  or 
compound  or  discharge  the  partnerehip  debts.  This  power  results  fi-om  the 
nature  of  the  business,  and  is  indispensable  to  the  safety  of  the  public,  and  the 
successful  operations  of  the  partnership.  A  like  power  in  each  partner  exists 
in  respect  to  purchases  on  joint  account ;  and  it  is  no  matter  ynih  what  frau- 
dulent views  the  goods  were  purchased,  or  to  what  purposes  they  are  applied 
by  the  purchasing  partner,  if  the  seller  be  clear  of  the  imputation  of  collusion. 
A  sale  to  one  partner,  in  a  case  within  the  scope  and  course  of  the  partner- 
ship business,  is,  in  judgment  of  law,  a  sale  to  the  partnershiji." 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.  157 

the  public,  as  well  as  to  the  facility  of  transacting  com- 
mercial business.     But  in  respect  to  real  estate  a  difFcr- 

formed  by  written  articles ;  the  question  of  the  application  of  the  Statute  of 
Frauds  was  not  raised. 

The  cases  of  Forster  v.  Hale,  3  Ves.  696  ;  s.  c.  5  Ves.  308,  and  Dale  v. 
Hamilton,  5  Hare,  369  ;  s.  c.  2  Ph.  266,  are  commonly  cited  as  authorities  to 
prove  that  lands  may  be  affected  with  a  trust  in  favor  of  a  partnership, 
though  the  partnership  was  formed  by  parol,  and  the  land  was  not  purchased 
with  partnership  funds.  But  in  Forster  v.  Hale,  the  case  was  decided  both 
by  the  Master  of  the  Rolls  and  on  appeal,  on  the  ground  that  there  was  a 
written  declaration  of  trust.  Lord  Chancellor  Loughborough  says  (5  Ves. 
314)  :  "  The  case  appears  proved  in  the  strictest  manner  by  the  written  evi- 
dence ;  "  it  would  seem,  also,  that  the  court  was  of  opinion  that  the  purchase 
was  made  out  of  the  partnership  funds.  Dale  v.  Hamilton,  it  is  true,  was 
decided  by  Vice-Chancellor  Wigram  (5  Hare,  369),  without  regard  to  the 
fact  that  there  was  a  written  memorandum  ;  but  Lord  Chancellor  Cotten- 
ham,  on  appeal,  made  a  decree  in  favor  of  the  plaintiff,  distinctly  on  the  sole 
ground  of  the  existence  of  a  written  memorandum  (2  Ph.  266)  ;  and  the 
Vice-Chancellor's  judgment  in  Dale  v.  Hamilton,  5  Hare,  369,  must  be  con- 
sidered as  weakened,  if  not  overruled,  by  the  case  of  Caddick  v.  Skidmore, 
2  De  G.  &  J.  52.  The  marginal  note  in  this  case  is  as  follows  :  "  An  agree- 
ment between  A.,  a  lessee  of  a  mine,  and  B.  to  become  partners  in  the 
mine,  paying  the  reserved  rent,  subletting  the  mine  at  a  royalty,  and  dividing 
the  proceeds.  Held,  to  be  within  the  Statute  of  Frauds,  and  not  sufficiently 
proved  by  a  receipt  signed  by  A.  and  given  to  B.  for  a  sum  as  B.'s  share  of 
the  head-rent  of  the  mine,  the  sum  being  exactly  half  of  that  rent." 

In  Henderson  v.  Hudson,  1  Munf.  510,  an  agreement  to  form  a  partner- 
ship, for  the  purpose  of  purchasing  land,  was  held  within  the  statute,  and  it 
was  so  held  by  Judge  Story,  in  a  very  well-considered  case.  Smith  v.  Burn- 
ham,  3  Sumn.  435,  Pitts  v.  Waugh,  4  Mass.  424 ;  In  re  Warren,  Davies, 
320;  Deloney  v.  Hutcheson,  2  Rand,  183.  See  Bird  v.  Morrison,  12  Wis. 
138  ;  Fall  River  Whaling  River  Co.  v.  Borden,  10  Cush.  458.  In  this  last 
case  the  court  say:  "The  cost  of  the  purchase  went  into  the  partnership 
account,"  which  would  seem  to  mean  that  the  purchase  was  made  with  part- 
nership funds. 

The  only  American  cases  in  which  lands  have  been  allowed  to  be  affected 
with  a  partnership  trust,  when  neither  was  the  existence  of  the  partnership 
evidenced  by  writing,  nor  the  lands  purchased  with  partnership  funds,  seem 
to  be  Dilworth  v.  Mayfield,  36  Miss.  40,  and  Hanff  v.  Howard,  3  Jones, 
Eq.  440 ;  and  in  the  former  of  these  cases  no  (piestion  as  to  the  Statute  of 
Frauds  was  raised.  In  Black  v.  Black,  15  Ga.  445,  it  was  held,  that  an 
agreement  between  a  partnership  and  a  stranger,  that  the  latter  should  have 
an  interest  in  the  profits  arising  from  the  sale  of  the  partnership  lands  was 
within  the  Statute  of  Frauds.  If  A.  and  B.,  who  are  in  partnership  as 
attorneys,  agree  by  parol  to  engage  in  the  business  of  buying  lauds,  though 


158  PARTNERSHIP.  [cHAP.  VI. 

ent  rule  prevails,  founded  upon  the  nature  of  the  prop- 
erty and  the  provisions  of  the  common  law  applicable 

such  agreement  may  be  void  as  between  themselves,  yet  the  holders  of  a 
note  signed  by  them  both,  and  given  in  the  course  of  such  business,  are 
entitled  to  proceed  against  the  partnership  assets  in  preference  to  the  sep- 
arate creditors.     In  re  Warren,  Davies,  320. 

B.  Real  estate  not  purchased  with  partnership  funds  will  of  course 
become  converted  into  partnership  j^roperty  by  express  agreement.  When 
there  is  no  express  agreement,  Mr.  Lindley  (Lind.  on  P.  555)  sums  up  the 
rule  as  follows :  "It  seems  that  land  acquired,  whether  gratuitously  or  not, 
for  the  purpose  of  carrying  on  a  jjartnership  business,  and  used  for  that 
purpose,  is  to  be  considered  as  property  of  the  partnership ;  but  that  land 
which  is  not  so  acquired,  but  which,  belonging  to  s&veral  persons  jointly  or 
in  common,  is  employed  by  them  for  their  common  profit,  does  not  become 
partnership  property  unless  there  is  some  evidence  to  show  that  it  has  been 
treated  by  them  as  ancillary  to  their  partnership  business,  and  as  part  of  the 
common  stock  of  the  firm."  Crawshayu.  Maule,  1  Swans.  495,  522  ;  Roberts 
V.  Eberhardt,  Kay.  148  ;  Morris  v.  Barrett,  3  You.  &  J.  384 ;  Brown  v.  Oak- 
shot,  24  Beav.  254;  Phillips  v.  Phillips,  1  Myl.  &  K.  649  ;  s.  c.  Bisset  on  P. 
50  ;  Jackson  v.  Jackson,  7  Ves.  535,  s.  c.  9  Ves.  591 ;  Fereday  i\  Wightwick, 
Taml.  250;  Essex  v.  Essex,  20  Beav.  442.  See  also,  Caddick  v.  Skidmore, 
2  De  G.  &  J.  52 ;  Burdon  v.  Barkus,  2  Giff.  412.  The  American  cases 
hold  generally  that  real  estate  not  purchased  with  partnership  funds  does 
not  become  partnership  property,  though  used  for  partnership  purposes 
unless  there  is  some  agreement  that  it  shall  be  so  considered,  1  Am.  Lead. 
Cas.  496,  4th  ed.  Wheatley's  Heirs  v.  Calhoun,  12  Leigh,  264 ;  Frink  v. 
Branch,  16  Conn.  260;  See  Divine  v.  Mitchum,  4  B.  Mon.  488;  Owens  v. 
Collins,  23  Ala.  837.  In  Boyers  v.  Elliott,  7  Humph.  204,  and  Fall  River 
Whaling  Co.  v.  Borden,  10  Cush.  458,  the  land  seems  to  have  been  pur- 
chased with  partnei'ship  funds.  See  Pitts  v.  Waugh,  4  Mass.  424.  In 
Forsyth  v.  Clark,  3  Wend.  637,  it  was  held,  that  land  did  not  become  part- 
nership property,  though  jiartnershij)  funds  were  employed  by  a  ^sartner  in 
its  purchase,  if  it  was  not  agreed  at  the  time  of  the  purchase,  that  it  should 
be  made  with  j^artnei'ship  funds  ;  but  in  Dewey  v.  Dewey,  35  Vt.  555,  where 
land  was  purchased  by  one  partner  for  partnership  use,  and  was  so  used  ibr 
twenty-six  years,  the  fact  that  the  partner  purchasing  took  the  title  in  his  own 
name,  and  gave  his  individual  note  for  the  amount,  without  the  knowledge 
of  the  other  partner,  the  note  being  j^aid  out  of  partnershiji  i'unds,  did  not 
prevent  a  resulting  trust  arising  for  the  other  partner  in  a  moiety  of  the 
land ;  and  in  Lacy  v.  Hall,  37  Penn.  St.  360,  where  one  of  two  partners, 
acting  as  the  financial  member  of  the  firm,  purchased  land  to  promote  the 
partnership  business,  though  the  purchase  was  made  in  his  own  name,  and 
with  his  own  money,  and  where  the  firm  afterwards  expended  money  and 
made  valuable  improvements  on  the  land,  the  purchase  was  held  that  of 
the  firm,  and  enured  to  its  benefit. 


CHAP.  VI. J  PARTNERSHIP    PROPERTY.  159 

thereto.     Each  partner  is  required,  both  at  law  and  in 
equity,  to  join  in  every  conveyance   of  real   estate,  in 

VI.  Real  estate  which  has  once  been  partnership  proj)erty  niav  by 
agreement  he  changed  into  separate  property.  Rowley  v.  Adams,  7  Beav. 
548,  1  Lead.  Cas.  in  Eq.  237,  [162],  3d  Am.  ed. 

VII.  The  remaining  question  on  the  subject  is  whether  the  property  of 
a  partner  in  partnership  land  is  real  or  personal  estate.  If  it  is  the  former, 
it  is  liable  to  dower,  and  goes,  on  the  partner's  decease,  to  his  heir ;  if  the 
latter,  it  is  free  from  dower,  and  goes  to  his  personal  representatives.  The 
question  is  complicated  in  the  cases  with  that  previously  discussed,  viz. 
whether  the  real  estate  has  become  pai*tnership  property  ;  if  it  has  not,  there 
can  be  no  question  that  it  is  liable  to  all  the  incidents,  and  has  all  the  qual- 
ities of  real  estate.  The  cases  in  England  are  conflicting;  but  the  result  is 
well  summed  by  Mr.  Lindley  in  the  following  passage.     (Lind.  on  P.  565.) 

"  If  a  share  of  a  partner  is  nothing  more  than  his  proportion  of  the  part- 
nership assets  after  they  have  been  turned  into  money  and  applied  in  liqui- 
dation of  the  partnership  debts,  it  necessarily  follows  that  in  equity,  a  share 
in  a  partnership,  whether  its  property  consists  of  land  or  not,  must,  as 
between  the  real  and  personal  representatives  of  a  deceased  partner,  be 
deemed  to  be  personal  and  not  real  estate.  And  although  the  decisions 
upon  this  point  are  conflicting,  the  authorities  which  are  in  favor  of  the 
above  conclusion  certainly  preponderate  over  the  others.  Tliornton  v. 
Dixon,  3  Bro.  Ch.  199  ;  Bell  r.  Phyn,  7  Ves.  453 ;  Randall  v.  Randall, 
7  Sim.  271  ;  Cookson  v.  Cookson,  8  Sim.  529,  are  all  cases  in  which  part- 
nership realty  was  treated  as  realty.  On  the  other  hand,  Ripley  v.  Water- 
worth,  7  Ves.  425 ;  Townsend  v.  Devaynes,  1  Mont,  on  P.  note  2a.  Appx. 
p.  97  ;  Phillips  v.  Phillips,  1  Myl.  &  K.  649  ;  Broom  v.  Broom,  3  Myl.  &  K. 
443 ;  Morris  v.  Kearsley,  2  You.  &  C.  Ex.  139 ;  Houghton  v.  Houghton, 
11  Sim.  491  ;  Essex  v.  Essex,  20  Beav.  442,  and  Darby  v.  Darby,.  3  Drew, 
495;  Holroyd  v.  Holroyd,  7  Weekly  Rep.  426,  all  support  the  statement 
in  the  text. 

"In  Thornton  v.  Dixon,  3  Bro.  Ch.  199,  the  court  recognized  the  rule, 
that  partnersliip  property  must  be  considered  as  personal  estate  ;  but  held, 
that  the  lands  which  Avere  there  in  question  could  not  be  so  considered,  as 
they  had  been  conveyed  to  all  the  partners  in  connnon,  and  there  was  no 
agreement  for  a  sale. 

"  In  Bell  V.  Phyn,  7  Ves.  453,  partners  in  trade  purchased,  with  the  funds 
of  the  firm,  a  share  in  a  plantation,  and  kept  the  accounts  relating  to  the 
estate  in  the  partnership  books  ;  and  it  was  held,  upon  the  authority  of  the 
last  case,  that,  assuming  the  land  to  have  become  partnershij)  2>roi)erty,  it 
ought  not  to  be  regarded  as  personal  estate. 

"  In  Randall  v.  Randall,  7  Sim.  271,  the  partners  were  farmers,  maltsters, 
and  biscuit  makers.  They  bouglit  land  for  the  farming  business,  and  it  was 
held,  that,  as  it  was  not  acquired  for  the  purpose  of  any  partnersliip  in  trade, 
the  land  could  not  be  treated  as  personalty. 


160  PARTNERSHIP.  [CHAP.  VI. 

order  to  pass  the  entirety  thereof  to  the  grantee ;  and 
if  one   partner  only  executes  it,  whether  it  be  in  his 

"  In  Cookson  v.  Cookson,  8  Sim.  529,  a  father,  who  was  seised  in  fee  of 
land  on  which  he  carried  on  business  as  a  bottle  manufacturer,  took  his  son 
into  partnership,  and  conveyed  a  share  in  the  land  to  him.  The  land  was 
declared  by  the  articles  of  partnership  to  be  partnership  property.  But  on 
the  death  of  the  flither,  it  was  held,  that  his  share  in  the  land  was  to  be 
treated  as  real  estate,  no  sale  being  required  for  the  payment  of  the  part- 
nership debts,  or  for  any  other  purpose. 

"  These  are  the  cases  which  militate  against  the  rule  under  discussion. 
The  following  are  those  which  support  it :  — 

"  In  Ripley  v.  Waterworth,  7  Ves.  425,  partnership  land  was  conveyed  to 
trustees  upon  trust,  upon  a  dissolution  of  the  partnership,  to  sell  and  pay 
the  partnership  debts,  and  divide  the  residue  of  the  money  arising  from  the 
sale  amongst  the  partners ;  and  it  was  held,  upon  the  death  of  one  of  them, 
that  his  share  in  the  land  was  personal  estate,  although  the  land  was  not  in 
fact  sold,  and  the  deceased's  share  in  it  was  purchased  by  the  surviving  part- 
ners, under  a  clause  enabling  them  so  to  do,  and  contained  in  the  convey- 
ance to  the  trustees. 

"In  Townsend  v.  Devaynes,  1  Mont,  on  P.  note  2a.  Appx.  p.  97;  see 
too,  11  Sim.  498,  note ;  two  persons  in  partnership  as  paper  makers,  pur- 
chased paper-mills  for  the  use  of  the  firm,  and  paid  for  them  out  of  its  funds. 
It  was  agreed  that,  on  the  death  of  either,  the  survivor  should  have  the  op- 
tion of  purchasing  his  share.  One  of  the  partners  died,  and  his  share  was 
purchased  by  the  survivor.  It  was  held,  that  the  whole  of  the  purchase 
money  formed  part  of  the  personal  estate  of  the  deceased,  although  most 
of  the  money  was  paid  in  respect  of  the  interest  of  the  deceased  in  the 
mills. 

"  In  Phillips  V.  Phillips,  1  Myl.  &  K.  649,  two  persons  in  partnership 
as  brewers  purchased  public  houses  for  the  purposes  of  their  trade, 
and  had  them  conveyed  to  both  in  fee.  On  the  death  of  one  of  them, 
it  was  held,  that  his  share  in  the  houses  was  to  be  treated  as  personal 
estate. 

"  Broom  v.  Broom,  3  Myl.  &  K.  443,  is  a  decision  to  the  same  effect  as  the 
last,  and  decided  on  its  authority. 

"  In  Morris  v.  Kearsley,  2  You.  &  C  Ex.  139.  A  partnership  of  brewers 
was  possessed  of  real  estate  conveyed  partly  to  the  partners  as  tenants  in 
common,  and  partly  to  one  or  more  of  the  partners,  in  trust  for  the  firm ; 
and  it  was  decided  that  the  several  lands,  hereditaments,  and  premises 
belonging  to  the  partnership,  ought  to  be  considered  as  personal  estate. 
The  report  does  not  state  how,  when,  or  for  what  purpose,  the  property 
was  originally  acquired. 

"  In  Houghton  v.  Houghton,  11  Sim.  491,  two  brothers,  A.  and  B.,  were 
partners  as  soap  boilers.  They  purchased  land  for  the  purposes  of  their 
trade,  took  a  conveyance  to  themselves  as  tenants  in  common,  and  mort- 


CHAP.  VI.]       PARTNERSHIP  PROPERTY.  161 

osvn  name,  or  in  that  of  the  firm,  the  deed  will  not 
ordinarily  convey  any  more  than  his  own .  share  or  in- 
terest therein.^ 

gaged  the  land  for  the  purchase  money.  They  then  built  on  the  land,  in- 
sured the  buildings,  and  paid  the  expenses  and  the  intei-est  of  the  mortgage 
debt  out  of  the  partnership  funds.  A.  died  intestate,  and  B.  took  another 
brother,  C,  into  partnership.  B.  and  C.  paid  off  the  mortgage,  and  took  a 
reconveyance  to  themselves  as  joint  tenants  in  fee,  and  expended  money  in 
building  and  insurance,  defraying  the  expense,  as  Avell  as  providing  the  mort- 
gage money,  out  of  the  funds  of  the  partnership.  On  B.'s  death  it  was  held 
that  the  land  and  buildings  had  clearly  become  partnership  property,  and 
that  it  ought,  therefore,  to  be  treated  as  personal  estate. 

"  In  Darby  r.  Darby,  3  Drew,  495,  two  brothers  embarked  in  joint  specu- 
lations in  land.  Their  scheme  was  to  buy  land,  convert  it  into  building  sites, 
and  then  sell  it  at  a  protit.  This  was  done  on  several  occasions,  the  land 
being  generally  conveyed  to  one  of  them  only.  On  the  death  of  that  one, 
it  was  held  that  his  interest  in  all  the  land  bought  by  both,  and  still  unsold, 
was  personal  and  not  real  estate. 

"  In  Essex  v.  Essex,  20  Beav.  442,  two  brothers  were,  under  the  will  of 
their  lather,  seized  of  freehold  lands.  They  agreed  to  become  partners  as 
curriers  and  tanners  for  fourteen  years,  and  to  carry  on  their  business  on 
those  lands.  It  Avas  stipulated  that  if  either  died  during  the  copartnership 
term,  the  other  should  take  his  share  in  the  freeholds,  and  that  the  entirety 
thereof,  including  the  plant  and  tan-pits,  should  be  valued  at  £5,000.  The 
fourteen  yeai's  expired,  but  the  partnership  was  continued  as  before.  On 
the  death  of  one  of  th^partners,  it  was  held  that  his  share  in  the  freeholds 
was  to  be  regarded  as  personal  estate. 

"  There  are  also  various  dicta  of  Lord  Eldon  in  favor  of  the  broad  principle 
that  partnership  property  is  to  be  regarded  as  personal  and  not  as  real  estate. 
See  the  judgment  of  V.  C.  Kindersley,  in  Darby  ».  Darby,  3  Drew,  498,  &c. 

"  Upon  the  whole,  therefore,  it  is  submitted  :  —  1.  That,  notwithstanding 
Thornton  v.  Dixon,  Bell  v.  Phyn,  and  Randall  v.  Randall,  the  true  rule  is, 
as  stated  by  the  vice-chancellor,  Kindersley,  in  Darby  v.  Darby,  3  Drew, 
506,  '  that  whenever  a  partnership  purchase  real  estate  for  the  partnership 
purposes,  and  with  the  partnership  funds,  it  is,  as  between  the  real  and  per- 
sonal representatives  of  the  partners,  personal  estate.'  See,  in  addition  to 
the  cases  referred  to  above,  Holroyd  v.  Holroyd,  7  Weekly  Rep.  426. 

"  2.  That,  notwithstanding  Cookson  y.Cookson,  no  satisfactory  distinction, 
Avith  reference  to  the  question  of  conversion,  can  be  drawn  between  land 
purchased  with  partnership  moneys,  and  land  acquired  in  any  other  way. 
See  per  Lord  Eldon,  in  Jackson  v.  Jackson,  9  Ves.  593  :  '  It  is  very  diflicult 
to  make  a  distinction  between  a  joint  tenancy  by  will,  by  a  gratuitous  deed. 


^  Coles  V.  Coles,  15  Johns.  15!i,  IGl  ;  [Jackson  v.  Stanford,  19  Geo.  14]; 
ante,  §  93,  note. 


11 


162  PARTNERSHIP.  [CHAP.  VI. 

§  95.  The  Roman  law  does  not  seem,  ordinarily,  to 
have    conferred    upon    partners    the    same    extensive 

or  a  purchase,  the  law  of  merchants,  if  it  applies  to  one,  must  apply  to 
all ; '  and  that  the  question  of  conversion,  like  the  question  of  survivorship, 
turns  only  on  whether  the  land  is  or  is  not  to  be  deemed  property  of  the 
firm  in  the  true  sense  of  that  expression. 

"  If,  indeed,  the  property  is  not  partnership  property  in  the  true  sense  of 
the  phrase  {i.  e.  the  property  of  the  firm,  or,  in  other  words,  of  all  the  part- 
ners, as  such),  the  rule  has  no  application.  Therefore,  in  a  case  where  two 
out  of  three  partners  were  owners  of  land  occupied  by  the  firm,  and  for 
which  the  fii'm  paid  a  rent,  and  the  land  was  in  fact  kept  distinct  from  the 
joint  property  of  the  three  pai-tners,  it  was  properly  held,  on  the  death  of 
one  of  the  two  partners  to  whom  the  rent  was  paid,  that  his  interest  in 
the  land  was  not  to  be  considered  as  personal,  but  as  real  estate.  Rowley 
V.  Adams,  7  Beav.  548;  Balmain  v.  Shore,  9  Ves.  500;  see,  too,  Phillips  v. 
Phillips,  ante.  So,  if  land  belongs  to  all  the  partners  as  tenants  in 
common,  but  not  as  partners,  and  that  land  is  used  by  them  for  partnership 
pui'poses,  but  is  nevertheless  intended  to  remain  vested  in  them  as  tenants 
in  common,  and  not  to  form  part  of  the  assets  of  the  firm,  the  share  of  each 
partner  will  be  real  and  not  personal  estate.  In  the  case  now  supposed, 
co-owners  of  land  are  partners :  but  the  co-ownership  continues  unaffected  by 
the  partnership.  But  it  is  not  possible  on  this  ground  to  uphold  Thornton 
V.  Dixon,  Bell  v.  Phyn,  Randall  v.  Randall,  and  Cookson  v.  Cookson.  In 
each  of  these  four  cases  the  land  had  become  part  of  the  assets  of  the  firm, 
or  it  had  not ;  if  it  had,  these  four  cases  are  in  direct  conflict  with  those 
which  have  just  been  alluded  to ;  whilst,  if  it  had  not,  they  are  in  no  less 
direct  conflict  with  other  cases  which  are  authorities  on  the  question  what  is 
and  what  is  not  property  of  the  firm.  The  doctrine  of  conversion  which  has 
just  been  considered,  merely  amounts  to  this,  that  on  the  death  of  a  partner, 
his  share  in  the  partnership  is,  as  between  his  real  and  personal  representa- 
tives, to  be  treated  in  equity  as  money  and  not  as  land.  The  crown  cannot 
avail  itself  of  the  doctrine,  and  require  probate  duty  to  be  paid,  upon  the 
assumption  that  the  share  of  the  deceased  actually  consisted  of  money. 
Custance  v.  Bradshaw,  4  Hare,  315.  And  if  the  shares  of  the  partners  in 
partnership  realty  are  of  sufficient  value,  they  are  not  precluded  by  the 
doctrine  in  question  from  voting  in  respect  of  those  shares  at  elections  for 
members  of  Parliament.  Baxter  v.  Brown,  7  Man.  &  Gr.  198.  See,  too, 
Rogers  v.  Harvey,  5  C.  B.  N.  s.  3."     But  see  23  Law  Mag.  98. 

The  subject  has  been  often  alluded  to  in  the  American  courts,  and  the 
books  are  full  of  dicta  on  the  matter ;  but  there  seem  to  be  but  few  cases  in 
which  the  point  has  arisen  directly  for  decision  between  the  widow  or  heirs 
on  one  side,  and  the  personal  representatives  on  the  other.  In  several  of 
the  cases  where  the  widow's  claim  for  dower  has  been  allowed,  the  case 
seems  to  have  turned  not  on  the  point  that  partnership  land  was  to  be  re- 
garded as  real  estate  as  between  the  widow  and  next  of  kin,  but  on  the 


CHAP.  VI.]       PARTNERSHIP  PROPERTY.  1G3 

powers  and  mutual  rights  over  the  disposition  of  the 
partnership  property,  as  is  given  by  the  common  law, 

point  that  the  real  estate  in  question  never  became  partnership  property. 
Wooldridge  v.  Wilkins,  3  How.  Miss.  360 ;  Markham  v.  Merrett,  7  How. 
Miss.  437.     See  Dilworth  v.  Mayfield,  36  Miss.  40. 

In  the  following  cases  it  has  been  held,  that,  as  between  the  widow  and 
heirs  of  a  deceased  partner  on  one  side,  and  the  personal  representatives  on 
the  other,  partnership  real  estate  goes,  in  the  absence  of  agreement  for  an 
absolute  conversion  into  personalty,  to  the  former.  Wilcox  v.  Wilcox,  13 
All.  252  ;  Buckley  v.  Buckley,  11  Barb.  43  ;  Goodburn  v.  Stevens,  5  Gill,  1 ; 
s.  c.  1  Md.  Ch.  420;  Hale  v.  Plummer,  6  Ind.  121;  Summey  v.  Patton, 
1  Winst.  Eq.  52;  Dilworth  v.  Mayfield,  36  Miss.  40;  Piper  v.  Smith,  1 
Head,  93.  In  this  latter  case,  however,  the  Court  say  that  the  weight  of 
authority  is  the  other  way,  "  and  it  should  be  so  held,  if  the  question  were 
an  open  one  "  in  tljat  State,  but  they  declare  themselves  concluded  by  the 
earlier  cases  of  McAlister  v.  Montgomery,  3  Haywood,  94 ;  Yeatman  v. 
Woods,  6  Yerg.  20. 

In  Wilcox  V.  Wilcox,  13  All.  252,  Wells,  J.,  says:  "We  are  unable  to 
see  how  the  equities,  which  spring  from  the  relation  of  copartnership,  and 
are  raised  for  the  protection  of  the  rights  of  the  several  copartners,  intei' 
sese,  and  of  their  joint  creditors,  can,  by  any  principle  of  law  or  equity,  be 
invoked  by  one  class  of  the  representatives  of  a  deceased  copartner  against 
another  class  of  representatives  of  the  same  copartner,  each  claiming  the 
same  interest  and  right.  The  legal  estate  passes  to  the  heirs,  with  the 
incident  of  dower  to  the  widow.  Equity  interferes  for  equitable  purposes 
only.  This  right  of  each  copartner  to  hold  the  real  estate  of  the  firm  as 
security  through  him  for  the  partnership  debts,  and  to  him  for  his  advances 
and  for  the  amount  of  his  interest  in  the  final  results  of  the  joint  business, 
is  often  called  an  equitable  lien.  Now,  when  the  joint  debts  are  all  paid, 
all  balances  between  the  several  copartners  fully  adjusted,  and  there  remains 
undivided  real  estate  in  which  they  are  tenants  in  common,  the  legal  title  of 
each  corresponding  to  his  interest  or  share  in  the  partnership,  lor  what  can 
one  partner  have  any  lien  upon  the  share  of  the  other  in  such  real  estate  ? 
For  what  pui'poses,  and  upon  what  grounds,  can  he  ajipeal  to  a  court  of 
equity  to  decree  its  sale?  Certainly  in  Massachusetts,  where  equitable 
jurisdiction  is  given  only  '  where  the  parties  have  not  a  plain,  adequate,  and 
complete  remedy  at  the  common  law,'  such  an  appeal  must  fail ;  a  fortion, 
Avould  the  executor  or  administrator  fail  of  any  right  to  come  into  ecjuity  for 
such  a  purpose." 

It  is  generally  admitted,  that,  if  there  is  an  agreement  that  the  land  shall 
be  considered  as  personal  property,  such  agreement  will  be  enforced  be- 
tween the  real  and  personal  representatives.  See  Goodburn  v.  Stevens, 
ubi  supra;  Hale  v.  Plummer,  ubi  supra;  Galbraith  v.  Gedge,  16  B.  Mon. 
631.  And  it  is  held,  that  an  agreement  to  buy  and  sell  lands  and  share  in 
the  profits  of  the  sale  is  such  an  agreement  as  will  convert  the  lands  abso- 


164  PARTNERSHIP.  [CHAP.  VI. 

unless,  indeed,  a  particular  partner  was  specially  clothed 
with  the  authority  of  all  the  partners,  as  the  general 
agent  of  the  partnership  in  the  administration  of  its 
affairs.  Hence,  one  partner  could  not  ordinarily,  in 
virtue  of  that  relation  alone,  contract  debts,  which 
would  be  binding  on  all  the  partners,  or  alienate  more 
than  his  share  of  the  partnership  property.  Accord- 
ingly it  is  laid  down  in  the  Digest :  Nemo  ex  sociis  plus 
parte  sua  potest  alienare,  etsi  totorum  honorum  socii 
sint}     And  again :  In  re  communi  neminem  dominorum 

lutely  into  personalty  as  between  heir  and  administrator.  Heirs  of  Ludlow  u. 
Cooper's  Devisees,  4  Ohio  St.  1.  See  NicoU  v.  Ogden,  29  111.  323;  Coster 
V.  Clarke,  3  Edw.  Ch.  428  ;  Wylie  v.  Wylie,  4  Grant,  Cfi.  (u.  c.)  278.  But 
see  Dilworth  v.  Mayfield,  36  Miss.  40. 

The  case  of  Dyer  v.  Clark,  5  Met.  562,  is  commonly  cited  as  an  authority 
against  the  doctrine  of  absolute  conversion  ;  but  the  question  as  to  right 
of  heir  and  administrator  in  the  partnership  real  estate  does  not  seem  to 
have  been  presented  to  the  court.  There  are  numerous  dicta  sustaining  the 
same  view  as  in  Buchan  v.  Sumner,  2  Barb.  Ch.  165  ;  Galbraith  v.  Gedge, 
16  B.  Mon.  631 ;  Lang  v.  Waring,  25  Ala.  625 ;  but  in  none  of  these  cases 
does  the  precise  point  seem  to  have  arisen  for  decision. 

On  the  other  hand,  in  Pierce  v.  Trigg,  10  Leigh,  406,  427,  is  a  dictum  to 
the  contrary,  and  the  opinion  of  Chancellor  Kent  (3  Kent,  39,  note  h),  and 
of  Judge  Story  (1  Story,  Eq.  Jur.  §  674),  were  in  favor  of  the  absolute 
conversion.  See  also  Hoxie  v.  Carr,  1  Sumn.  173  ;  Piper  v.  Smith,  uhi 
supra. 

On  the  whole,  the  law  does  not  seem  to  have  advanced  much  beyond  its 
condition  when  the  author  declared  it  open  to  many  distressing  doubts.  If 
the  doctrine  that  partnership  real  estate  should  pass  to  the  widow  and  heirs 
of  the  partner,  is  finally  adopted,  many  curious  questions  may  arise,  as 
Whether  this  doctrine  applies  to  a  partner  who  had  no  legal,  but  only  an 
equitable  interest  in  the  land  ?  Whetlier,  if  partnership  land  is  sold  for  the 
payment  of  debts,  any  surplus  goes  to  the  heir  or  to  the  executor,  and  if  it  goes 
to  the  heir,  whether  it  goes  as  i-eal  or  personal  property  .^  Whether  equity 
will  compel  the  partnership  creditor  to  exhaust  the  personal  assets  before 
proceeding  against  the  real  estate  ?  There  do  not  seem  to  be  any  decisions 
touching  these  points,  except  those  under  the  general  doctrines  of  equitable 
conversion  and  marshalling  of  assets.  The  avoidance  of  tliese  and  other 
similar  difhcult  questions  seems  to  be  a  practical  reason  for  adopting  the 
doctrine  of  absolute  conversion.} 

»  D.  17,  2,  G8  ;  Poth.  Pand.  17,  2,  n.  26,  27  ;  Poth.  de  Soc.  n.  89  ;  Domat, 
1,  8,  art.  16. 


CHAP.  VI.]         PARTNERSHIP  PROPERTY.  165 

jure  facere  quicquam^  invito  altero^  posse :  uncle  man- 
ifeshim  est  j^^ohlhendi  jus  esse}  Those,  who  were 
specially  appointed  to  administer  the  affairs  of  the  part- 
nership, were  called  inagistri  societatis  —  ita  maglstri 
ai^pellantur."  Similar  principles  prevail  in  our  day  in 
the  foreign  law  of  many  countries,  whose  jurisprudence 
is  founded  on  the  Roman  law ;  and  especially  in  that 
of  France.^  However,  by  the  modern  code  of  France, 
the  partners  are  deemed  to  have  given  reciprocally  to 
each  other  the  power  of  administering  one  for  the 
other,  in  default  of  any  special  stipulations  as  to  the 
mode  of  administration.'*  This,  of  course,  leaves  the 
rights  of  the  partners  to  be  governed  by  the  general  law 
of  France,  where  such  stipulations  exist,  although  they 
may  be  unknown  to  third  persons,  and,  of  course,  it 
may  expose  the  latter  to  some  hazards  of  loss  or  incon- 
venience, if  they  trust  to  their  confidence  in  a  single 
partner,  not  notoriously  authorized  to  administer  for  the 
partnership. 

§  96.  The  Scottish  law  has  avoided  this  difficulty, 
and  followed  the  general  doctrine  of  the  common  law. 
By  the  Scottish  law,  it  is  implied  from  the  very  nature 
of  partnership,  that  each  partner  is  clothed  with  the 
complete  power  of  administering  the  property  and 
affairs  of  the  partnership,  as  2^^((^p>ositus  negotlls  socie- 
tatis, to  the  eff"ect  not  only  of  holding  possession  of  the 
property  for  the  company,  and  of  acquiring  property  for 
them  in  the  course  of  their  trade  and  business,  but  also 
to  the  eifect  of  entering  into  contracts  on  behalf  of  the 
company,  and  binding  the  company  by  all  acts  in  the 

1  D.  10,  3,  28;  Poth.  Pand.  17,  2,  n.  27. 

2  D.  2,  U,  14;  Id.  50,  16,  57;  Domat,  1,  8,  4,  art.  16;  2  Bell,  Comm. 
B.  7,  p.  615,  5tli  ed. 

3  Poth.  de  Soc.  n.  66-72. 

*  Code  Civil,  art.  1856,  1860. 


166  ■  PARTNERSHIP.  [cHAP.  VI. 

ordinary  administration  of  such  trade  and  business.^ 
And  it  will  make  no  difference  in  this  respect,  that 
there  are  private  stipulations  between  the  partners 
themselves  prohibiting  or  restraining  this  right  or 
authority ;  for,  as  a  general  institorial  power,  it  will 
still  be  deemed  to  exist  in  favor  of  third  persons,  who 
are  ignorant  of  any  such  prohibitions  or  restrictions.^ 

§  97.  Besides  this  community  of  interest  in  the 
capital  stock,  funds,  and  effects  of  the  partnership, 
each  partner  has  certain  rights,  liens,  and  privileges 
thereon.  In  the  first  place,  no  one  partner  has  any 
right  to  share  in  the  partnership  property,  except 
what  remains  thereof  after  the  full  discharge  and  pay- 
ment of  all  debts  and  liabilities  of  the  partnership  ; 
and,  therefore,  each  partner  has  a  right  to  have  the 
same  applied  to  the  due  discharge  and  payment  of  all 
such  debts  and  liabilities,  before  any  one  of  the  part- 
ners, or  his  personal  representatives,  or  his  individual 
creditors,  can  claim  any  right  or  title  thereto.^  In 
short,  as  between  the  partners  themselves,  the  debts 
and  liabilities  of  the  firm  to  creditors  and  third  per- 
sons are  a  fund  appropriated,  in  the  first  instance,  to 
the  discharge  and  payment  of  such  debts  and  liabil- 
ities, and  there  is,  JDroperly  speaking,  as  between  them, 
a  lien  thereon,  or  at  least  an  equity,  which  may  be 
worked  out  through  the  partners  in  favor  of  the  credi- 
tors, although  it  may  not  directly  attach  in  the  creditors 
by  virtue  of  their  original  claims,  in  all  cases."*     Each 

>  2  Bell,  Coram.  B.  7,  p.  615,  5th  ed. 

2  2  Bell,  Comm.  B.  7,  p.  615,  5th  ed. 

=*  Coll.  on  r.  B.  2,  c.  1,  §  1,  p.  77,  2d  ed.;  West  v.  Skip,  1  Ves.  Sr.  239, 
242;  Ex  parte  Ruffin,  6  Ves.  119. 

*  Ex  parte  Ruffin,  6  Ves.  119,  126.  —  In  this  case  Lord  Eldon  said: 
"  It  is  the  case  of  two  partners,  who  owed  several  joint  debts,  and  had  joint 
effects.  Under  these  circumstances  their  creditors,  who  had  a  demand  ujion 
them  in  respect  of  those  debts,  had  clearly  no  lien  whatsoever  upon  the 


CHAP.  VI.]  PARTNERSHIP    PROPERTY.    .  167 

partner  also  has  a  specific  lien  on  the  present  and  future 
property  of  the  partnership,  not  only  for  the  debts  and 

partnersliip  effects.  They  had  power  of  suing,  and  by  process  creating 
a  demand,  that  would  directly  attach  upon  the  partnership  effects.  But 
they  had  no  lien  upon  or  interest  in  them  in  point  of  law  or  equity.  If  any 
creditor  had  brought  an  action,  the  action  would  be  joint;  his  execution 
might  be  either  joint  or  several.  He  might  have  taken  in  execution  both 
joint  and  separate  effects.  It  is  also  true,  that  the  separate  creditors  of 
each,  by  bringing  actions,  might  acquire  a  certain  interest  even  in  the  part- 
nership effects ;  taking  them  in  execution  in  the  way,  in  which  separate 
creditors  can  affect  such  property.  But  there  was  no  lien  in  either.  The 
partnership  might  dissolve  in  various  ways ;  first,  by  death ;  secondly,  by 
the  act  of  the  parties  ;  that  act  extending  to  nothing  more  than  mere  disso- 
lution ;  without  any  special  agreement  as  to  the  disposition  of  the  property, 
the  satisfaction  of  the  debts,  much  less  any  agreement  for  an  assignment  from 
either  of  the  partners  to  the  others.  The  partnership  might  also  be  dissolved 
by  the  bankruptcy  of  one  or  of  both,  and  by  effluxion  of  time.  If  it  is  dis- 
solved by  death,  referring  to  the  law  of  merchants,  and  the  well-known 
doctrine  of  this  Court,  the  death  being  the  act  of  God,  the  legal  title  in  some 
respects,  in  all  the  equitable  title,  would  remain,  notwithstanding  the  survi- 
vorship ;  and  the  executor  would  have  a  right  to  insist,  that  the  property 
should  be  applied  to  the  partnership  debts.  I  do  not  know  that  the  partner- 
ship creditors  would  have  that  right ;  supposing  both  remained  solvent.  So 
upon  the  bankruptcy  of  one  of  them  there  would  be  an  equity  to  say,  the 
assignees  stand  in  the  place  of  the  bankrupt ;  and  can  take  no  more  than  he 
could  ;  and  consequently  nothing  until  the  partnership  debts  are  paid.  So, 
upon  a  mere  dissolution,  without  a  special  agreement,  or  a  dissolution  by 
effluxion  of  time ;  to  wind  up  the  accounts  the  debts  must  be  paid,  and  the 
surplus  be  distributed  in  proportion  to  the  different  interests.  In  all  these 
ways  the  equity  is  not  that  of  the  joint  creditors,  but  that  of  the  partners 
with  regard  to  each  other,  that  operates  to  the  payment  of  the  partnership 
debts.  The  joint  creditors  must  of  necessity  be  paid,  in  order  to  the 
administration  of  justice  to  the  partners  themselves.  When  the  bankruptcy 
of  both  takes  place,  it  puts  an  end  to  the  partnership  certainly ;  but  still  it 
is  very  possible,  and  it  oftens  happens  in  fact,  that  the  partners  may  have 
different  interests  in  the  surplus  ;  and  out  of  that  a  necessity  arises,  that  the 
partnership  debts  must  be  paid  :  otherwise  the  surplus  cannot  be  distributed 
according  to  equity;  and  no  distinction  has  been  made  with  reference  to 
their  interests,  whether  in  different  proportions,  or  equally.  Many  cases 
have  occurred  upon  the  distribution  between  the  separate  and  joint  estates ; 
and  the  principle  in  all  of  them,  from  the  great  case  of  ]\Ir.  Fordyce,  has 
been,  that  if  the  Court  should  say,  tliat  what  has  ever  been  joint  or  separate 
property  shall  always  remain  so,  the  consequence  would  be,  that  no  part- 
nership could  ever  arrange  their  affairs.  Therefore  a  honajidc  transmuta- 
tion of  the  property  is  understood  to  be  the  act  of  men  acting  fairly,  wind- 


168  PARTNERSHIP.  [cHAP.  VI. 

liabilities  due  to  third  persons,  but  also  for  his  own 
amount  or  share  of  the  capital  stock,  and  funds,  and  for 
all  moneys,  advanced  by  him  for  the  use  of  the  firm, 
and  also  for  all  debts  due  to  the  firm'for  moneys  ab- 
stracted by  any  other  partner  from  such  stock  and 
funds  beyond  his  share.\/  It  follows  from  this  principle, 
that  if  an}^  partner  takes  the  whole  or  a  part  of  his 
share  out  of  the  partnership  stock,  the  stock  so  taken, 
if  identified,  is  applicable  to  the  payment  of  what 
shall,  upon  an  account  taken,  be  found  due  from  him 
to  the  partnership,  before  any  of  it  can  be  applied  to 
the  payment  of  his  debts,  due  to  his  own  separate  cred- 
itors ;  for  such  partner  has  an  interest  in  the  stock  only 
to  the  amount  of  the  ultimate  balance  due  to  him,  as 
his  share  of  the  stock.^  The  same  rule  will  apply  to 
any  other  property,  into  which  the  partnership  prop- 
erty may  have  been  converted,  so  far  and  so  long  as  its 
original  character  and  identity  can  be  distinctly  traced.^ 
Hence  it  may  be  stated,  as  a  general  corollary  from  the 
foregoing  considerations,  that  no  separate  creditor  of  any 
partner  can  acquire  any  right,  title,  or  interest,  in  the  part- 
nership stock,  funds,  or  effects,  by  process  or  otherwise, 
merely  in  his  character  as  such  creditor,  except  for  so 
much  as  belongs  to  that  partner,  as  his  share  or  balance, 
after  all  prior  claims  thereon  are  deducted  and  satisfied.^ 

ing  up  the  concern,  and  binds  the  creditors  ;  and  therefore  the  Court  always 
lets  the  arrangements  be,  as  they  stand,  not  at  the  time  of  the  commission, 
but  of  the  act  of  bankruptcy."  s.  p.  Ex  pa?-fe  Williams,  11  Ves.  3,  5; 
[Kirby  v.  Schoonmaker,  3  Barb.  Ch.  46.] 

1  Coll.  on  P.  B.  2,  c.   1,  §  1,  p.  77,  2d  ed. ;  West  v.  Skip,  1  Ves.  Sr. 

239,  242  ;  Ex  parte  Paiffin,  6  Ves.  119. 

^  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  78,  79,  2d  ed. ;  West  v.  Skip,  1  Ves.  Sr.  239, 

240,  242  ;  Skipp  v.  Harwood,  2  Swans.  586  ;  Croft  v.  Pyke,  3  P.  Wms.  180 ; 
Wats,  on  P.  c.  2,  p.  66,  2d  ed. 

3  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  78,  79,  2d  ed. ;  Ridgely  v.  Carey,  4  Har. 
&  McII.  167. 

*  {See  §  261-264,  and  c.  xv.} 


CHAP.  VI.]       PARTNERSHIP  PROPERTY.  169 

§  98.  What  properly  constitutes  partnership  prop- 
erty may  be,  in  some  particular  cases,  an  inquiry  of  no 
inconsiderable  embarrassment  and  difficulty,  although, 
when  all  the  facts  are  established,  the  principles  of  law 
applicable  to  it  are  generally  clearly  defined.  So  far  as 
personal  property  is  concerned,  not  only  the  capital, 
stock,  funds,  and  other  effects  originally  put  into  the 
partnership,  but  all  the  property  subsequently  acquired 
by  the  firm,  by  sale,  barter,  or  otherwise,  and  all  the 
debts  and  other  claims  arising  in  the  course  of  the  trade 
and  business  thereof,  are  deemed  part  of  the  partner- 
ship capital,  stock,  funds,  and  effects/  So,  all  real  es- 
tate, purchased  for  the  partnership,  and  paid  for  out  of 
the  funds  thereof,  in  whosesoever  name  it  stands,^  is 
treated  in  the  same  manner.^  Leases  of  land,  also,  oris:- 
inally  granted  to  or  for  the  partnership,  or  subsequently 
renewed  during  the  partnership,  for  the  purposes  there- 
of, fall  under  the  like  predicament.^  In  short,  whatever 
property,  whether  real,  or  personal,  or  mixed,  is  pur- 
chased for  the  use  and  purposes  of  the  partnership,  and 
is  chargeable  to  the  same,  is  in  the  contemplation  of 
courts  of  equity,  even  if  not  of  courts  of  law,  treated 
as  a  part  of  the  effects  thereof.^ 

§  99.  There  is  a  peculiar  species  of  interest,  which 
arises  in  cases  of  partnership,  and  is  often  treated  as  in 
some  sort  a  part  of  the  partnership  property.  It  is 
what  is  commonly  called  the  good-will  of  the  trade  or 

'  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  76-78,  2d  ed.  {But  the  capital  stock  may 
remain  the  property  of  one  partner.     See  §  27. } 

^  [But  see  Otis  v.  Sill,  8  Barb.  102,  122,  as  to  such  a  rule  at  law,  if  the 
title  is  in  only  one  partner.] 

3  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  82,  83,  2d  ed. ;  Jackson  v.  Jackson, 
7  Ves.  535;  9  Ves.  591.     {See  §  93.} 

"  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  83,  84,  101,  2d  ed.  ;  Elliot  v.  Brown, 
3  Swans.  489,  note  ;  Alder  v.  Fouracre,  3  Swans.  489  ;  Featherstonliaiigii  v. 
Fenwick,  17  Ves.  298 ;  Gow  on  P.  c.  2,  §  1,  p.  32-34,3d  ed. ;  Coles  v.  Coles, 
15  Johns.  159,  161. 

*  Story,  Eq.  Jur.  §  674. 


170  PARTNERSHIP.  [CHAP.  VI. 

business.  This  good-will  may  be  properly  enough  de- 
scribed to  be  the  advantage  or  benefit,  which  is  acquired 
by  an  establishment,  beyond  the  mere  value  of  the  cap- 
ital, stock,  funds,  or  property  employed  therein,  in  con- 
sequence of  the  general  public  patronage  and  encour- 
agement, which  it  receives  from  constant  or  habitual 
customers,  on  account  of  its  local  position,  or  common 
celebrity,  or  reputation  for  skill  or  affluence,  or  punctu- 
ality, or  from  other  accidental  circumstances  or  necessi- 
ties, or  even  from  ancient  partialities  or  prejudices. 
Thus,  an  inn,  a  nursery  of  trees  and  shrubs,  a  favorite 
fashionable  stand,  or  a  newspaper  establishment,  may, 
and  often  does  enjoy  a  reputation,  and  command  a  price 
beyond  the  intrinsic  value  of  the  property  invested 
therein,  from  the  custom,  which  it  has  obtained  and 
secured  for  a  long  time  ;  and  this  is  commonly  called 
the  good-will  of  the  establishment.^  Lord  Eldon  upon 
one  occasion  said,  that  a  good-will  of  this  sort  was  noth- 
ing more  than  the  probability,  that  the  old  customers 
will  resort  to  the  old  place.^  It  is  certainly  not  a  visi- 
ble, tangible  interest,  or  a  commodity,  upon  which  a 
definite  or  fixed  allowance  can  be  made;^  nor,  perhaps, 
would  a  contract,  touching  the  conveyance  thereof,  be 
decreed  to  be   specifically  performed  in  equity."*     It  is 

'  See  Cruttwell  v.  Lye,  17  Ves.  335;  Coslake  v.  Till,  1  Riiss.  376; 
Dougherty  v.  Van  Nostrand,  1  Hoflf.  68-70.  See  also  an  able  review  of  the 
doctrine  in  16  Am.  Jur.  87-92 ;  {Churton  v.  Douglas,  H.  R.  V.  Johns.  174 ; 
Austen  v.  Boys,  2  De  G.  &  J.  626. } 

2  Cruttweil  V.  Lye,  17  Ves.  335,  346. 

3  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  102,  103,  2d  ed.  {The  value  of  the 
good-will  assigned  exclusively  to  one  partner  on  a  dissolution,  is  what  it  would 
have  produced  if  sold  in  the  most  advantageous  manner,  and  at  the  proper 
time.  Mellersh  v.  Keen,  28  Beav.  453.  On  the  value  of  good-will  in  a  part- 
nership of  limited  duration  see  Austen  v.  Boys,  24  Beav.  598 ;  s.  c.  on  ap- 
peal, 2  De  G.  &  J.  626.} 

*  Baxter  v.  Conolly,  1  Jac.  &  W.  576  ;  Coslake  v.  Till,  1  Russ.  376,  378  ; 
Shackle  v.  Baker,  14  Ves.  468.  {Cooper  v.  Hood,  26  Beav.  293;  Robert- 
son V.  Quiddington,  28  Beav.  529.} 


CHAP.  VI.]       PARTNERSHIP  PROPERTY.  171 

not,  therefore,  strictly  speaking,  a  part  of  the  partner- 
ship effects,  of  which,  upon  a  dissohition  thereof,  a  di- 
vision can  be  compelled,  unless,  indeed,  in  cases,  where 
a  sale  of  the  whole  premises  and  stock  will  be  ordered ; 
and  then  the  good- will  will  accompany  such  sale,  and 
may  create  a  speculative  value  in  the  mind  of  a  pur- 
chaser, of  which  each  partner  will  be  entitled  to  his 
share  of  the  benefit.^  But  the  term  "  good-will "  is 
sometimes  applied  to  another  case,  where  a  retiring 
partner  contracts  not  to  carry  on  the  same  trade  or 
business  at  all,  or  not  within  a  given  distance.  This  is 
an  interest,  which  may  be  valued  between  the  parties, 
and  may  therefore  be  assigned  with  the  premises  and 
the  rest  of  the  effects  to  the  remaining  partner,  as  an 
accompaniment  of  the  ordinary  good-will  of  the  estab- 
lishment.^    Good-will,  in  the  former  sense,  is  therefore 

>  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  102, 103,  2d  ed. ;  Id.  c.  3,  §  4,  p.  214-218  ; 
Crawshay  v.  Collins,  15  Ves.  218,  227;  Crutwell  ?J.»Lye,  1  Rose,  123; 
Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  809,  310 ;  Dougherty  v.  Van 
Nostrand,  1  HofF.  68-70 ;  Gow  on  P.  c.  5,  §  4,  p.  349,  350,  3d  ed.  —  Lord 
Rosslyn,  in  Hammond  v.  Douglas,  5  Ves.  539,  held,  that  the  good-will  of  a 
trade,  carried  on  without  articles,  survives,  and  is  not  to  be  considered  as 
partnership  stock,  to  Avhich  the  representatives  of  a  deceased  partner  have 
any  right.  But  Lord  Eldon,  in  Crawshay  v.  Collins,  15  Ves.  227,  expressed 
doubts  of  the  propriety  of  that  determination,  considering  it  difficult  to 
draw  any  solid  distinction  between  the  lease  of  the  partnership  premises, 
and  the  good-will,  which  consists  in  the  habit  of  the  trade  being  conducted 
on  those  premises.  Gow  on  P.  c.  5,  §  4,  p.  349,  3d  ed.  ;  Coll.  on  P.  B.  2, 
c.  1,  §  1,  p.  102,  103,  2d  ed.  {On  a  sale  of  partnership  property  and  busi- 
ness, the  good-will  will  be  included.  Williams  v.  Wilson,  4  Sand.  Ch.  379 ; 
Holden's  Adm'rs  v.  M'Makin,  1  Pars.  Eq.  Cas.  270  ;  Marten  v.  Van  Schaick, 
4  Paige,  479.  In  this  last  case  a  receiver  was  appointed  to  carry  on  a  news- 
paper for  the  purpose  of  preserving  the  good-will,  but  to  sell  without  delay. 
The  right  to  use  the  name  of  a  periodical  must  be  sold  for  the  benefit  of  a 
partnership  on  its  dissolution.  Bradbury  v.  Dickens,  27  Beav.  53.  See 
]\Iellersh  v.  Keen,  28  Beav.  453 ;  Turner  v.  Major,  3  Giff.  442.  The  estate 
of  a  deceased  partner  participates  in  the  good-will..  Smith  v.  Everett,  27 
Beav.  446,  Wade  v.  Jenkins,  2  Giff.  509.  See  Wedderburn  r.  Wedderburn, 
22  Beav.  84,  104 ;  Davies  v.  Hodgson,  25  Beav.  177,  and  the  following  note. } 

=  Coll.  on  P.  B.  2,  c.  1,  §  1,  p.  102,  103,  2d  ed. ;  Id.  c.'3,  §  4,  p.  214- 
218,  and  note ;  Bryson  v.  Whitehead,  1  Sim.  &  St.  74 ;  Harrison  v.  Gard- 


172  PARTNEI^SHIP.  [chap.  YI. 

an  advantage  arising  from  the  mere  fact  of  sole  owner- 
ship of  the  premises,  stock,  or  establishment,  without 

ner,  2  Madd.  198 ;  Cruttwell  v.  Lye,  17  Ves.  335 ;  Gow  on  P.  c.  5,  §  4,  p. 
349,  3d  ed.  — Lord  Eldon,  In  Kennedy  v.  Lee,  3  Mer.  441,  4:32,  speaking 
on  this  subject,  used  the  following  language:  "  AYhere  two  persons  are 
jointly  interested  in  trade,  and  one  by  purchase  becomes  sole  owner  of  the 
partnership  property,  the  very  circumstance  of  sole  ownership  gives  him  an 
advantage  beyond  the  actual  value  of  the  property,  and  which  may  be 
pointed  out  as  a  distinct  benefit,  essentially  connected  with  the  sole  owner- 
ship. In  the  case  of  the  trade  of  a  nursery-man,  for  instance,  the  mere 
knowledge  of  the  fact,  that  he  is  sole  owner  of  the  property,  and  in  the 
sole  and  exclusive  management  of  the  concern,  gives  him  an  advantage 
which  the  other  partner,  supposing  him  to  carry  on  the  same  trade,  with 
other  property,  not  the  partnership  property,  would  not  possess.  In  that 
sense,  therefore,  the  good-will  of  a  trade  follows  from,  and  is  connected 
with,  the  fact  of  sole  ownership.  There  is  another  way,  in  which  the  good- 
will of  a  trade  may  be  rendered  still  more  valuable  ;  as  by  certain  stipula- 
tions entered  into  between  the  parties  at  the  time  of  the  one  relinquishing 
his  share  in  the  business ;  as  by  inserting  a  condition,  that  the  withdrawing 
partner  shall  not  carry  on  the  same  trade  any  longer,  or  that  he  shall  not 
carry  it  on  within  a  certain  distance  of  the  place,  whei-e  the  partnership 
trade  was  carried  on,  and  where  the  continuing  partner  is  to  carry  it  on 
upon  his  own  sole  and  separate  account.  Xow  it  is  evident,  that  in  neither 
sense  was  the  good-will  of  this  trade  at  all  considered,  as  among  the  sub- 
jects of  the  valuation  to  be  made  by  either  party.  It  was  not  so  considered 
by  the  plaintiff,  when  he  wrote  his  letter  of  the  21st  of  October.  The 
words  '  concern  '  and  '  inheritance  '  are  used  inartificially,  and  cannot  be 
construed  as  having  any  reference  but  to  the  actual  subjects  of  valuation. 
And  when  the  plaintiff  offers  to  take  the  business  himself,  he  could  not  have 
forgotten,  that  the  defendant's  own  estate  of  Butterwick,  lay  contiguous  to 
the  partnersliip  property,  and  therefore  his  introducing  no  stipulation,  with 
reference  to  the  fact  of  its  contiguity,  is  a  clear  intimation,  that  when  he 
wrote  this  letter,  he  had  no  intention,  in  offering  to  take  the  paitnership 
property,  to  purchase  with  it  the  good-will,  in  the  sense  of  restricting  the 
defendant  from  carrying  on  the  trade  in  its  vicinity.  In  that  sense,  at  least, 
therefore,  the  good-will  of  the  trade  was  not  the  subject  of  contract,  or 
treaty  even,  between  the  parties."  {If  a  partnershijD  is  dissolved,  each  part- 
ner, in  the  absence  of  agreement,  can  carry  on  business  in  the  name  of  the 
old  firm.  Banks  v.  Gibson,  34Beav.  566.  See  Dent  v.  Turpin,  2  John.  & 
Hem.  139.  The  surviving  partner  can  carry  on  the  same  trade.  Davies  v. 
Hodgson,  25  Beav.  177.  Hence,  though  the  estate  of  a  deceased  partner  par- 
ticipates in  the  good-will  (see  previous  note),  yet  as  the  surviving  partner, 
afler  the  sah;  of  the  partnership  business,  can  at  once  set  up  a  similar  business 
in  the  same  place,  the  good-will  will  often  sell  for  but  little.  Lind.  on  P.  710  ; 
Smith  V.  Everett,  27  Beav.  446  ;  Davies  v.  Hodgson,  25  Beav.  177  ;  Cook  v. 


CHAP,  yi.]       PARTNERSHIP  PROPERTY.  173 

reference  to  other  persons,  as  rivals ;  and  in  tlie  latter 
sense,  as  an  advantage  arising  from  the  fact  of  exclud- 
ing the  retiring  partner  from  the  same  trade  or  busi- 
ness, as  a  rival. ^  It  seems  that  good-will  can  constitute 
a  part  of  the  partnership  effects  or  interests  only  in 
cases  of  mere  commercial  business  or  trade ;  and  not 
in  cases  of  professional  business,  which  is  almost  neces- 
sarily connected  with  personal  skill  and  confidence  in 
the  particular  partner.^ 

§  100.  Under  this  head  a  curious  question  has  arisen; 
and  that  is,  whether  the  right  to  use  the  firm  name  is 
a   part  of  the   good-will  belonging  to  the   partnership, 

Collingridge,  Jac.  607.  The  form  of  the  decree  in  Cook  v.  Colliiiuridge  is 
given  at  27  Beav.  456.  In  Churton  v.  Douglas,  H.  R.  V.  Johns.  17-t,  Wood, 
V.  C,  says  that,  on  a  sale,  by  the  retiring  partner  to  the  other  partner  of  the 
good-will, the  retiring  partner  may  set  up  a  precisely  similar  business  next  door, 
provided  he  sets  it  up  distinctly  as  a  separate  business.  In  Hall  v.  Barrows, 
10  Jur.  N.  s.  55;  s.  c.  33  L.  J.  n.  s.  Ch.  204,  Lord  AVestbury,  C,  held 
that  under  a  stipulation  in  articles  that  the  surviving  partner  should  have 
the  option  of  taking  all  the  partnership  stock  on  paying  to  the  rej)resenta- 
tive  of  the  deceased  partner  the  value  of  his  share,  the  good-will  must  be 
included  in  the  valuation,  but  on  the  footing  that  the  surviving  partner  was 
at  liberty  to  set  up  and  carry  on  the  same  business  as  that  of  the  partner- 
ship. See  Johnson  v.  Helleley,  34  Beav.  63 ;  s.  c.  on  appeal,  2  De  G.  J.  & 
S.  446.  In  Hall  v.  Hall,  20  Beav.  139,  a  retiring  partner  was  not  allowed 
to  share  in  the  value  of  the  good-will,  though  the  stipulations  of  the  articles 
were  nmch  like  those  in  Hall  v.  Barrows  :  the  decision  seems  hardly  to  be  re- 
conciled with  that  case.  It  thus  appears  that  the  good-will  of  a  partnership 
is  of  little  value  after  dissolution,  lor  lack  of  power  in  the  courts  to  restrain  the 
former  or  surviving  partners  from  carrying  on  a  similar  business.  In  Wil- 
liams V.  Wilson,  4  Sand.  Ch.  379,  the  court  assumed  this  power,  and  on  a 
sale  of  partnership  jjroperty  and  the  good-will  of  the  business,  ordered  that 
either  of  the  former  partners  might  lie  a  purchaser ;  but  that,  except  they 
purchased,  they  should  be  restrained  from  conducting  the  same  business, 
directly  or  indirectly,  in  the  same  city.  See  §  100,  210-212,  Turner  v. 
Major,  3  Giff.  442. } 

>  Coll.  onP.  B.2,c.  1,§1,  p.  102,  103,  2d  ed.;  Gow  on  P.  c.  5,  §  4,  p.  349, 
350,  3d  ed. 

=^  Fan-  V.  Pearce,  3  Madd.  74,  76;  Coll.  on  P.  B.  2,  c.  1,  §  1.  p.  103, 
104,  2d  ed. ;  Gow  on  P.  c.  5,  §  4,  p.  349,  350,  3d  ed. ;  {Austen  v.  Boys,  2 
DeG.  &.  J.  626.} 


174  PARTNERSHIP.  [CHAP.  VI. 

or  whether  in  case  of  the  dissokition  thereof  by  the 
death  of  the  partner,  it  belongs  to  the  survivors.  That 
the  right  to  use  the  name  of  a  known  and  celebrated 
firm,  especially  in  the  case  of  manufactures,  is  often  a 
very  valuable  possession,  is  unquestionable  ;  and,  there- 
fore, courts  of  equity  will  often  interpose  to  protect  the 
right  against  the  abuse  of  third  persons,  in  using  it  for 
their  own  advantage.^  But  it  has  been  thought,  that 
this  right,  however  valuable,  does  not  fall  within  the 
true  character  and  nature  of  good-will ;  but  that  it 
belongs  to  the  surviving  partner,^ 

^  Eden  on  Injunct.  c.  li,  p.  314,  315  ;  Motley  v.  Downman,  3  MyL  &  C. 
1,  14,  15 ;  Millington  v.  Fox,  3  Myl.  &  C.  338 ;  2  Story,  Eq.  Jur.  §  951 ; 
Knott  V.  Morgan,  2  Keen,  213,  219  ;  Webster  v.  W^ebster,  3  Swans.  490,  n. ; 
Gow  on  P.  c.  2,  §  4,  p.  109,  3d  ed.  {The  name  of  a  fii-m  may  be  a  trade- 
mark. HoUoway  i\  Holloway,  13  Beav.  209 ;  Lawson  v.  Bank  of  London, 
18  C.  B.  84  ;  ^Velcli  v.  Knott,  4  K.  &  J.  747  ;  Burgess  v.  Burgess,  3  De  G., 
Macn.  &  G.  896  ;  Hall  v.  Barrows,  9  Jur.  x.  s.  483  ;  s.  c.  32  L.  J.  n.  s.  Cli. 
548;  on  appeal,  10  Jur.  n.  s.  55,  s.  c.  33  L.  J.  x.  s.  Ch.  204;  Bradbury 
U.Dickens,  27  Beav.  53.} 

*  Lewis  V.  Langdon,  7  Sim.  421.  —  La  this  case  Vice-Chancellor  Shad- 
well  said:  "The  question  in  this  case  depends  on  the  right,  in  the  surviv- 
ing partner,  to  carry  on  the  business  under  the  name  of  the  partnership.  Lord 
Eldon,  certainly,  has  expressed  a  doubt,  in  the  case  of  Crawshay  v.  Collins, 
15  Ves.  227,  upon  what  has  been  understood  to  be  the  proposition  laid  down 
by  Lord  Rosslyu,  in  the  case  of  Hammond  v.  Douglas,  5  Ves.  539.  It  is 
true,  that  the  question  might  have  been,  to  a  cei'tain  degree,  whether,  hav- 
ing regard  to  what  had  taken  place,  the  money  should  be  considered  to  be- 
long to  one  party,  rather  than  to  another ;  and  it  is  also  observable,  that 
Lord  Eldon  might  have  been  throwing  out  his  observations  with  reference  to 
a  supposed  connection  between  the  place  where  the  business  was  carried  on, 
and  the  good-will.  But  it  occurs  to  me,  that  if  the  good-will  is  to  be  con- 
sidered as  a  salable  article,  which  belongs  to  the  partnership,  then  this  con- 
sequence must  follow  ;  namely,  that  the  surviving  partner  must  be  under  an 
obligation  to  carry  on  the  trade  for  some  time  after  his  partner's  death,  in  or- 
der that  the  thing,  which  is  said  to  be  salable,  may  be  preserved  until  it  can 
be  sold.  If  a  partnership  were  carried  on  between  A.  and  B.  under  the 
name  of  Smith  &  Co.,  and  the  surviving  partner  chose  to  discontinue  the  busi- 
ness, and  to  write  to  the  customers,  and  say,  that  his  partner  was  dead,  and 
that  the  business  was  at  an  end,  the  effect  would  be,  that  that,  which  is  said 
to  be  salable,  would  cease  to  exist.  Now,  what  power  is  there  in  a  court  of 
equity,  to  compel  a  jiartner  to  carry  on  a  trade  after  the  death  of  his  co- 


CHAP.  VI.]        PARTNERSHIP  PROPERTY.  175 

pa.'tner,  merely  that,  at  a  fhture  time,  the  good-will,  as  it  is  called,  may  be 
sold  ?     It  is  plain,  that,  unless  tliei'e  is  such  a  power  in  this  court,  it  must 
be  in  the  discretion  of  the  surviving  partner  to  determine,  what  shall  be  done 
with  the  good-will ;  and,  if  that  is  the  case,  it  must  be  his  property.     I  can- 
not but  think,  when  two  partners  carry  on  a  business  in  pax'tnership  together 
under  a  given  name,    that,  during  the  partnership,  it  is  the  joint   right  of 
them  both  to  carry  on  the  business  under  that  name,  and  that,  upon  the 
death  of  one  of  them,  the  right  which  they  before  had  jointly,  becomes  the 
separate  right  of  the  survivor."     See  also  Webster  v.  Webster,   3  Swans. 
490,  n.     {If  a  partnership  is   dissolved,  each  partner,    in  the  absence  of 
agreement,  can  carry  on  business  in  the  name  of  the  old  firm.     Banks  v. 
Gibson,    34  Beav.    566.      See    Dent  v:  Turpin,    2   John.    &  Hem.    139. 
The   firm   name   survives  to    a   surviving  partner,   and  cannot,  therefore, 
be  sold  as  part  of  the   partnership   assets.       Robertson   v.    Quiddington, 
28  Beav.  529.     See  Smith  i\  Everett,  27  Beav.  446.     J.  D.,  a  member  of 
a  firm   styled  J.   D.    &  Co.,  assigned   his   interest    in  the   business   and 
the  good-will  thereof  to  his  late  partners,  who  continued  to  carry  on  the 
business  under  a  new  name  with  the  addition  "  late  J.  D.  &  Co."  J.  D.  took  a 
partner  and  set  up  in  the  same  neighborhood  in  a  similar  business  under  the 
name  of  J.  D.  &  Co.    He  was  restrained  by  injunction.    Churton  v.  Douglas, 
H.  R.  V.  Johns.  174.   Mr.  Lindley,  (Lind.  on  P.  710,)  says:  "In  the  event 
of  dissolution  by  death,  it  has  been  said  that  the  good-will  survives.     But 
this  is  not  correct,  if  ^it  is  meant  that  the  value  of  the  good-will,  as  such,  be- 
longs to  the  survivor.     It  undoubtedly  may  happen  that  the  survivor  may  ob- 
tain the  benefit  of  the  good-will,  without  paying  for  it ;   for  he  is  at  liberty, 
(unless  restrained  by  agreement)  to  carry  on  business  on  his  own  account, 
and,  it  is  said,  in  the  name  of  the  late  fii-m.      See  Webster  v.  Webster,  3 
Swans.  490,  and  Hammond  v.  Douglas,  5  Ves.  539.     But  see  contra,  Smith 
V.  Everett,    27   Beav.  446.     The   executor  of  the  deceased  partner  has 
no  right  to  do  this.     Lewis  v.  Langdon,  7  Sim.  421.     Under  these  circum- 
stances, if,  on  the  death  of  a  partner,  the  good-will  is  put  up  for  sale,  it  will 
produce  nothing  if  it  is  known  that  the  surviving  partner  will  exercise  his 
rights.     He  will,  therefore,  acquire   all  the  benefit  of  the  good-will ;  but  he 
does  not  acquu-e  it  by  survivorship,  as  something  belonging  to   him   exclu- 
sively, and  with  which  the  executors  of  the  deceased  partner  have  no  concern  ; 
for  if  he  did,  he  might  sell  the  good-will  for  his  own  benefit,  and  this  he  can- 
not do.     See  Smith  v.  Everett,  27  Beav.  446  ;  Wedderburn  v.  Wcdderburn, 
22  Beav.  84,  104.    (Hammond  v.  Douglas,  5  Ves.  539  is  not  consistent  with 
the  statement  in  the  text,  but  this  case  has  been  much  doubted,  and  is  against 
all  principle.)    When,  therefore,  it  is  said  that,  on  t)je  death  of  one  partner, 
the  good-will  of  the  firm  survives  to  the  other,  what  is  meant  is,  that  the  sur- 
vivor is  entitled  to  all  the  advantages  incidental  to  his  former  connection 
with  the  firm,  and  that  he  is  under  no  obligation,  in  order  to  render  those 
advantages  salable,  to  retire  from  business  himself."     See  §  99.} 


176  PARTNERSHIP.  [cHAP.  VII. 


CHAPTER   VII. 

POWERS    AND    AUTHORITIES    OF    PARTNERS. 

{§  101.  Power  over  the  partnership  property.     General  assignments. 

102.  Partners  have  all  powers  incident  to  the  trade. 
102  a.  Power  to  give  negotiable  paper. 

103,  104.  Necessity  of  general  powers  in  partners. 

105.  Misconduct  of  partner  does  not  affect  liability  to  third  parties. 

106.  Nor  does  the  constitution  of  the  partnership. 

107.  Representations  and  admissions  of  a  partner. 

108.  Liability  for  frauds  by  a  partner. 

109.  Power  of  partners  in  the  Roman  and  Fi'ench  law. 

110.  Limitations  on  a  partner's  jjower. 

111.  112.  Powers  confined  to  the  scope  of  the  ordinary  business  of  the 

partnership. 

113.  Determination  of  this  scope. 

114.  A  partner  cannot  submit  to  arbitration. 

115.  Though  he  may  compromise  or  release  a  debt. 

116.  Roman  law. 

117.  One  partner  cannot  bind  the  others  by  deed. 

118.  Roman  law. 

119.  Illustrative  cases. 

120.  Limitation  of  the  rule. 

121.  Whether  authority  to  seal  must  be  given  under  seal. 

122.  'American  doctrine. 

122  a.  A  partner  cannot  bind  a  firm  before  its  establishment. 

123.  Power  of  a  majority. 

124.  Roman  law. 

125.  Majority  cannot  change  the  partnership  articles.} 

§  101.  As  to  the  powers  and  authorities  of  the  part- 
ners during  the  existence  of  the  partnership  (for  their 
powers  and  authc^-ities  upon  the  dissohition  thereof  will 
be  considered  hereafter,  in  another  place),  they  have 
been  in  part  already  suggested.  In  the  first  place,  when- 
ever there  are  written  articles,  or  particular  stipulations 
between  the  partners,  these  will  regulate  their  respect- 
ive powers  and   authorities  inter  sese,  although  not,  if 


CHAP.  VII,]  POAVERS    AND    AUTHORITIES.  177 

unknown,  in  their  dealings  with  third  persons.^  But, 
indeijendently  of  any  such  articles  or  stipulations  ex- 
pressed, each  partner  is  PrceposHus  negotiis  societatls, 
and  each  partner,  virtute  officii,  possesses  an  equal  and 
general  power  and  authority  in  behalf  of  the  firm,  to 
transfer,  pledge,  exchange,  or  apply  or  otherwise  dis- 
pose of  the  partnership  property  and  effects,  for  any  and 
all  purposes  within  the  scope  and  objects  of  the  partner- 
ship, and  in  the  course  of  its  trade  and  business.^  Or, 
as  was  said  by  a  learned  judge  upon  a  recent  occasion, 
"  One  partner  by  virtue  of  that  relation  (of  partner- 
ship) is  constituted  a  general  agent  for  another  as  to 
all  matters  within  the  scope  of  the  partnership  deal- 
ings, and  has  communicated  to  him,  by  virtue  of  that 
relation,  all  authorities  necessary  for  carrying  on  the 
partnership,  and  all  such  as  are  usually  exercised  by 
partners  in  that  business,  in  w^hich  they  are  engaged. 
Any  restriction  which,  by  agreement  amongst  the  part- 
ners, is  attempted  to  be  imposed  upon  the  authority 
which  one  possesses  as  a  general  agent  for  the  other,  is 
operative  only  between  the  partners  themselves,  and 
does  not  limit  the  authority  as  to  third  persons,  who 
acquire  rights  by  its  exercise,  unless  they  know  that 
such  restrictions  have  been  made."  ^  The  power  ex- 
tends also  to  assignments  of  property  of  the  firm,  as  a 
security  for  antecedent  debts,  as  well  as  for  debts  there- 
after to  be  contracted  on  account  of  the  firm."*  Nor 
will  it  make  any  difference,  whether  the  assignment  be 

•  3  Kent,  40-42 ;  U.  S.  Bank  r.  Binney,  5  Mason,  176 ;  s.  c.  5  Pet.  529  ; 
Coll.  on  P.  B.  3,  c.  1,  p.  259,  260,  2d  ed. 

*  3  Kent,  40-46  ;  Story  on  Ag.  §  37,  39,  124  ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p. 
129,  2d  ed. ;  Gow  on  P.  c.  2,  §  2,  p.  36,  51-53,  3d  ed. ;  2  Bell,  Coram.  B.  7, 
c.  1,  p.  615,  616,  5th  ed. 

3  Hawken  v.  Bourne,  8  M.  &  W.  703,  710. 

■•  Harrison  v.  Sterry,  5  Cranch,  289  ;  Anderson  v.  Tompkins,  1  Brock.  456  ; 
Tapley  v.  Butterfield,  1  Met.  515, 

12 


178  PARTNERSHIP.  [CHAP.  Til. 

for  the  benefit  of  one  creditor,  or  of  several,  or  of  all 
of  the  joint  creditors.^  But  it  may  well  admit  of  some 
doubt,  whether  this  power  extends  to  a  general  assign- 
ment of  all  the  funds  and  effects  of  the  partnership  by 
one  partner,  for  the  benefit  of  creditors  ;  for  such  an 
assignment  would  seem  to  amount  of  itself  to  a  sus- 
pension or  dissolution  of  the  partnership  itself.^     The 

'  Ibid. 

2  Pearpoint  v.  Graham,  4  Wash.  C.  C.  232  ;  [Dana  v.  Lull,  17  Vt.  390; 
Cullura  V.  Bloodgood,  15  Ala.  34;  Deming  v.  Colt,  3  Sand.  .284;  Hayes 
V.  Heyer,  3  Sand.  284;  Wilson  v.  Soper,  13  B.  Mon.  411;  Fisher  v. 
Murray,  1  E.  D.  Smith,  341;  Mabbett  v.  White,  2  Kern.  442;  Kemp  v. 
Carnley,  3  Duer,  1;  Kirby  v.  Ingersoll,  1  Dougl.  (Mich.),  477,  Harrington, 
Ch.  1 72.  If,  however,  one  partner  has  abandoned  all  control  of  the  business, 
an  assignment  by  the  other  is  valid,  if  an  equal  distribution  is  thereby 
secured.  Kemp  v.  Carnley,  3  Duer,  1]  ;  Deckert  v.  Filbert,  3  W.  &  S.  454.  — 
In  this  case,  it  was  held,  that  after  a  dissolution  of  partnership,  one  partner 
could  not  make  a  voluntary  assignment  of  the  effects  of  the  partnership  for 
the  benefit  of  creditors .  against  the  express  dissent  of  his  copartner.  In 
Anderson  v.  Tompkins,  1  Brock.  456,  Mr.  Chief  Justice  Marshall  affirmed 
the  authority  of  one  partner  to  assign  all  the  partnership  effects  for  the  pay- 
ment of  the  creditors  thereof  On  that  occasion,  he  said:  "  It  will  be  readily 
conceded,  that  a  fraudulent  sale,  whether  made  by  deed  or  otherwise,  would 
pass  nothing  to  a  vendee  concerned  in  the  fraud.  But,  with  this  exception,  I 
feel  much  difficulty  in  setting  any  other  limits  to  the  power  of  a  partner, 
in  disi^osing  of  the  effects  of  the  company,  purchased  for  sale.  He  may  sell 
a  yard,  a  piece,  a  bale,  or  any  number  of  bales.  He  may  sell  the  whole  of 
any  article,  or  of  any  number  of  articles.  This  power  certainly  would  not  be 
exercised  in  the  presence  of  a  partner,  without  consulting  him  ;  and  if  it  were 
so  exercised,  slight  circumstances  would  be  sufficient  to  render  the  transac- 
tion suspicious,  and,  perhaps,  to  fix  on  it  the  imputation  of  fraud.  In  this 
respect,  every  case  must  depend  on  its  own  circumstances.  But  with  respect 
to  the  power,  in  a  case  perfectly  fair,  I  can  perceive  no  ground  on  which  it 
is  to  be  questioned.  But  this  power,  it  is  said,  is  limited  to  the  course  of 
trade.  What  is  understood  by  the  course  of  trade  ?  Is  it  that  which  is  act- 
ually done  every  day,  or  is  it  that  which  may  be  done  whenever  the  occa- 
sion for  doing  it  presents  itself?  There  are  small  traders,  who  scarcely  ever, 
in  practice,  sell  a  piece  of  cloth  uncut,  or  a  cask  of  spirits.  But  may  not  a 
partner  in  such  a  store  sell  a  piece  of  cloth,  or  a  cask  of  spirits  ?  His  power 
extends  to  the  sale  of  the  article,  and  the  course  of  trade  does  not  limit  him 
as  to  (|uantity.  So  with  respect  to  larger  concerns.  By  the  course  of  trade 
is  understood  dealing  in  an  article  in  which  the  company  is  accustomed  to 
deal ;  and  dealing  in  that  article  for  the  company.     Tompkins  and  Murray 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  179 

doctrine,  however,  is  strictly  confined  to  personal  prop- 
erty,  and   does  not  extend  to  real  estate  held  by  the 

sold  goods.  A  sale  of  goods  was  in  the  course  of  their  trade,  and  within  the 
power  of  either  partner.  A  fair  sale,  then,  of  all  or  of  a  part  of  the  goods 
was  within  the  power  vested  in  a  partner.  This  reasoning  applies  with 
increased  force,  when  we  consider  the  situation  of  these  partners.  The  one 
was  on  a  voyage  to  Europe,  the  other  in  possession  of  all  the  partnership 
effects  for  sale.  The  absent  partner  could  have  no  agency  in  the  sale  of 
them.  He  could  not  be  consulted.  He  could  not  give  an  opinion.  In  leav- 
ing the  country,  he  must  have  intended  to  confide  all  his  business  to  the 
partner,  who  remained,  for  the  purpose  of  transacting  it.  Had  this  then  been 
a  sale  for  money,  or  on  credit,  no  person,  I  think,  could  have  doubted  its  ob- 
ligation. I  can  perceive  no  distinction  in  law,  in  reason,  or  in  justice,  between 
such  a  sale  and  the  transaction  which  has  taken  place.  A  merchant  may 
rightfully  sell  to  his  creditor,  as  well  as  for  money.  He  may  give  goods  in 
payment  of  a  debt.  If  he  may  thus  pay  a  small  creditor,  he  may  thus  pay  a 
large  one.  The  quantum  of  debt,  or  of  goods  sold,  cannot  alter  the  right. 
Neither  does  it,  as  I  conceive,  affect  the  jjower,  that  these  goods  were  con- 
veyed to  trustees  to  be  sold  by  them.  The  mode  of  sale  must,  I  think, 
depend  on  circumstances.  Should  goods  be  delivered  to  trustees  for  sale, 
without  necessity,  the  transaction  would  be  examined  with  scrutinizing  eyes, 
and  might,  under  some  circumstances,  be  impeached.  But  if  the  necessity 
be  appai-ent,  if  the  act  is  justified  by  its  motives,  if  the  mode  of  sale  be  such 
as  the  circumstances  require,  I  cannot  say,  that  the  partner  has  exceeded 
his  power.  This  is  denominated  a  destruction  of  the  partnership  subject,  and 
a  dissolution  of  the  partnership.  But  how  is  it  a  destruction  of  the  subject  ? 
Can  this  appellation  be  bestowed  on  the  application  of  the  joint  property  to 
the  payment  of  the  debts  of  the  company '?  How  is  it  a  dissolution  of  the 
partnership '?  A  partnership  is  an  association  to  carry  on  business  jointly. 
This  association  may  be  formed  for  the  future  before  any  goods  are  acquired. 
It  may  continue  after  the  whole  of  a  particular  purchase  has  been  sold.  But 
either  partner  had  a  right  to  dissolve  this  partnership.  The  act,  however,  of 
applying  the  means  of  carrying  on  their  business  to  the  payment  of  their 
debts,  might  suspend  the  operations  of  the  company,  but  did  not  dissolve  the 
contract,  under  which  their  operations  were  to  be  conducted."  In  Egberts  v. 
•Wood,  3  Paige,  517,  523,  524,  Mr.  Chancellor  Walworth  said:  "It  appears 
to  be  the  better  opinion,  that  one  of  the  partners,  at  any  time  during  the 
existence  of  the  partnership,  may  assign  the  partnership  effects,  in  the  name 
of  the  firm,  for  the  payment  of  the  debts  of  the  company,  although  by  such 
assignment  a  preference  is  given  to  one  set  of  creditors  over  another.  In 
the  case  of  Dickinson  v.  Eegare  and  others,  cited  by  the  complainant's 
counsel  from  the  Equity  Reports  of  South  Carolina,  1  Desaus.  537,  the  Court 
of  Chancery  of  that  State  decided  against  the  validity  of  an  assignment  of  all 
the  partnership  eflects,  made  by  one  of  the  partners,  without  the  knowledge 
or  consent  of  the  other,  to  pay  the  debt  of  a  particular  creditor.     Chancellor 


180  PARTNERSHIP.  [CHAP.  VII. 

partnership ;  for  in  such  a  case  the  partner,  who  exe- 
cutes the  deed  of  conveyance,  can  transfer  no  more  title 

Matthews,  who  delivered  the  ojjinion  of  the  court  in  that  case,  admits,  that  it 
was  a  question  of  the  first  impression,  no  case  analogous  to  it  having  come 
under  the  view  of  the  court.  That  assignment,  however,  was  made  under 
very  peculiar  circumstances.  The  company  during  the  revolutionary  war 
were  doing  business  in  this  country.  And  while  one  of  the  partners  was  on 
a  voyage  to  France,  he  was  taken  by  a  British  ship  of  war,  and  carried  as  a 
prisoner  to  England,  where  he  was  prevailed  upon  by  a  creditor  residing 
there,  to  give  him  a  general  assignment  of  all  the  partnership  funds,  which 
funds  were  then  in  this  country,  to  secure  the  payment  of  his  particular  debt 
against  the  firm.  Although  the  decision  was  put  upon  the  general  ground, 
that  one  partner  had  not  the  right  to  assign  the  partnership  funds  in  this 
manner,  without  the  consent  of  his  copartner,  there  is  no  doubt  that  the  par- 
ticular circumstances,  under  which  that  assignment  took  place,  had  a  very 
considerable  influence  in  bringing  the  mind  of  the  Chancellor  to  that  result. 
The  assignment  in  that  case  being  made  by  a  citizen  of  one  of  the  United 
States,  during  the  existence  of  the  war,  to  an  alien  enemy  and  in  an  enemy's 
country,  was  probably  void  by  the  laws  of  war,  so  far  at  least  as  to  prevent 
its  being  carried  into  effect  by  any  of  the  courts  of  this  country.  And  cer- 
tainly it  could  not  be  considered  as  made  according  to  any  mercantile  usage. 
That  decision,  however,  has  been  recently  overruled  by  the  Court  of  Appeals 
in  the  same  State,  in  the  case  of  Robinson  v.  Crowder,  4  McCord,  519; 
where  it  was  held,  that  an  assignment  by  one  partner  of  all  the  effects  of  the 
firm  in  payment  of  the  partnership  debts  was  valid,  as  against  his  copartners. 
In  Pearpoint  v.  Graham,  4  Wash.  C.  C.  232,  in  the  Circuit  Court  of  the  United 
States  for  the  district  of  Pennsylvania,  Judge  Washington  doubted  the  right 
of  one  of  the  partners,  without  the  consent  of  the  others,  to  assign  the  whole 
of  the  partnership  effects  in  such  a  manner  as  to  terminate  the  partnership. 
But  he  declined  expressing  any  decided  opinion  upon  this  question,  which  he 
consitlered  unnecessary  to  the  decision  of  the  cause  then  befoi'e  him ;  as,  in 
that  case,  the  copartner  had  subsequently  assented  to  the  assignment.  In 
Mills  V.  Barber,  4  Day,  428,  the  Supreme  Court  of  Errors  in  Connecticut 
decided,  that  one  partner,  without  the  knowledge  of  the  other,  might  make  a 
valid  assignment  of  partnership  funds,  to  secure  the  payment  of  a  debt  due 
from  the  firm.  See  Forkner  v.  Stuart,  6  Graft.  197.  And  in  Harrison  v. 
Sterry,  5  Cranch,  289,  the  Supreme  Court  of  the  United  States  decided,  that 
one  of  the  partners  might  assign  the  partnership  effects  to  a  trustee,  for  the 
security  or  payment  of  the  creditors  of  the  firm,  without  the  concurrence  of 
his  copartners.  I  do  not  intend,  in  this  case,  to  express  any  opinion  in  favor 
of  the  validity  of  such  an  assignment  of  the  partnership  effects  to  a  trustee 
by  one  partner,  against  the  known  wishes  of  his  copartner,  and  in  fraud  of 
his  i-ight  to  participate  in  the  distribution  of  the  partnership  funds  among  the 
creditors,  or  in  the  decision  of  the  question,  which  of  those  creditors  should 
have  a  preference  in  payment,  out  of  the  effects  of  an  insolvent  concern. 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  181 

than  he  possesses  ;  and  he  cannot  transfer  the  property 
belonging  to  the  firm,  whether  it  was  conveyed  directly 

As  a  Court  of  Equity,  upon  a  proper  application,  would  protect  the  rights  of 
the  several  partners  in  this  respect,  before  an  assignment  had  actually  been 
made,  and  if  they  could  not  agree  among  themselves,  would  appoint  a  receiver 
of  the  effects  of  the  partnership,  and  would  apply  them  in  payment  of  all 
the  debts  due  from  the  firm  ratably,  it  might  perhaps  apply  the  same  rule  to 
the  case  of  an  assignment  to  a  trustee  for  the  payment  of  the  favorite  credi- 
tors of  one  of  the  partners  only,  where  the  equitable  rights  of  the  parties  had 
not  in  fact  been  changed  by  any  proceedings  under  the  assignment."  —  But 
in  the  subsequent  case  of  Havens  v.  Hussey,  5  Paige,  30,  31,  the  Chancellor 
greatly  quahfied  that  ojiinion.  On  that  occasion  he  said:  "In  the  case  of 
Egberts  v.  Wood,  3  Paige,  517,  I  had  occasion  to  refer  to  most  of  the  cases 
relative  to  assignments  of  partnershij?  effects  made  by  one  of  the  copartners. 
And  I  then  arrived  at  the  conclusion,  that,  from  the  nature  of  the  contract 
of  copartnership,  one  of  the  partnership  might  make  a  valid  assignment  of 
the  partnership  effects,  or  so  much  thereof  as  was  necessary  for  that  purjDOse, 
in  the  name  of  the  firm,  directly  to  one  or  more  of  the  creditors  in  payment 
of  his  or  their  debts ;  although  the  effect  of  such  assignment  was  to  give  a 
preference  to  one  set  of  creditors  over  another.  But  as  it  was  not  necessary 
for  the  decision  of  that  case,  I  did  not  express  any  opinion,  as  to  the  validity 
of  an  assignment  of  the  partnership  effects  by  one  partner,  against  the  known 
wishes  of  his  copartner,  to  a  trustee,  for  the  benefit  of  the  favorite  creditors 
of  the  assignor;  in  fraud  of  the  rights  of  his  copartner  to  participate  in  the 
distribution  of  the  partnership  effects  among  the  creditors,  or  in  the  decision 
of  the  question  as  to  which  of  the  creditors,  if  any,  should  have  a  preference 
in  payment  out  of  the  effects  of  an  insolvent  concern.  The  present  case 
presents  that  point  distinctly  for  the  decision  of  the  court.  And  upon  the  most 
deliberate  examination  of  the  question,  I  am  satisfied,  that  the  decision  of  the 
Vice- Chancellor  is  correct ;  that  such  an  assignment  is  both  illegal  and  inequit- 
able, and  cannot  be  sustained.  The  principle,  upon  which  an  assignment  by 
one  partner  in  payment  of  a  partnership  debt  rests,  is,  that  there  is  an  implied 
authority  for  that  purpose  from  his  copartner,  from  the  very  nature  of  the 
contract  of  partnership ;  the  payment  of  the  company  debts  being  always  a 
part  of  the  necessary  business  of  the  firm.  And  while  either  party  acts  fairly 
within  the  limits  of  such  implied  authority,  his  contracts  are  valid,  and  bind- 
ing upon  his  copartner.  One  member  of  the  firm,  therefore,  without  any 
express  authority  from  the  other,  may  discharge  a  ])artnership  debt,  either 
by  the  payment  of  money,  or  by  the  transfer  to  the  creditor  of  any  other  of 
the  copartnership  effects ;  although  there  may  not  be  sufficient  left  to  pay  an 
equal  amount  to  the  other  creditors  of  the  firm.  But  it  is  no  part  of  the 
ordinary  business  of  a  copartnership,  to  appoint  a  trustee  of  all  the  part- 
nership effects,  for  the  purpose  of  selling  and  distributing  the  proceeds 
among  the  creditors  in  unequal  proportions.  And  no  such  authority  as 
that  can  be  implied.     On  the  contrary,  such  an  exercise  of  power  by  one 


182  PARTNERSHIP.  [CHAP.  VII. 

to  the  firm,  or  held  in  trust ;  for  it  belongs  to  the  part- 
ners as  tenants  in  common,  and  neither  of  the  partners 
can  convey  more  than  his  undivided  interest.^ 

of  tlie  firm,  without  the  consent  of  the  other,  is  in  most  cases  a  virtual 
dissolution  of  the  copartnership ;  as  it  renders  it  impossible  for  the  firm  to 
continue  its  business.  The  case  of  Harrison  v.  Sterry,  5  Cranch,  289,  which, 
perhaps,  has  gone  as  far  as  any  other  on  this  subject,  was  not  sustained  as 
an  assignment  of  all  the  partnership  effects  to  a  trustee  for  the  payment  of 
preferred  creditors.  It  professed  to  be  the  transfer  of  a  certain  specific 
portion  of  the  partnership  property,  for  the  purpose  of  saving  the  credit  of 
the  firm,  and  to  raise  funds  to  carry  on  the  partnership  business.  And  upon 
the  ground  that  it  was  not  in  fact  what  it  professed  to  be,  but  was  merely 
intended  to  give  a  preference  to  particular  creditors,  the  court  held  the 
assignment  void,  as  a  fraud  upon  the  bankrupt  laws.  It  was  only  upon 
the  supposition,  that  the  assignment  was  in  fact  what  it  professed  to  be,  that 
Chief  Justice  Marshall  held  it  to  be  within  the  power  usually  exercised  by  a 
managing  partner."  In  Hitchcock  v.  St.  John,  1  Iloff.  511,  Mr.  Vice- 
Chaucellor  Hoffman  decided  against  the  authority  of  one  partner  to  make 
any  general  assignment,  allowing  preferences,  and  said :  "  The  power  to 
make  a  sale  of  the  partnership  effects  resides  in  each  partner  while  the 
relation  exists.  The  power  to  bind  the  firm  upon  a  purchase  equally  exists  in 
each,  although  the  goods  never  came  into  joint  stock.  All  these  instances 
of  authority,  as  well  as  that  to  make  negotiable  paper,  flow  from  the  principle, 
that  each  is  the  agent  of  the  whole.  But  for  what  is  he  such  agent  ?  For 
the  purposes  of  carrying  on  the  business  of  the  firm,  and  because  the 
authority  to  do  the  act  is  implied  from  the  nature  of  the  business.  Best,  J., 
In  Barton  v.  Williams,  5  B.  &  Aid.  395,  405.  Now  a  transfer  of  all  the  effects 
of  a  firm  for  payment  of  its  debts,  is  a  virtual  dissolution  of  the  partner- 
ship. It  supersedes  all  the  business  of  the  firm,  as  such.  It  takes  from 
the  control  of  each  all  the  property  with  which  such  business  is  conducted. 
The  purposes  of  the  business  then  clearly  do  not  require  that  such  a  power 
should  be  implied.  What  other  reason  is  there  for  holding,  that  by  the 
contract  of  partnership  it  is  to  be  inferred  ?  I  do  not  think  that  the  principle 
insisted  upon  by  the  counsel  for  the  defendant  is  the  true  one,  namely,  that 
such  a  transfer  is  only  invalid,  when  it  operates  as  a  fraud  upon  the  other 
partner;  when,  for  example,  it  is  made  against  his  wishes,  and  to  give 
preferences,  which  he  is  unwilling  to  give.  It  strikes  me  that  the  principle, 
upon  which  the  invalidity  is  established,  lies  deeper.  I  consider  that  neither 
during  the  existence,  nor  after  the  dissolution  of  a  partnership,  can  such 
a  transfer  be  made,  because  of  want  of  power  in  any  one  partner  to  make 
it.  A  direct  payment  of  money,  or  a  transfer  of  property  to  an  acknowl- 
edged creditor,  is  an  admitted  and  a  necessary  power,  during  the  existence 
of  the  partnership.     We  probably  are  compelled  by  authoi'ities  to  go  so  far 


Anderson  v.  Tompkins,  1  Brock.  456,  463.     {See  §  94.} 


CHAP.   YII.]  POWERS    AND    AUTHORITIES.  183 

§  102.  Each  partner  may,  in  like  manner,  enter  into 
any  contracts  or  engagements  on  behalf  of  the  firm  in 
the  ordinary  trade  and  business  thereof;  as  for  example, 
by  buying,  or  selling,  or  pledging  goods, ^  or  by  paying, 
or  receiving,  or  borrowing  moneys,  or  by  drawing,  or 
negotiating,  or  indorsing,  or  accepting  bills  of  exchange, 
and  promissory  notes,  and  checks,  and  other  negotiable 
securities,  or  by  procuring  insurance  for  the  firm,  or  by 
doing  any  other  acts,  which  are  incident  or  appropriate 

as  to  say,  that  it  is  a  necessary  surviving  power  after  a  dissolution,  in  what- 
ever way  that  is  effected.  All  that  is  requisite  to  test  the  transfer  is  the 
amount  of  debt,  and  the  extent  of  the  fund  assigned.  But  upon  an  assign- 
ment of  the  property  of  a  firm  to  a  trustee,  a  complication  of  duties  and 
responsibilities  is  involved.  An  agent  is  appointed  to  control  and  dispose 
of  the  whole.  The  capacity,  integrity,  and  industry  of  another  are  brought 
to  the  management ;  and  the  fitness  of  the  party  selected  is  judged  of  solely 
by  one  member  of  the  firm.  From  what  part  or  principle  of  the  partnership 
relation  can  such  an  authority  emanate  ?  It  is  impossible  to  uphold  a  rule, 
which  would  rob  every  member  of  a  firm  of  a  voice  and  share  in  this  last, 
and  probably  most  important  act  of  a  foiling  house.  It  is  no  contradiction  of 
this  doctrine,  that,  where  the  assignment  is  made  after  insolvencv,  and  divides 
the  funds  with  perfect  equality  among  all  the  creditors,  it  will  be  supported. 
It  is  clear,  that  either  partner  might  file  a  bill,  obtain  an  injunction  and 
receiver,  and  insure  an  equal  distribution  of  all  the  funds.  An  assignment 
fairly  securing  the  same  equality  is  an  object  of  favor  in  this  court.  In  the 
absence  of  any  indication  on  the  part  of  the  copartner  of  a  contrary  inten- 
tion, it  may  well  be  inferred,  that  he  consents  to  do  justice.  A  serious 
question  might  indeed  arise  in  a  case  in  which,  after  such  an  assignment 
by  one  partner,  the  other  should  make  a  transfer  of  a  specific  piece  of 
property,  in  payment  of  a  just  debt  of  the  firm."  There  is  no  small  difficulty 
in  supporting  the  doctrine,  even  with  these  qualifications,  that  one  partner 
may  make  a  general  assignment  of  all  the  partnership  property.  {Graser  v. 
Stellwagen,  25  N.  Y.  315  ;  Welles  v.  March,  30  N.  Y.  344;  Robinson  v. 
Gregory,  29  Barb.  560 ;  McClelland  v.  Remsen,  36  Barb.  622 ;  Palmer  v. 
Myers,  43  Barb.  509  ;  Pettee  v.  Orser,  6  Bosw.  123 ;  Kimball  v.  Hamilton 
Fire  Ins.  Co.  8  Bosw.  495;  Hennessy  v.  Western  Bank,  6  W.  &  S.  300; 
Sloan  V.  Moore,  37  Penn.  St.  217 ;  M'Cullough  v.  Sommerville,  8  Leigh, 
415 ;  Hughes  v.  Ellison,  5  Mo.  463 :  Drake  v.  Rogers,  6  Mo.  317  ;  Forbes 
V.  Scannell,  13  Cal.  242 ;  Barcroft  v.  Snodgrass,  1  Coldwell,  430 ;  1  Am. 
Lead.  Cas.  444,  4th  ed.} 

1  {One  partner  may  execute  a  valid  mortgage  of  a  vessel  owned  by  the 
firm.  Ex  parte  Howden,  2  Mont.  D.  &  De  G.  574 ;  Patch  v.  Wheatland,  8 
All.  102.} 


184  PARTNERSHIP.  [CHAP.  YII. 

to   such    trade    or  business,  according  to  the  common 
course  and  usages  thereof.^     So  each  partner  may  con- 

'  3  Kent,  40-42 ;  Story  on  Ag.  §  37,  124 ;  Coll.  on  P.  B.  3,  c.  1,  §  4,  p. 
282,  2d  ed. ;  Id.  B.  2,  c.  2,  §  1,  p.  128,  129 ;  Id.  B.  3,  c.  1,  p.  259 ;  Id.  §  1, 
p.  263,  268-293 ;  Gow  on  P.  c.  2,  §  2,  p.  36-69,  3d  ed. ;  Id.  c.  4,  §  1,  p. 
146,  147;  Wats,  on  P.  c.  4,  p.  167,  2d  ed. ;  Id.  p.  195.  — The  cases  on 
this  subject  are  exceedingly  numerous.  Many  of  them  will  be  found  col- 
lected in  the  elementary  wi-iters  in  the  pages  above  cited.  See  also  Swan 
V.  Steele,  7  East,  210 ;  Hope  v.  Oust,  cited  by  Lawrence,  J.,  in  1  East,  53 ; 
Sandilands  v.  Marsh,  2  B.  &  Aid.  673;  U.  S.  Bank  v.  Binney,  5  Mason, 
176 ;  s.  c.  5  Pet.  529 ;  South  Carolina  Bank  v.  Case,  8  B.  &  C.  427 ;  Liv- 
ingston V.  Roosevelt,  4  Johns.  251 ;  Fisher  v.  Tayler,  2  Hare,  218,  229. 
In  Winship  v.  Bank  of  U.  S.  5  Pet.  529,  561,  Mr.  Chief  Justice  Marshall, 
in  delivering  the  opinion  of  the  court,  said:  "  Partnerships  for  commercial 
purposes,  for  trading  with  the  world,  for  buying  and  selling  from  and  to  a 
great  number  of  individuals,  are  necessarily  governed  by  many  general 
principles,  which  are  known  to  the  public,  which  subserve  the  purpose  of 
justice,  and  which  society  is  concerned  in  sustaining.  One  of  these  is, 
that  a  man,  who  shares  in  the  profit,  although  his  name  may  not  be  in  the 
firm,  is  responsible  for  all  its  debts.  Another,  more  applicable  to  the  subject 
under  consideration,  is,  that  a  partner,  certainly  the  acting  partner,  has 
power  to  transact  the  whole  business  of  the  firm,  whatever  that  may  be,  and 
consequently  to  bind  his  partners  in  such  transactions,  as  entirely  as  himself. 
This  is  a  general  power,  essential  to  the  well  conducting  of  business ;  which 
is  implied  in  the  existence  of  a  partnership.  When,  then,  a  partnership  is 
formed  for  a  particular  purpose,  it  is  understood  to  be  in  itself  a  grant  of 
power  to  the  acting  members  of  the  company  to  transact  its  business  in  the 
usual  way.  If  that  business  be  to  buy  and  sell,  then  the  individual  buys 
and  sells  for  the  company,  and  every  person,  with  whom  he  trades  in  the 
way  of  its  business,  has  a  right  to  consider  him  as  the  company,  whoever 
may  compose  it.  It  is  usual  to  buy  and  sell  on  credit ;  and  if  it  be  so,  the 
partner,  who  purchases  on  credit  in  the  name  of  the  firm,  must  bind  the  firm. 
This  is  a  general  authority  held  out  to  the  world,  to  which  the  world  has  a 
right  to  trust.  The  articles  of  copartnership  are  perhaps  never  published. 
They  are  rarely  if  ever  seen,  except  by  the  partners  themselves.  The 
stipulations  they  may  contain  are  to  regulate  the  conduct  and  rights  of  the 
parties,  as  between  themselves.  The  trading  world,  with  whom  the  company 
is  in  jierpetual  intercourse,  cannot  individually  examine  these  articles,  but 
must  trust  to  the  general  powers  contained  in  all  partnerships.  The  acting 
partners  are  identified  with  the  company,  and  have  power  to  conduct  its 
usual  business,  in  the  usual  way.  This  power  is  conferred  by  entering 
into  the  partnership,  and  is  perhaps  never  to  be  found  in  the  articles.  If  it 
is  to  be  restrained,  fair  dealing  requires  that  the  restriction  should  be  made 
known.  These  stipulations  may  bind  the  partners  ;  but  ought  not  to  affect 
those  to  whom  they  are  unknown,  and  who  trust  to  the  general  and  well 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  185 

sign  goods  to  an  agent  or  factor  for  sale  on  account  of 
the  firm,  and  give  instructions  and  orders  relating  to 
the  sale.^  All  such  contracts  and  engagements,  acts  and 
things,  he  has  authority  to  make  and  do  in  the  name  of 
the  firm,  and,  indeed,  in  order  to  bind  the  firm,  they 
must  ordinarily  be  made  and  done  in  the  name  of  the 
firm;  otherwise  they  will  bind  the  individual  partner 
only,  who  executes  them,  as  his  own  private  acts,  con- 
tracts, or  other  things.^     And  this  is  entirely  in  coinci- 

establisbed  commercial  law."  See  also  Hooper  v.  Lusby,  4  Camp.  G6 ;  Le 
Roy  V.  Johnson,  2  Pet.  186,  198 ;  Ex  parte  Agace,  2  Cox,  312 ;  2  Bell, 
Coram.  B.  7,  p.  615-618,  5th  ed. ;   {1  Am.  Lead.  Cas.  407,  4th  ed.} 

'  3  Kent,  40-45. 

'^  {See  §  134-151,  202}  ;  Kirk  v.  Blurton,  9  M.  &  W.  284  ;  Faith  v.  Rich- 
mond, 11  Ad.  &  E.  339  ;  Story  on  Ag.  §  37,  39,  41,  147,  155,  161 ;  Coll.  on 
P.  B.  3,  c.  1,  §  4,  p.  277,  278,  282,  2d  ed. ;  Id.  B.  8,  c.  2,  §  2,  p.  315-323, 
2d  ed.  ;  Pothier  on  Oblig.  n.  83,  and  note  by  Evans  ;  3  Kent,  41-44.  —Mr. 
Chancellor  Kent,  in  his  learned  Commentaries,  in  the  passage  above  cited, 
has  summed  up  the  doctrine  in  the  following  terms:  "In  all  contracts 
concerning  negotiable  paper,  the  act  of  one  partner  binds  all ;  and  even 
though  he  signs  his  individual  name,  provided  it  appears  on  the  face  of 
the  paper  to  be  on  partnership  account,  and  to  be  intended  to  have  a 
joint  operation.  But  if  a  note  or  bill  be  drawn  by  one  partner,  in  his 
own  name  only,  and  without  appearing  to  be  on  partnership  account,  or 
if  one  partner  borrow  money  on  his  own  security,  the  partnership  is  not 
bound  by  the  signature,  even  though  it  was  made  for  a  partnership  pur- 
pose, or  the  money  applied  to  a  partnership  use.  The  borrowing  partner 
is  the  creditor  of  the  firm,  and  not  the  original  lender.  If,  however,  the 
bill  be  drawn  by  one  partner  in  his  own  name,  upon  the  firm  or  partnership 
account,  the  act  of  drawing  has  been  held  to  amount,  in  judgment  of  law, 
to  an  acceptance  of  the  bill  by  the  drawer  in  behalf  of  the  firm,  and  to 
bind  the  firm  as  an  accepted  bill.  And  though  the  partnership  be  not  bound 
at  law  in  such  a  case,  it  is  held,  that  equity  will  enforce  payment  from  it,  if 
the  bill  was  actually  drawn  on  partnership  account.  Even  if  the  paper  was 
made  in  a  case,  which  was  not  in  its  nature 'a  partnership  transaction,  yet 
it  will  bind  the  firm,  if  it  was  done  in  the  name  of  the  firm,  and  there  be 
evidence  that  it  was  done  under  its  express  or  implied  sanction.  But  if  part- 
nership security  be  taken  from  one  partner,  without  the  previous  knowledge 
and  consent  of  the  others,  for  a  debt,  which  the  creditor  knew  at  the  time 
was  the  private  debt  of  the  particular  partner,  it  would  be  a  fraudulent 
transaction,  and  clearly  void  in  respect  to  the  partnership.  So,  if  I'rom  the 
subject-matter  of  the  contract,  or  the  course  of  dealing  of  the  partnership, 
the  creditor  was  chargeable,  with  constructive  knowledge  of  that  fact,  the 


186  PARTNERSHIP.  [CHAP.  VII. 

dence  with  the  rule  of  the  Roman  law,  as  to  jomt  em- 
ployers of  ships,  against  w^hom  the  exercitorial  action 

partnership  was  not  liable.  There  is  no  distinction  in  principle  upon  this 
point,  between  general  and  special  partnerships  ;  and  the  question,  in  all 
cases,  is  a  question  of  notice,  express  or  constructive.  All  partnerships  are 
more  or  less  limited.  There  is  none,  that  embraces,  at  the  same  time,  every 
branch  of  business  ;  and  when  a  person  deals  with  one  of  the  partners  in  a 
matter  not  within  the  scope  of  the  partnership,  the  intendment  of  law  will 
be,  unless  there  be  circumstances,  or  proof  in  the  case,  to  destroy  the  pre- 
sumption, that  he  deals  with  him  on  his  private  account,  notwithstanding  the 
partnership  name  be  assumed.  The  conclusion  is  otherwise,  if  the  subject- 
matter  of  the  contract  was  consistent  with  the  partnership  business  ;  and  the 
defendants  in  that  case  would  be  bound  to  show  that  the  contract  was  out  of 
the  regular  course  of  the  partnership  dealings.  When  the  business  of  a 
partnership  is  defined,  known,  or  declared,  and  the  company  do  not  appear 
to  the  world  in  any  other  light  than  the  one  exhibited,  one  of  the  partners 
cannot  make  a  valid  partnership  engagement,  except  on  partnership  account. 
There  must  be  at  least  some  evidence  of  previous  authority  beyond  the  mere 
circumstance  of  partnership,  to  make  such  a  contract  binding.  If  the  pub- 
lic have  the  usual  means  of  knowledge  given  them,  and  no  acts  have  been 
done  or  suffered  by  the  partnership,  to  mislead  them,  every  man  is  presumed 
to  know  the  extent  of  the  partnership,  with  whose  members  he  deals ;  and 
when  a  person  takes  a  partnership  engagement  without  the  consent  or  au- 
thority of  the  firm,  for  a  matter  that  has  no  reference  to  the  business  of  the 
firm,  and  is  not  within  the  scope  of  its  authority,  or  its  regular  course  of 
dealing,  he  is,  in  judgment  of  law,  guilty  of  a  fi-aud.  It  is  a  well-established 
doctrine,  that  one  partner  cannot  rightfully  apply  the  partnership  funds  to 
discharge  his  own  pre-existing  debts,  without  the  express  or  implied  assent  of 
the  other  partners.  This  is  the  case,  even  if  the  creditor  had  no  knowledge 
at  the  time,  of  the  fact  of  the  fund  being  partnership  property.  The  author- 
ity of  each  partner  to  dispose  of  the  partnership  funds,  strictly  and  rightfully, 
extends  only  to  the  partnership  business,  though  in  the  case  of  hona  fide  pur- 
chasers, without  notice,  for  a  valuable  consideration,  the  partnership  may,  in 
certain  cases,  be  bound  by  the  act  of  ope  partner.  But,  if  the  negotiable 
paper  of  a  firm  be  given  by  one  partner  on  his  private  account,  and  that 
paper,  issued  within  the  general  scope  of  the  authority  of  the  firm,  passes 
into  the  hands  of  a  bona  fide  holder,  Avho  has  no  notice,  either  actually  or 
constructively,  of  the  consideration  of  the  instrument ;  or  if  one  partner 
should  purchase,  on  his  private  account,  an  article,  in  which  the  firm  dealt, 
or  which  had  an  immediate  connection  with  the  business  of  the  firm,  a  differ- 
ent rule  applies,  and  one,  which  requires  the  knowledge  of  its  being  a  pri- 
vate, and  not  a  partnership  transaction,  to  be  brought  home  to  the  claimant. 
These  are  general  principles,  which  are  considered  to  be  well  established  in 
the  English  and  American  jurisprudence."  In  some  cases,  however,  it  is  a 
matter  of  great  nicety  to  decide,  whether  the  partner  alone  is  bound,  or  the 


CHAP.  YII.]  POWERS    AND    AUTHORITIES.  187 

lay.  Si  2^lures  navjem  exerceant,  cum  quoUhet  eoruin  in 
solidum  agi  potest.  JVe  in  plures  adversarios  destrin- 
gatur,  qui  cum  uno  contraxerit}  Jure  societatis  per 
socium  cere  alieno  socius  non  ohligatur,  nisi  in  commu- 
nem  arcam  pecimice  versce  sunt}  This  is  also  the  rule 
of  the  French  law,^  and  of  the  Scottish  law.^     Pothier 

partnership.  Thus  if  a  bill  is  drawn  upon  a  firm,  and  is  accepted  by  one  of 
the  firm  in  his  own  name,  it  will  be  treated  as  an  acceptance  of  the  firm. 
Wells  V.  Masterman,  2  Esp.  731;  Mason  v.  Rumsey.  1  Camp.  384;  Beach 
V.  State  Bank,  2  Ind.  488;  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  274,  275,  2d  ed. 
{But  see  Heenan  v.  Nash,  8  Minn.  407.}  So,  where  a  note  was  drawn,  "  I 
promise,"  and  was  signed  "  for  A.  B.  &  C.  —  A."  it  was  held  to  bind  the 
partnership.  Hall  v.  Smith,  1  B.  &  C.  407  ;  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  277, 
278,  2d  ed.  ;  Lord  Galway  v.  Matthew,  1  Camp.  403.  See  also  Story  on  Ag. 
§  154,  275,  276  ;  Doty  v.  Bates,  11  Johns.  544 ;  Gow  on  P.  c.  2,  §  2,  p.  40- 
42,  3ded. ;  Id.  p.  49, 50.  Wats,  on  P.  c.  4,  p.  214,  2ded. ;  U.  S.Bankr.Bin- 
ney,  5  Mason,  176  ;  s.  c.  5  Pet.  629  ;  Faith  v.  Richmond,  3  Per.  &  Dav.  187. 

1  D.  14,  1,  25;  Id.  14,  1,  2;  Poth.  Pand.  14,  1,  n.  10;  Domat,  1,  16, 
3,  art.  6,  7;  D.  14,  1,  4,  §  1,  2;  Domat,  1,  8,  4,  art.  16;  Story  on  Ag. 
§  124,  note. 

2  D.  17,  2,  82;  Domat,  1,  8,  3,  art.  10. 
^  Poth.  on  Oblig.  n.  83. 

^  2  Bell,  Comm.  B.  7,  c.  1,  p.  615,  5th  ed. ;  Ersk.  Inst.  B.  3,  tit.  3,  §  20. 
—  Mr.  Erskine  says  :  "  It  hath  been  much  disputed,  how  far  an  obligation, 
signed  by  one  of  the  partners,  affects  the  company  or  copartnery  by  the  Ro- 
man law ;  as  to  which,  a  variety  of  distinctions  hath  been  imagined  by  Doc- 
tors, to  reconcile  the  different  expressions  of  the  Roman  jurisconsults. 
According  to  our  present  practice,  the  partners  in  private  companies  gener- 
ally assume  to  themselves  a  firm  or  name,  proper  to  their  own  company,  by 
which  they  may  be  distinguished  in  their  transactions ;  and  in  all  deeds 
subscribed  by  this  name  of  distinction,  every  partner  is,  by  the  nature  of  co- 
partnery, understood  to  be  intrusted  with  a  power  from  the  company  of  bind- 
ing them.  Any  one  pai'tner,  therefore,  who  signs  a  bill,  or  other  obligation,  by 
the  company's  firm,  obliges  all  the  other  partners  :  but  where  he  subscribes  a 
deed  by  his  own  proper  subscription,  the  creditor,  who  followed  his  faith 
alone  in  the  transaction,  hath  no  action  against  the  company,  unless  he  shall 
prove,  that  the  money  lent  or  advanced  by  him  was  thrown  into  the  common 
stock."  Lord  Stair  savs  :  "  The  same  question  is  incident  here,  that  before 
hath  been  touched  concerning  mandates,  when  one  or  more  of  the  parties 
act  in  the  matter  of  the  society,  whether  thereby  the  whole  society  be  obliged 
by  the  obligations  of  these  ?  Whether  obligations,  made  to  these,  constitute 
the  society  creditor  ?  Or  whether  real  rights,  acquired  by  these,  are  ipso 
facto  common  to  the  society,  or  if  there  be  but  an  obligation  upon  the  actors 
to  communicate  the  property  always  remaining  in  the  actors,  till  they  effect- 
uallv  communicate  ?     The  resolution  of  this  beinjj  the   same  with   that  in 


188  PARTNERSHIP.  [CHAP.  VII. 

says :  Whatever  may  be  the  authority  of  a  partner,  in 
order  tliat  a  debt  contracted  by  him  should  bind  his 
partners,  it  is  necessary  that  it  should  be  contracted  in 
the  name  of  the  firm.^ 

§  102  a.  In  the  remarks  which  have  been  already 
made,  in  respect  to  the  power  of  each  partner  to  bind 
the  firm  by  bills  of  exchange,  promissory  notes,  checks, 
and  other  negotiable  instruments,  we  are  to  understand 
that  this  doctrine  is  not  applicable  to  all  kinds  of  part- 
nership, but  is  generally  limited  to  partnerships  in  trade 
and  commerce,  for  in  such  cases  it  is  the  usual  course  of 
mercantile  transactions,  and  grows  out  of  the  general 
customs  and  laws  of  merchants,  which  is  a  part  of  the 
common  law,  and  is  recognized  as  such.^  But  the  same 
reason  does  not  apply,  or  at  least  may  not  apply  to  oth- 
er partnerships,  unless  indeed  it  is  the  common  custom 
or  usage  of  such  business  to  bind  the  firm  by  negotiable 
instruments,  or  it  is  necessary  for  the  due  transaction 
thereof.^     Hence,  attorneys  who  are  in  partnership  have 

mandates,  we  refer  you  thither,  and  say  only  this  m  general,  that  when  these 
parties  only  act  in  the  name  of  the  society,  and  by  its  express  warrant,  or  by 
what  they  have  been  accustomed  to  do,  in  so  far  they  are  not  only  partners, 
but  mandators,  and  it  hath  the  same  effect,  as  if  the  society  had  acted  itself. 
But  when  they  act  not  so,  there  doth  only  arise  an  obligement  upon  the 
partners-actors  to  communicate  ;  in  the  mean  time  the  property  remaineth 
in  the  actors ;  and  if  transmitted  to  others  before  this  communication,  the 
society  will  be  thereby  excluded,  but  the  actors  will  remain  obliged  for  rep- 
aration of  the  damage  and  interest  of  the  society.  And  this  will  hold, 
though  things  be  bought  or  acquired  by  the  common  money  of  the  society ; 
but  all  the  natural  interest,  birth,  fruits,  and  profit  of  the  society,  is  of  it- 
self and  instantly,  common  to  the  society."  Stair's  Inst.  B.  1,  tit.  16,  §  6, 
p.  159. 

>  Both,  de  Soc.  n.  100,  101.  [But  see  Xewton  v.  Boodle,  3  C.B.  795; 
post,  §  202.] 

2  Hedley  v.  Bainbridge,  3  Q.  B.  316,  321 ;  {Tappan  v.  Bailey,  4  Met. 
529.} 

=»  {Dickinson  v.  Valpy,  10  B.  &  C.  128;  Brown  v.  Byers,  16  M.  &  W. 
252 ;  Greenslade  v.  Dower,  7  B.  &  C.  635 ;  Nicholson  v.  Ricketts,  2  E.  &  E. 
497  ;  Crosthwait  v.  Ross,  1  Humph.  23  ;  Gray  v.  Ward,  18  111.  32  ;  Lind.  on 
P.  214.     See  Kimbro  v.  Bullitt,  22  How.  256.} 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  189 

110  implied  authority  to  become  parties  to  negotiable 
instruments,  and  to  bind  the  firm  thereby.^  The  author- 
ity to  do  such  acts  must  in  such  cases  be  either  express- 
ly given,  or  be  recognized  as  proper  and  necessary,  or 
in  the  usual  course  of  the  particular  business  of  that 
firm.- 

§  103.  This  doctrine  of  the  common  law,  as  to  the 
general  right  and  authority  of  each  partner  to  bind  the 
firm,  and  act  for  the  firm  in  all  partnership  transactions, 
equally  applies  to  all  cases  of  partnership  in  trade, 
whether  the  partners  be  all  known,  or  some  be  secret 
or  dormant  partners.^    It  doubtless  has  its  foundation  in 

'  [So  an  attorney  has  no  implied  power,  as  such,  to  bind  his  partner 
by  receiving  money  to  lay  out  on  security  for  the  depositor,  and  to  hold 
the  money  in  his  hands  until  an  opportunity  offers  for  laying  it  out.  Har- 
man  v.  Johnson,  2  E.  &  B.  61,  18  Eng.  L.  &  Eq.  400;]  {Breckinridge  v. 
Shrieve,  -i  Dana,  375.  See  Atkinson  v.  Mackreth,  Law  Rep.  2  Eq.  570 ; 
Alliance  Bank  i'.  Tucker,  15  Weekly  Eep.  992.  See  §  126.  An  attorney 
has  no  implied  authority  to  bind  his  copartners  by  a  post-dated  check,  drawn 
in  the  firm  name.     Forster  v.  Mackreth,  Law  Rep.  2  Ex.  163.} 

2  Hedley  v.  Bainbridge,  3  Q.  B.  316,  321. 

^  Dormant  partners  ai'e  bound  by  the  written  unsealed  contracts  of  the 
ostensible  partners,  as  much  as  by  their  parol  contracts ;  but  not,  for  tech- 
nical reasons,  by  their  sealed  contracts.  {See  §  117-122.}  Beckham  v. 
Drake,  9  M.  &  W.  79,  s.  c.  11  M.  &  W.  315,  overruling  Beckham  v.  Knight, 
4  Bing.  N.  C.  243  ;  s.  c.  1  Man,  &  G.  738.  See  Swan  v.  Steele,  7  East,  210  ; 
Sandilands  r.  Marsh,  2  B.  &  Aid.  6  73;  U.  S.  Bank  v.  Binney,  5  Mason, 
176;  s.  c.  5  Pet.  529;  Coll.  on  P.  B.  3,  c.  1,  p.  259,  2d  ed.  The  whole 
doctrine  is  well  summed  up  by  Mr.  Chief  Justice  Marshall,  in  the  case  of 
Binney  v.  U.  S.  Bank,  5  Pet.  529,  561,  where  he  states  the  reasons  of  the 
general  rule,  and  the  application  of  it  to  dormant  partnershiji.  Immediately 
after  the  passage  already  cited  (ante,  §  102,  note),  he  added  as  follows:  "  The 
counsel  tor  the  plaintifi'  in  error  supposes,  that  though  tliese  principles  may 
be  apphcable  to  an  open  avowed  partnership,  they  are  inapplicable  to  one 
that  is  secret.  Can  this  distinction  be  maintained  ?  If  it  could,  there  would 
be  a  difference  between  the  responsibility  of  a  dormant  partner,  and  one 
whose  name  was  to  the  articles.  But  their  responsibility,  in  all  partnership 
transactions,  is  admitted  to  be  the  same.  Those  who  trade  with  a  firm  on  the 
credit  of  individuals,  whom  they  believe  to  be  members  of  it,  take  upon 
themselves  the  hazard  that  their  belief  is  well  founded.  If  they  are  mistaken, 
they  must  submit  to  the  consequences  of  their  mistake ;  if  their  belief  be 
verified  by  the  fact,  their  claims  on  the  partners,  who  were  not  ostensible,  are 


190  PARTNERSHIP.  [cHAP.  VII. 

common  convenience  and  public  policy  in  regard  to 
all  commercial  operations,  if  indeed  in  a  general  view 
it  might  not  be  deemed  almost  a  matter  of  moral  neces- 
sity in  the  enlarged  intercourse  and  trade  of  modern 
nations.  If  it  were  not  admitted,  then,  it  would  be  ne- 
cessary, that  every  partner  should  expressly  agree  to  or 
confirm  every  transaction  affecting  the  partnership  be- 
fore it  could  acquire  any  absolute  obligation,  or  be  con- 
clusive upon  the  partnership.  The  absence,  or  illness, 
or  remote  residence,  of  a  single  partner  might  greatly 
delay  and  retard,  if  it  would  not  prostrate  the  best  con- 
certed enterprise  or  bargain  ;  and  before  any  negotiation 
could  be  completed,  it  would  be  indispensable,  that  the 
other  contracting  party  should  first  by  inquiry  ascertain 
who  all  the   parties  were  in  any  particular  firm,  and 

as  valid  as  on  those  whose  names  are  in  the  firm.  This  distinction  seems  to 
be  founded  on  the  idea,  that,  if  partners  are  not  openly  named,  the  resort  to 
them  must  be  connected  with  some  knowledge  of  the  secret  stipulations  be- 
tween the  partners,  which  may  be  inserted  in  the  articles.  But  this  certainly 
is  not  correct.  The  responsibility  of  unavowed  partners  depends  on  the 
general  principles  of  commercial  law,  not  on  the  particular  stipulation  of  the 
articles.  It  has  been  supposed,  that  the  principles  laid  down  in  the  third  in- 
struction, respecting  these  secret  restrictions,  are  inconsistent  with  the  opinion 
declared  in  the  first ;  that  in  this  case,  where  the  articles  were  before  the 
court,  the  qnestion,  whether  this  was  in  its  origin  a  secret  or  an  avowed  part- 
nership, had  become  unimportant.  If  this  inconsistency  really  existed,  it 
would  not  affect  the  law  of  the  case;  unless  the  judge  had  laid  down  principles, 
in  the  one  or  the  other  instruction,  which  might  aifect  the  party  injuriously. 
But  it  does  not  exist.  ♦  The  two  instructions  were  given  on  different  views  of 
the  subject,  and  apply  to  different  objects.  The  first  respected  the  parties  to 
the  firm,  and  their  liability,  whether  they  were  or  were  not  known,  as  mem- 
bers of  it ;  the  last  applies  to  secret  restrictions  on  the  partners,  which 
change  the  power  held  out  to  the  world,  by  the  law  of  partnership.  The 
meaning  of  the  terms  '  secret  partnership,'  or  the  question,  whether  this  did 
or  did  not  come  within  the  definition  of  a  secret  partnership,  might  be  unim- 
portant ;  and  yet  the  question,  whether  a  private  agreement  between  the 
partners,  limiting  their  responsibility,  was  known  to  a  person  trusting  the 
firm,  might  be  very  important."  See  also  Watson  on  P.  c.  5,  p.  168-174,  2d 
ed.  Furze  v.  Sharwood,  2  Q.  B.  388,  417;  [and  it  exists  so  long  as  the 
relation  continues,  notwithstanding  the  objection  of  the  other  partners. 
AVIlkins  v.  Pearce,  5  Denio,  541  ;  Sage  v.  Sherman,  2  Comst.  417.] 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  191 

whether  they  had  all  deUberately  assented  thereto.  The 
arrangements  of  commerce,  which  are  now  accomplished 
in  a  single  hour  or  day,  might  thus  require  whole  weeks, 
or  even  months,  before  they  could  be  matured  or  estab- 
lished.^ To  avoid  this  difficulty,  the  common  law  has 
adopted  a  very  satisfactory,  and  at  the  same  time  a  very 
facile  rule.  It  decides,  that  in  the  absence  of  any  known, 
controlling  stipulation  between  the  parties,  each  partner 
shall  be  deemed  invested  by  the  consent  of  all  of  them 
with  an  equal  and  complete  power  of  administration  of  the 
whole  partnership  property,  funds,  and  affairs.  It  gives 
to  all  and  each  of  the  partners,  what  the  Roman  law 
allows  to  be  delegated  to  one  by  a  special  authority,  the 
entire  administration  of  all  the  partnership  business,  and 
thereby,  as  such  admistrator,  he  may  act  for  the  whole, 
and  in  the  name  of  the  whole.  Si  ijlures  exerceanU 
unmn  autem  de  numero  suo  raagistrwni  fecerint^  hujus 
nomine  in  soUdum  j^otenmt  conveniri.^ 

§  104.  It  has,  therefore,  been  well  remarked  by  a 
learned  writer,  that,  "  Although  the  general  rule  of  law 
is,  that  no  one  is  liable  upon  any  contract,  except  such 
as  are  privy  to  it ;  yet  this  is  not  contravened  by  the 
liability  of  partners,  as  they  may  be  imagined  virtually 
present  at,  and  sanctioning  the  proceedings,  they  singly 
enter  into  in  the  course  of  trade  ;  or,  as  each  is  vested 
with  a  power,  enabling  them  to  act  at  once  as  principals, 
and  as  the  authorized  agent  of  their  copartners.  It  is 
for  the  advantage  of  partners  themselves,  that  they  are 
thus  held  liable,  as  the  credit  of  their  firm  in  the  mer- 
cantile world  is  hereby  greatly  enhanced,  and  a  vast  fa- 
cility is  given  to  all  their  dealings ;  insomuch,  that  they 
may  reside  in  distant  parts  of  the  country,  or  in  different 

1  Wats,  on  p.  c.  4,  p.  16G,  1G7,  2d  cd. ;  Gow  on  P.  c.  2,  §  2,  p.  36,  37.  3d 
ed. ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  128,  129: 

2  D.  14,  1,  4,  1  ;  Civil  Code  of  France,  art.  1836,  1857. 


192  PARTNERSHIP.  [cHAP.  VII. 

quarters  of  the  globe.  A  due  regard  to  the  interests  of 
strangers  is  at  the  same  time  observed ;  for,  where  a 
merchant  deals  with  one  of  several  partners,  he  goes 
upon  the  credit  of  the  whole  partnership,  and  therefore 
ought  to  have  his  remedy  against  all  the  individuals  who 
compose  it."^ 

§  105.  Whenever,  therefore,  credit  is  given  to  a  firm, 
within  the  scope  of  the  business  of  that  firm,  whether 
the  partnership  be  of  a  general  or  of  a  limited  nature,  it 
will  bind  all  the  partners,  notwithstanding  any  secret 
reservations  between  them,  which  are  unknown  to  those 
who  give  the  credit.  And  no  subsequent  misappUcation 
of  the  fund  by  the  partner  procuring  it,  to  which  the 
creditor  is  not  a  party,  or  privy,  will  exonerate  them 
from  liability.  Thus,  for  example,  if  one  partner  should 
borrow  money  on  the  credit  of  the  firm,  which  he  should 
subsequently  misapply  to  his  own  private  purposes  with- 
out any  knowledge  or  connivance  on  the  part  of  the 
lender,  the  firm  would  be  bound  therefor.^ 

§  106.  Nor  will  it  make  any  diff'erence  in  cases  of 
this  sort,  as  to  third  persons,  whether  the  partnership 
is  carried  on  for  the  benefit  of  the  partners  themselves 
alone,  or  for  the  benefit  of  others,  who  are  the  cestids 
que  trusty  or  beneficiaries.  In  each  case  the  trustees 
and  the  cestuis  que  finest,  or  beneficiaries,  will  be  equally 
bound  by  the  acts  of  a  single  partner,  and  equally  liable 
therefor  to  third  persons.^  The  same  rule  applies, 
whether  the  partnership  is  carried  on  in  a  firm  or  com- 

1  Wats,  on  p.  c.  4,  p.  167,  168.  See  also  Gow  on  P.  c.  2,  §  2,  p.  36,  37, 
3d  ed. 

*  U.  S.  Bank  v.  Binney,  5  Mason,  176,  187,  188;  Etheridge  v.  Binney,  9 
Pick.  272,  274,  275;  Winship  v.  Bank  of  U.  S.  5  Pet.  529;  [Buckner  v. 
Lee,  8  Ga.  285,  291.] 

^  Coll.  on  P.  B.  3,  c.  1,  p.  260;  Thicknesse  v.  Bromilow,  2  Cromp.  &  J. 
425;  Clavering  v.  Westley,  3  P.  Wms.  402;  Furze  v.  Sharwood,  2  Q.  B. 
388,  417,  418.      {But  see  §  70.} 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  193 

pany  name,  or  in  the  name  of  one  partner  only.  If  in 
the  name  of  the  partner  only,  it  will,  however,  be  ne- 
cessary to  show,  that  the  transaction  was  in  the  business, 
or  upon  the  credit  of  the  partnership,  and  not  of  that 
partner  alone. ^ 

§  107.  The  like  rule  applies  to  other  acts,  done  by  any 
partner,  touching  the  partnership  business,  and  to  any 
acknowledgments,  representations,  declarations,  admis- 
sions, or  undertakings  of  any  partner  relating  thereto. 
Thus  the  representation  of  any  fact,  or  a  misrepresen- 
tation of  any  fact,  made  in  any  partnership  transaction, 
by  one  partner,  will  bind  the  firm.^  So,  the  acknowl- 
edgment of  one  partner,  during  the  continuance  of  the 
partnership,  of  a  debt,  as  due  by  the  partnership,  will 
amount  to  a  promise,  binding  on  the  firm.  So,  the  ad- 
mission of  any  fact,  by  one  partner,  material  as  evidence 
in  a  suit,  will,  under  the  like  circumstances,  be  deemed 
the  admission  of  all  the  partners.^  So,  a  part  payment 
of  a  debt  of  the  firm,  by  one  partner,  will  not  only 
extinguish  2^'f'o  tanto  the  partnership  debt,  but  will, 
under  the  like  circumstances,  operate  as  an  admission 
of  the  existence  of  the  residue  of  the  debt,  binding  on 

'  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  270-277,  2d  ed. ;  Baker  r.  Charlton,  1 
Peake,  80;  1  Mont,  on  P.  p.  37,  note  (c) ;  2  Bell,  Comm.  B.  7,  p.  615-618, 
5th  ed.  ;  Swan  v.  Steele,  7  East,  210;  {Davison  v.  Robertson,  3  Dow.  218.} 
U.  S.  Bank  i-.  Blnney,  5  Mason,  176  ;  s.  c.  5  Pet.  529  ;  [Buckner  v.  Lee,  8 
Ga.  285];  Etheridge  v.  Binney,  9  Pick.  272;  Ex  parte  Bolitho,  Buck,  100; 
South  Carolina  Bank  v.  Case,  8  B.  &  C.  427;  Manuf.  &  Mech.  Bank  v. 
Winship,  5  Pick.  11  ;  Mifflin  v.  Smith,  17  S.  &  R.  165;  Furze  v.  Sharwood, 
2  Q.  B.  388,  417,  418.  This  last  case  involved  the  same  point  as  was 
decided  in  U.  S.  Bank  v.  Binney,  5  Mason,  176,  and  it  was  decided  the  same 
way.     {See  §139.} 

-  Gow  on  P.  c.  2,  §  2,  p.  55,  3d  ed. ;  Id.  129,  130;  Rapp  v.  Latham,  2  B. 
&  Aid.  795 ;  Coll.  on  P.  B.  3,  c.  1,  §  4,  p.  290 ;  Id.  §  5,  p.  296-298,  2d  ed. ; 
Lucas  V.  De  la  Cour,  1  M.  &  S.  249 ;  [Blair  v.  Bromley,  5  Hare,  542.] 

3  [Pope  V.  Risley,  23  Mo.  185];   {Wickham  v.  Wickham,  2  K.  &  J.  478  ; 

Folk  t'.  Wilson,  21  Md.  538;  Gordon  v.  Bankard,  37  111.  14  7.     See  Wells  v. 

Turner,  16  Md.  133.} 

13 


194  PARTNERSHIP.  [cHAP.  VII. 

the  partnership.^  So,  the  acts  of  joint  proprietors  of 
stage  coaches,  in  relation  to  their  partnership  concerns, 
will  be  deemed  the  acts  of  all  of  them,  and  binding  on 
ali.^  So,  notice  to  or  by  one  of  a  firm  is  deemed  notice 
to  or  by  all  of  them.  ^ 

§  108.  The  principle  extends  further,  so  as  to  bind 
the  firm  for  the  frauds  committed  by  one  partner  in  the 
course  of  the  transactions  and  business  of  the  partner- 
ship, even  when  the  other  partners  had  not  the  slight- 
est connection  with,  or  knowledge  of,  or  participation 
in  the  fraud  ;  "*  for  (as  has  been  justly  observed),  by  form- 
ing the  connection  of  partnership,  the  partners  declare 
themselves  to  the  world  satisfied  with  the  good  faith 
and  integrity  of  each  other,  and  impliedly  undertake  to 
be  responsible  for  what  they  shall  respectively  do  withm 
the  scope  of  the  partnership  concerns. •"  Hence,  if  in 
the  business  of  the  partnership,  money  is  received,  partly 
by  one  of  the  firm  and  partly  by  another,  to  be  laid  out 

1  Coll.  on  P.  B.  3,  c.  1,  §  4,  p.  282-286,  290,  2d  ed. ;  Lacy  v.  M'Neile,  4  Dowl. 
&  R.  7;  Pittam  v.  Foster,  1  B.  &  C.  248;  Burleigh  v.  Stott,  8  B.  &  C.  36.— 
The  authorities  are  all  agreed  on  this  })oint,  during  the  existence  of  the 
partnership.  But  whether  such  an  acknowledgment  or  admission,  or  promise, 
or  payment  by  one  partner,  after  the  dissolution  of  the  firm,  will  bind  the 
others,  is  a  matter  upon  which  there  are  conflicting  authorities ;  and  the  point 
will  be  hereafter  discussed  in  another  connection.  See  Bell  v.  Mori-ison,  1 
Pet.  351,  373;  3  Kent,  49,  50;  Whitcomb  r.  Whiting,  2  Doug.  652;  Brisban 
V.  Boyd,  4  Paige,  1 7.  { On  the  law  under  the  jjresent  Statutes  of  Limitations 
in  England,  see  Lind.  on  P.  370-379.} 

2  Coll.  on  P.  B.  3,  c.  1,  §  4,  p.  287,  288,  2d  ed.;  Helsby  v.  Hears,  5  B. 
&  C.  504. 

=»  Coll.  on  P.  B.  3,  c.  1,  §  4,  p.  290-292,  2d  ed. ;  Bignold  v.  Waterhouse, 
1  M.  &  S.  255  ;  [Haywood  i'.  Harmon,  17  111.  477 ;  Bouldin  v.  Page,  24  Mo. 
594]  ;  {  Spaulding  v.  Ludlow  Woollen  Mill,  36  Vt.  150  ;  State  v.  Linaweaver, 
3  Head,  51  ;  Lind.  on  P.  230-232.  See  Baldwin  v.  Leonard,  39  Yt.  260; 
Herbert  v.  Odlin,  40  N.  H.  267.} 

«  [Pierce  v.  Wood,  3  Post.  519;  Locke  v.  Stearns,  1  Met.  560];  {See 
§  131,  166.} 

5  Gow  on  P.  c.  2,  §  2.  p.  55,  Id.  c.  4,  §  1,  p.  146-148,  3d  ed. ;  Coll.  on  P. 
B.  3,  c.  1,  §  5,  p.  293-304,  2d  ed. ;  Wats,  on  P.  c.  4,  p.  1  75,  2d  ed. 


CHAP.  Yll.]  POWERS    AND    AUTHORITIES.  195 

Upon  a  mortgage,  and  a  mortgage  is  forged  by  one  part- 
ner, without  the  knowledge  of  the  other,  the  innocent 
partner  will  be  liable  for  the  whole  money. ^  So,  if  repre- 
sentations of  certain  facts,  as  existing,  are  fraudulently 
made  by  one  partner,  unknown  to  the  others,  in  the 
partnership  business,  and  the  facts  never  existed,  but 
the  whole  statement  is  a  mere  fiction,  the  firm  will  be 
bound  to  the  same  extent,  as  if  it  were  true,  and  the 
facts  existed.^  This  whole  doctrine  proceeds  upon  the 
intelligible  ground,  that,  where  one  of  two  innocent 
persons  must  suffer  by  the  act  of  a  third  person,  he 
shall  suffer,  who  has  been  the  cause  or  occasion  of  the 
confidence  and  credit  reposed  in  such  third  person. 

§  109.  The  French  law  has  adopted  a  rule  essential- 
ly the  same  as  that  of  the  common  law.  The  admin- 
istration of  the  affairs  of  the  partnership  may  be 
delegated  or  intrusted  to  one  or  more  of  the  partners.^ 
But  in  the  absence  of  any  stipulation  to  this  effect,  the 
partners  are  deemed  to  have  given  reciprocally  to  each 

1  {§  166,  168};  Willett  v.  Chambers,  Cowp.  814;  Stone  v.  Marsh,  Ry.  & 
Moo.  364;  6  B.  &  C.  551  ;  Hume  v.  Bolland,  Ry.  &  Moo.  371  ;  Keating  v. 
Marsh.  2  CI.  &  Fin.  250  ;  Manuf.  &  Mech.  Bank  v.  Gore,  15  Mass.  75  ;  Board- 
man  V.  Gore,  15  Mass.  331 ;  [Blair  v.  Bromley,  5  Hare,  §42,  s.  c.  2  Phil.  354. 
But  see  Sims  v.  Brutton,  5  Exch.  802,  1  Eng.  L.  &  Eq.  446];  {Devaynes  v. 
Noble,  1  Mer.  572,  611;  Brydges  v.  Branfill,  12  Sim.  369.  Ex  parte  Bid- 
dulph,  3  De  G.  &  Sm.  587;  Sadler  v.  Lee,  6  Beav.  324;  De  Ribeyre  v. 
Barclay,  23  Beav.  107;  Eager  v.  Barnes,  31  Beav.  579;  Atkinson  v.  Mack- 
reth,  Law  Rep.  2  Eq.  570 ;  Sawyer  v.  Goodwin,  15  Weekly  Rep.  1008  ;  s.  c. 
36  L.  J.  Ch.  578,  St.  Aubyn  v.  Smart,  Law  Rep.  5  Eq.  183,  But  see  §  168, 
note;  also  Harman  v.  Johnson,  2  E.  &  B.  61.} 

-  Rapp  V.  Latham,  2  B.  &  Aid.  795  ;  Hume  v.  Bolland,  Ry.  &  Moo.  371 ; 
[Beach  v.  State  Bank,  2  Ind.  488  ;  Doremus  v.  McCormick,  7  Gill,  49  ;  Sweet 
V.  Bradley,  24  Barb.  549  ;  Hawkins  v.  Appleby,  2  Sand.  421]  ;  { Griswold  v. 
Haven,  25  N.  Y.  595  ;  French  v.  Rowe,  15  Iowa,  563.}  [And  in  Eipiity  the 
limitation  in  bar  of  the  claim  in  such  Ccises  does  not  begin  to  run  until  the  time 
of  the  discovery  of  the  fraud.  Blair  v.  Bromley,  5  Hare,  542,  s.  c.  2  Phil. 
354.     See  Sims  v.  Brutton,  5  Exch.  802,  1  Eng.  L.  &  Eq.  446.] 

*  Code  Civil,  art.  1856,  1857;  Poth.  de  Soc.  n.  66,  67,  89,  90,  96,  98; 
Poth.  on  Oblig.  n.  83;  Code  of  Louisiana  (of  1825),  art.  1841. 


196  PARTNERSHIP.  [cHAP.  VII. 

other  the  power  of  administering  the  one  for  the  other ; 
and  what  each  one  does  is  vaHd  even  for  the  share  of 
his  partners,  without  his  having  obtained  their  consent.^ 

»  Code  Civil,  art.  1859;  Poth.  de  Soc.  n.  90-100;  Poth.  on  Oblig.  n.  83, 
89.  —  Pothier  (on  Oblig.  n.  83)  has  expounded  tlie  reason  of  this  doctrine 
exactly  as  it  would  be  stated  at  the  common  law.  "  We  are  also  deemed  to 
contract  by  the  ministry  of  our  partners,  when  they  contract,  or  are  regarded 
as  contracting  for  the  affairs  of  the  partnership.  For,  by  entering  into  the 
partnei-ship  with  them,  and  permitting  them  to  transact  the  business  of  it,  we 
are  deemed  to  have  adopted  and  approved  beforehand  of  all  the  contracts, 
which  they  may  make  for  the  affairs  of  the  partnership,  as  if  we  had  con- 
tracted jointly  with  them,  and  we  have  acceded  beforehand  to  all  the  conse- 
quent obligations.  A  partner  is  deemed  to  contract  for  the  affairs  of  the 
partnership,  whenever  he  adds  to  his  signature  the  words,  and  Company, 
although  afterwards  the  contract  does  not  turn  to  the  benefit  of  the  pai'tner- 
ship.  For  instance,  if  he  borrows  a  sum  of  money,  for  which  he  gives  a  note 
with  the  words,  and  Company^  added  to  his  signature,  although  he  has  em- 
ployed the  money  in  his  private  affairs,  or  lost  it  at  play,  he  is  still  deemed  to 
have  contracted  for  the  affairs  of  the  partnership,  and  consequently  obliges 
his  partners  as  having  borrowed  the  money  jointly  with  him,  and  as  having 
contracted  by  his  ministry.  For  his  partners  must  take  the  consequence  of 
having  entered  into  their  engagement  with  such  a  person ;  but  those,  who 
contract  with  him,  ought  not  to  be  deceived  and  suffer  by  his  want  of  fidelity. 
The  signature,  and  Company,  does  not,  however,  oblige  my  partners,  if  it 
appears  by  the  very  nature  of  the  contract,  that  it  does  not  concern  the 
affairs  of  the  partnership ;  as  if  I  put  that  signature  to  the  lease  belonging  to 
myself  and  not  to  the  company.  AVhen  the  partner  does  not  sign  and 
Company,  he  is  deemed  to  have  only  contracted  for  his  own  private  affairs, 
and  does  not  bind  his  partners,  unless  the  creditor  shows  by  other  proof,  that 
he  contracted  in  the  name  of  the  partnership,  and  that  the  contract  actually 
related  to  the  partnership  affairs."  See  also  Story  on  Ag.  §  124,  note  (1), 
and  Poth.  on  Oblig.  n.  44  7,  448;  Poth.  de  Soc.  n.  96.  Mr.  Bell  in  his 
learned  Commentaries  (2  Bell,  Comm.  B.  7,  p.  611,  5th  ed.)  has  made  some 
very  appropriate  remarks  on  the  state  of  the  Roman  law.  "  Partnership  is 
thus  a  contract  involving  important  relations  to  the  public,  as  well  as  to  the 
contracting  partners.  In  the  infancy  of  trade  it  is  little  regarded  or  under- 
stood ;  and  no  proofs  perhaps  are  more  decisive  of  the  low  state  of 
mercantile  intercourse  in  Rome,  than  the  very  imperfect  state  of  the 
Roman  jurisprudence  with  respect  to  partnership.  In  the  simple  view  of 
partnership  as  a  mere  society,  in  all  that  relates  to  the  shares  of  parties 
accidentally  associated  as  joint  proprietors,  or  the  rules  of  contribution 
and  division  in  the  management  of  a  common  stock  or  concern,  there  is 
no  defect  in  the  Roman  law.  But  the  subject  is  never  contemplated  in 
that  more  delicate  and  important  light,  which  presents  for  decision  the 
interests  and  dealings  of  the  company  with  third  parties,  and  the  powers 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  197 

In  these  respects  the  French  law  differs  (as  has  been 
already  suggested)  from  the  Roman  law ;  for  the  latter 
did  not  ordinarily  clothe  one  partner  (any  more  than 
any  other  agent)  with  the  power  of  generally  adminis- 
tering the  affairs  of  the  partnership,  unless  it  was 
especially  delegated  and  confided  to  him.  Under  other 
circumstances,  each  one  could  act  only  for  his  own 
share,  and  so  bind  himself.^  Nemo  ex  sociis  plus  parte 
sua  p)otest  aUenare,  efsi  totofntm  honorum  socii  sint.^ 
Item  magistri  societatum  p)actum  et  p)Todesse  et  ohesse 
constat.^  Si  socius  p)^^opriam.  pecuniam  mutuam  dedit, 
omnimodo  creditam,  [jpemniam^  faeiL  licet  ceteri  dissen- 
serint.     Quod  si  coinmunem  [^pecuniani]  numeravit,  non 

of  partners  to  pledge  the  stock  and  credit  of  the  society  with  the  indi- 
vidual responsibility  of  the  partners.  In  modern  times,  the  effects  of  this 
contract,  in  its  relations  to  third  parties,  are  by  far  the  most  important. 
The  question  in  this  view  is,  not  what  share  or  profit,  or  what  proportion 
of  loss,  upon  a  common  stock,  each  partner  is  to  gain  or  to  suffer;  but 
what  are  the  rights  of  those,  who  deal  with  the  company,  in  claiming 
preferably  on  its  common  stock,  and  what  responsibility  is  undertaken  by  the 
several  j^ai'^ners  for  contracts  bona  fide  entered  into  by  third  parties  ?  In 
this  inquiry,  be  the  reciprocal  rights  and  liabilities  of  the  partners  what  they 
may  in  respect  to  each  other,  they  each,  in  their  relation  to  the  public,  hold 
an  authority,  which  no  force  of  private  stipulation  can  alter  or  restrain ;  and 
by  means  of  which,  in  the  face  of  the  most  express  injunctions  or  prohibitions 
of  their  contract,  the  several  partners,  or  even  those  jjerhaps,  who  may  long 
have  left  the  partnership,  may,  by  the  act  of  any  one  of  the  number,  be  made 
responsible  to  third  jjarties  to  the  whole  extent  of  their  private  fortune.  It 
is  in  this  view  chieliy,  that  definitions  of  partnership  (which,  like  all  others, 
are  proverbially  dangerous,  seldom  useful)  are  to  be  received  with  peculiar 
caution,  if  borrowed  or  derived  from  the  writings  of  the  civilians;  who  neg- 
lect almost  entirely  the  implied  power  and  unlimited  mandate  of  the  partners 
to  bind  the  rest.  Even  in  the  writings  of  some  modern  lawyers,  this  limited 
character  appears  in  their  definitions  of  partnership,  while  their  doctrine  ex- 
tends to  consequences  which  are  not  presented  prominently  in  the  descrip- 
tion."    See  post,  last  note  of  this  section. 

'  Poth.  Pand.  17,  2,  n.  26-29;  Domat,  1,  8,  4,  art.  16;  D.  17,  2,  68; 
Story  on  Ag.  §  124,  note  (1)  ;  Id.  §  425-427  ;  ante,  §  102. 

'-  D.  17,  2,  68;  Poth.  Pand.  17,  2,  n.  26,  27. 

*  D.  2,  14,  14;  Poth.  Pand.  2,  14,  n.  46;  Domat,  1,  8,  4,  art.  16;  Poth. 
de  Soc.  n.  89. 


198  PARTNERSHIP.  [CHAP.  VII. 

alias  creditam  efficit^nisi  ceteri  quoque  consentiant ;  quia 
Slice  j^a^tis  tantutn  alienatlonem  hahuit}  This  delega- 
tion of  the  administration  of  the  partnership,  or  assent 
to  any  contract  made  by  one  partner,  need  not,  under 
the  Roman  law,  be  express  ;  but  might  be  implied  from 
circumstances.  But  it  has  been  a  matter  of  no  small 
discussion  among  the  civilians,  what  circumstances  were 
sufficient  for  such  a  purpose.^ 

^  D.  12,  1,  16;  Poth.  Pand.  12,  1,  n.  12;  Domat,  1,8,  4,  art.  16. 

^  Story  on  Ag.  §  124,  n.  (1);  Poth.  de  Soc.  n.  96.  —  In  these  respects 
the  Roman  law  seems  to  have  followed  out  its  own  doctrines  respecting 
the  rights,  duties,  and  obligations  of  principals  and  agents.  The  follow- 
ing statement  of  the  general  provisions  of  that  law  on  this  subject  may 
not  be  unacceptable.  By  the  Roman  law,  as  it  originally  stood,  the  prin- 
cipal could  not  ordinarily  sue  or  be  sued  on  the  contract  made  through  the 
instrumentality  of  his  agent ;  but  the  latter  was  generally  treated  as  the 
proper  and  sole  contracting  party.  This  was  subsequently  altered  by  the 
edicts  of  the  Praetor,  so  far  as  it  respected  the  rights  of  third  persons  to 
institute  suits  against  the  principal,  in  cases  falling  within  the  reach  of  the 
exercitorial  and  institorial  actions.  But  the  exercitorial  action  did  not  lie 
in  favor  of  the  owner  or  employer  {exerciloi')  against  the  other  contracting 
party.  He  was  not,  however,  without  a  remedy  ;  for,  if  there  was  a  con- 
tract of  hire  with  the  master,  the  owner  or  employer  might  recover  the 
hire  in  a  direct  action  ex  locato ;  if  it  was  a  gratuitous  contract,  he  might 
maintain  an  action  ex  mandato.  So  the  Digest  has  declared.  Sed  ex  con- 
trarioy  exercenti  naveni  adversus  eos,  qui  cum  magistro  contraxerunt,  actio 
non  pollicetur,  quia  non  eodem  auxilio  indigebat ;  sed.  aut  ex  locato  cum 
magistro,  si  mercede  operam  ei  exhibet ;  aut  si  gratuitam,  mandati  agere 
potest.  The  institorial  action  was,  also,  in  its  terms  apparently  limited  to 
suits  against  the  principal,  ^quum  Prcelori  visum  est,  sicut  commoda  sen- 
timus  ex  actu  institorum,  ita  etiam  ohligari  nos  ex  contractibus  ipsorum  et 
conveniri.  But  no  like  action  lay  against  the  other  contracting  party  by  the 
principal.  However,  he  was  not  without  remedy ;  since,  by  a  cession  of  the 
right  of  action  from  the  institor,  he  might,  in  some  cases,  maintain  a  suit 
founded  thereon  against  the  other  party.  Sed  non  idem  facit  circa  eum, 
qui  institorem  prceposuit,  ut  experiri  possit:  sed,  si  quidem  servum  proprium 
institorem  habuit,  potest  esse  securus,  acquisitis  sibi  action  ibus ;  si  autem 
vel  alienum  servum,  vel  etiam  Jwminem  iiherum,  actione  dejicietur.  Ipsum 
tamen  institorem,  vel  dominum  ejus  convenire  poterit,  vel  mandati,  vel 
negotiorum  gestorum.  It  is  added :  Marcellus  autem  ait,  debere  dari 
actionem  ei,  qui  institorem  prceposuit,  in  eos,  qui  cum  eo  contraxerint.  And 
Gains  held,  that  the  principal  might  maintain  the  suit,  if  he  could  not  other- 
wise vindicate  his  right ;    Eo  nomine,  quo  institor  contraxit,  si  modo  aliter  rem 


CHAP.  YII.]  POWERS    AND    AUTHORITIES.  199 

§  110.   The  limitations  at  the  common  hiw,  upon  this 
authority  of  each  partner  to  bind  the   partnership,  may 

siiam  servare  non  potest.  In  special  cases,  also,  where  the  contract,  made 
through  an  agent,  was  declared  to  be  directly  obligatory  between  the  princi- 
pal and  the  other  contracting  party  (as,  for  example,  in  case  of  a  sale),  the 
principal  might  maintain  a  direct  action  thereon.  Thus,  the  Digest  puts  it : 
Si  prociwato?-  vendiderit,  et  caverit  emptori ;  quceritur,  an  domino,  vel  adversus 
dominum  actio  dari  debe.at  ?  Et  Papinianus  (Lib.  3,  Responsorum)/jM^o/,  cu7n 
domino  ex  empto  agi  posse  utili  actione,  ad  exemplum  institorim  actionis  si  mode 
rem  vendendam  mandavit ;  ergu  et  per  contrariuyn,  dicendum  est^  utilem  ex  empto 
actionem  domino  competere.  But,  except  in  these  and  a  few  other  cases,  the 
general  rule  seems  to  have  prevailed  in  the  Roman  law,  that  reciprocal 
actions  lay  in  cases  of  agency  only  between  the  direct  and  immediate 
parties  thereto.  The  modern  nations  of  continental  Europe  seem,  with 
great  wisdom,  to  have  adopted  the  general  doctrine  of  allowing  reciprocal 
actions  between  the  principal  and  the  other  contracting  parties,  where  it 
is  not  excluded  by  the  nature,  or  express  terms  of  the  contract.  The 
rights  of  principals  against  third  persons,  arising  from  the  acts  and  con- 
tracts of  their  agents,  may  be  further  illustrated  by  the  consideration  of 
payments  made  to  or  by  the  latter.  And,  first,  in  relation  to  payments 
made  to  agents.  Such  payments  are  good,  and  obligatory  upon  the  prin- 
cipal in  all  cases,  where  the  agent  is  authorized  to  receive  payment,  either 
by  express  authority,  or  by  that  resulting  from  the  usage  of  trade,  or  from 
the  particular  dealings  between  the  parties.  In  such  cases,  the  maxim  of 
the  Roman  law  is  justly  apj^lied  ;  Quod  jussu  alterius  solvifw,  pro  eo  est, 
quasi  ipsi  solutitm  esset.  But,  the  principal  may  intercept  such  payment, 
by  giving  notice  to  the  debtor  not  to  pay  to  the  agent,  before  the  money 
is  paid ;  and,  in  such  a  case,  if  the  agent  has  no  superior  right,  from  a  lien 
or  otherwise,  any  subsequent  payment,  made  to  the  agent,  will  be  invalid, 
and  the  principal  may  recover  the  money  from  the  debtor.  Story  on  Ag. 
§  425-429;  Id.  §  163,  261,  271.  See,  also,  on  this  subject,  Poth.  on  Oblig.  n. 
54-84,  and  especially  n.  82,  83,  447,  448.  Pothier  (n.  82)  says:  "  AVe  con- 
tract through  the  ministiy  of  another,  not  only  when  a  person  merely  lends 
us  his  ministry  by  contracting  in  our  name  and  not  in  his  own,  as  when  we 
contract  by  the  ministry  of  a  tutor,  curator,  agent,  &c.,  in  their  quality  as 
such.  We  are  also  deemed  to  contract  by  the  ministry  of  another,  though 
he  contracts  himself  in  his  own  name,  when  he  contracts  in  relation  to  the 
affairs  which  we  have  committed  to  his  management ;  for  we  are  supposed  to 
have  adojited  and  approved,  beforehand,  of  all  the  contracts,  which  lie  may 
make  respecting  the  affairs  committed  to  him,  as  if  we  had  contracted  our- 
selves, and  are  held  to  have  acceded  to  all  the  obligations  resulting  therefrom. 
Upon  this  principle  is  founded  the  actio  exercitoria,  which  those,  who  have 
contracted  with  the  master  of  a  ship  for  matters  relative  to  the  conduct 
of  such  ship,  have  against  the  proprietor,  who  has  ai)pointed  the  master. 
Upon  the  same    principle  is  founded   the  actio  institoria,  which  tliose,  who 


200  PARTNERSHIP.  [cHAP.  VII. 

be  readily  deduced  from  what  has  been  ah'eady  stated. 
The  authority  can  be  exercised  only  in  cases  falling 
within  the  ordinary  business  and  transactions  of  the 
firm,  where  the  other  party  has  no  knowledge  or 
notice,  that  the  partner  is  acting  in  violation  of  his 
duties  and  obligations  to  the  firm,  or  for  purposes 
disapproved  of  by  the  firm,  or  in  fraud  of  the  rights 
thereof.^ 

§  111.  In  the  first  place,  the  authority,  to  be  valid, 
must  be  exercised  in  cases  within  the  scope  of  the 
ordinary  business  and  transactions  of  the  firm.^  Thus, 
for  example,  in  cases  of  factorage,  it  is  a  common,  al- 
though not  an  invariable  usage,  to  guaranty  the  solven- 
cy of  the  purchasers  on  sales  made  by  the  factor,  and 
to  receive  therefor  a  commission  del  credere ;  and  this 
would  be  deemed  an  authority  within  the  scope  of  a 
partnership,  formed  for  factorage  purposes,  although  it 
could  not  be  shown,  that  the  partners  had  stipulated 
for  that  power  in  their  articles  of  partnership,  or  even 
if  they  had  excluded  it  by  such  articles,  if  it  was  un- 
known to  the  principal,  for  w^hom  they  were  dealing.^ 

have  contracted  with  the  manager  of  a  commercial  concern,  or  a  manu- 
factory, have  against  the  employer  {le  commettant) ;  and  the  actio  utilis 
insliloria,  which  relates  to  contracts  made  with  a  manager,  of  any  other 
kind.  Observe,  there  is  a  difference  between  these  managers,  and  tutors, 
curators,  syndics,  &c.  When  these  managers  contract,  they  contract 
themselves,  and  enter  into  a  personal  obligation.  Their  employers  are  only 
regarded  as  accessory  to  their  contracts,  and  to  the  obligations  resulting 
from  them ;  whereas  the  others  do  not  contract  themselves,  but  only  afford 
their  ministry  in  contracting,  and  therefore  do  not  oblige  themselves,  but 
only  those  who  contract  by  their  ministry."  See  ante,  first  note  of  this 
section. 

>  Coll.  on  P.  B.  3,  c.  1,  p.  259-282,  2d  ed.;  Story  on  Ag.  §  125;  Ex 
parte  Agace,  2  Co.x,  312;  Wats,  on  P.  c.  4,  p.  180,  2d  ed.;  Farrar  v.  Hutch- 
inson, 9  Ad.  &  E.  641. 

2  Wats,  on  P.  c.  4,  p.  180,  194,  2d  ed. ;  Sandilands  v.  Marsh,  2  B.  &  Aid. 
673,  679.     {See  §  126,  127,} 

3  See  Sandilands  v.  Marsh,  2  B.  &  Aid.  G73 ;  Coll.  on  P.  B.  3,  c.  1,  §  3, 
p.  27'J-281 ;  Hope  v.  Cust,  1  East,  53 ;  Ex  parte  Nolte,  2  Glyn  &  J.  295. 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  201 

So,  it  is  the  common  course  of  business  for  persons 
engaged  in  the  purchase  and  sale  of  horses,  to  give  a 
warranty  on  sales  made  by  them  ;  and  therefore  a  war- 
ranty, made  in  the  course  of  such  business  by  one 
partner,  would  bind  the  partnership,  notwithstanding 
the  articles  prohibited  such  warranty,  if  the  purchaser 
were  unacquainted  therewith.^  On  the  other  hand, 
where  it  is  not  the  common  course  of  the  business,  in 
which  a  partnership  is  engaged,  to  give  letters  of 
guaranty  or  of  credit,  if  one  partner  should  give  such 
a  letter  of  guaranty  or  credit,  it  would  not  be  binding 
on  the  firm,  although  given  in  the  name  thereof.^ 

§  112.  For  the  like  reason,  if  one  partner  should  in 
the  name  of  the  firm  make  purchases  of  goods,  not 
connected  with  the  known  business  of  the  firm,  such 
purchases  would  not  bind  the  partnership.  Thus,  for 
example,  if  a  partnership  is  engaged  in  the  mere  busi- 
ness of  selling  dry  goods  by  wholesale  or  retail,  uncon- 
nected with  navigation,  a  purchase  of  a  ship  by  one 
partner,  in  the  name  of  the  firm,  would  not  be  binding 
on  the  other  partners,  unless  they  should  assent  thereto. 
So,  if  persons  are  engaged  in  the  mere  business  of  tal- 
low chandlers,  as  partners,  a  purchase  of  a  cargo  of 
flour,  or  of  pepper,  or  of  coff"ee,  or  of  other  things  by 
one  partner,  wholly  beside  the  business  of  the  firm, 
would  not  bind  the  other  partners.  But  if  the  articles 
were  such  as   might   be    applied  or  called  for  in  the 

1  Coll.  on  p.  B.  3,  c.  1,  §  260;  Sandilands  v.  Marsh,  2  B.  &  Aid.  673, 
679,  per  Abbott,  C.J. 

«  Coll.  on  P.  B.  3,  c.  1,  §  3,  p.  279,  280 ;  Hope  v.  Cust,  1  East,  53 ;  Dun- 
can V.  Lowndes,  3  Camp.  478:  [Hasleliam  v.  Young,  5  Q.  B.  833.  And 
although  sucli  guaranty  might  be  convenient  and  reasonable  for  accomplish- 
ing the  objects  of  the  partnership,  it  would  not  be  binding  upon  the  other 
partners  without  their  recognition  or  adoption,  unless  it  was  reasonably 
necessary  for  the  business  of  the  partnership.  Brettel  v.  Williams,  i  Exch. 
623.  Overruling  whatever  is  contrary  in  Ex  parte  Gardora,  15  Ves.  286.] 
{See§  127.} 


202  PARTNERSHIP.  [cHAP.  VII. 

ordinary  course  of  their  business,  the  purchase  of  such 
articles  would  bind  the  firm,  even  though  they  were 
unnecessary  at  the  time,  or  were  bought  contrary  to 
the  private  stipulations  between  the  partners,  or  were 
not  designed  to  be  used  in  the  partnership  at  all,  if  the 
vendor  were  not  acquainted  with  the  facts. 

§  113.  The  real  difficulty  in  many  cases  of  this  sort 
is  to  ascertain  what  contracts,  engagements,  and  acts 
are  properly  to  be  deemed  within  the  scope  of  the  par- 
ticular partnership,  trade  or  business ;  for  these  are  not 
exactly  the  same  in  all  sorts  of  trade  or  business.^  On 
the  contrary,  in  many  cases,  rights,  powers,  and  author- 
ities over  the  partnership  property  and  partnership 
concerns  exist  either  by  usage,  or  by  general  under- 
standing, or  by  natural  implication,  which  are  wholly 
unknown  in  others.  To  answer  the  inquiry,  then,  sat- 
isfactorily, it  is  not  enough  to  show,  that  in  other  trades 
or  other  business,  certain  rights,  powers,  and  authorities 
are  incident  thereto,  and  may  be  lawfully  exercised  by 
each  of  the  partners ;  but  we  must  see,  that  they  ap- 
propriately belong  to,  or  are,  by  usage  or  otherwise, 
implied  or  incidental  to  the  particular  trade  or  business 
in  which  the  partnership  is  engaged.- 

§  114.  Having  enumerated  some  of  the  general 
powers  and  authorities,  which  ordinarily  belong  to 
partnerships,    and   the    general    limitations    thereof   (a 


'  {1  Am.  Lead.  Cas.  407,  442,  4th  ed.  Some  of  the  later  cases  in 
■which  questions  as  to  the  scope  of  a  partnership  business  have  arisen  are 
London,  &c.,  Society  v.  Hagerstown,  &c..  Bank,  3G  Penn.  St.  498  ;  Thompson 
V.  Franlcs,  37  Penn.  St.  327  ;  Livingston  v.  Pittsburgh  R.  R.  Co.  2  Grant's 
Cas.  219 ;  Maltby  v.  N.  W.  Va.  R.  R.  Co.  16  Md.  422 ;  Cadwallader  v. 
Kroesen,  22  Md.  200;  Freeman  v.  Carpenter,  17  Wis.  126.} 

^  Dickinson  v.  Valpy,  10  B.  &  C.  128.  {Mr.  Lindley  is  of  opinion  that 
such  powers  nuist  be  necessary  in  order  that  the  firm  may  be  bound.  Lind. 
on  P.  193-195 ;  and  see  Brettel  v.  Williams,  4  Exch.  623 ;  Hawtayne  v. 
Bourne,  7  M.  &  W.  595 ;  Ex  jmrte  Chippendale,  4  De  G.  M.  &  G.  19. } 


CHAP.   VII.]  POWERS    AND    AUTHORITIES.  203 

subject  which  will  more  fully  occur  hereafter  in  other 
connections),  it  may  be  proper  here  to  state,  in  further 
illustration  of  the  foregoing  remarks,  what  powers  and 
authorities  are  not  ordinarily  deemed  to  be  within  the 
scope  of  partnerships,  and  which  therefore  require  some 
special  delegation  or  solemn  instrument  to  confer  them. 
And,  in  the  first  place,  it  may  be  laid  down  as  a  gen- 
erally recognized  principle,  that  one  partner  has  no 
power  or  authority  to  submit  or  refer  to  arbitration 
any  matters  whatsoever,  concerning  or  arising  out  of 
the  partnership  business.^  The  reason  assigned  is,  that 
it  is  not  within  the  scope  of  the  ordinary  business  or  of 
the  powers  or  authorities  necessary  or  proper  to  carry 
on  the  business  of  the  partnership.^  Another  reason  is, 
that  the  award  may  call  upon  the  partners  to  do  acts, 
which  they  might  not  otherwise  be  compellable  to  per- 
form.^    But  the  soundest  reason  seems  to  be,  that,  as  it 

'  Com.  Dig.  Arbitrament,  D.  2 ;  2  Bell,  Comm.  B.  7,  p.  618,  5th  ed.  ; 
Stead  V.  Salt,  3  Bing.  101 ;  Hambidge  v.  De  la  Crouee,  3  C.  B.  742 ;  Ad- 
ams V.  Bankart,  1  Cr.  M.  &  R.  681 ;  {Hatton  v.  Royle,  3  H.  &  N.  500}  ; 
Kartbaus  v.  Ferrer,  1  Pet.  222,  228;  Strangford  v.  breen,  2  Mod.  228; 
[Buchoz  r.  Grandjean,  1  Mich.  367  ;  Harrington  v.  Higham,  13  Barb.  660; 
Abbott  V.  Dexter,  6  Cush.  108 ;  Armstrong  v.  Robinson,  5  Gill  &  J.  412]  ; 
Buchanan  v.  Curry,  19  Johns.  137  ;  [Wood  v.  Shepherd,  2  P.  &  H.  442]  ; 
{1  Am.  Lead.  Cas.  452,  4th  ed.  See,  also.  Wesson  v.  Newton,  10  Cush. 
114  ;  Horton  v.  Wilde,  8  Gray,  425 ;  McQuewans  v.  Hamlin,  35  Penn.  St. 
517}  ;  3  Kent,  49;  Ersk.  Inst.  B.  3,  tit.  3,  §  23.  —In  Pennsylvania  and 
Kentucky  a  different  doctrine  is  established ;  that  one  partner  may  by  an 
unsealed  instrument  refer  any  partnership  matter  to  ai'bitratioii,  which  will 
bind  the  partnership.  Taylor  v.  Coryell,  12  S.  &  R.  243  ;  Southard  v.  Steele, 
3  Monr.  435.  {So  in  Illinois,  Hallack  u.  March,  25  111.  48.}  See  Cotton  u. 
Evans,  1  Dev.  &  Bat.  Eq.  284;  per  Lord  Abinger  in  Cleworth  v.  Pickford, 
7  M.  &  W.  314,  321. 

2  Ibid. 

3  Gow  on  P.  c.  2,  §  2,  p.  66  ;  Adams  v.  Bankart,  1  Cr.  M.  &  R.  681.  [It 
has  been  decided,  that  one  partner  has  no  implied  authority  to  consent  to 
an  order  for  judgment  in  an  action  against  himself  and  his  copartner.  Ham- 
bidge V.  De  la  Crouee,  3  C.  B.  742 ;  Binney  v.  Le  Gal,  19  Barb.  592 ; 
&  Morgan  v.  Richardson,  16  Mo.  409.  {See  Rathbone  v.  Drakeford,  4  Moo. 
P.  57  ;  Brutton  v.  Burton,  1  Chitty,  707, 1  Am.  Lead.  Cas.  452,  4tii  ed.  Among 


204  PARTNERSHIP.  [CHAP.  VII. 

takes  away  the  subject-matter  from  the  ordmary  cog- 
nizance of  the  estabHshed  courts  of  justice,  which  have 
the  best  means  to  investigate  the  merits  of  the  case  by 
proper  legal  proofs  and  testimony,  and  the  means  of 
arbitrators  to  accomplish  the  same  purposes  are  very 
narrow,  and  often  wholly  inadequate,  it  ought  not  to 
be  presumed,  that  the  partners  mean  to  waive  their 
ordinary  legal  rights  and  remedies,  unless  there  be 
some  special  delegation  of  authority  to  that  eifect, 
either  formal  or  informal.^ 


the  later  American  cases  on  this  point  are  Shedd  v.  Bank  of  Brattleboro', 
32  Yt.  709 ;  Christy  v.  Sherman,  10  Iowa,  535 ;  Xorth  v.  Mudge,  13  Iowa, 
496.  But  see  Edwards  v.  Pitzer,  12  Iowa,  607  ;  EHiott  v.  Holbrook,  33 
Ala.  659.}  And  service  of  a  writ  on  one  partner,  after  dissolution,  will  not 
authorize  judgment  against  the  other.  Faver  v.  Briggs,  18  Ala.  478.  An 
acknowledgment  of  service  of  a  writ  written  by  one  partner  in  presence  of 
the  other,  and  with  his  consent,  binds  the  firm.  Freeman  v.  Carhart,  17 
Ga.  348.  {See  Lind.  on  P.  227.}  An  appearance  in  a  suit  entered  by 
an  attorney,  employed  by  one  of  the  partners,  will  be  binding  and  con- 
clusive upon  the  other  partners.  Bennett  v.  Stickney,  17  Vt.  531.  But 
such  appearance  by  an  attorney  employed  by  one  partner,  has  been  constraed 
to  be  only  an  appearance  for  the  partners,  as  partners,  and  for  the  purpose 
of  defending  the  action  against  the  firm,  and  not  as  an  appearance  for  the 
partners,  individually  and  severally,  and  such  an  appearance  will  not  bind 
one  partner  individually,  who  is  without  the  jurisdiction,  was  not  served 
with  process,  and  did  not  authorize  the  appearance,  so  as  to  render  the 
judgment  evei-yichere  conclusive  against  him.  Phelps  v.  Brewer,  9  Cush. 
390.] 

'  See  Adams  v.  Bankart,  1  Cr.  M.  &  R.  681  ;  Bruen  i-.  Marquand,  17 
Johns.  58  ;  3  Kent,  44  ;  [Boyington  v.  Boyington,  10  Vt.  107.]  —  Mr.  Gow, 
in  the  Supplement  to  his  Treatise  on  Partnership,  London,  1841,  c.  2,  §  2, 
p.  17,  says :  "  In  the  case  of  Boyd  v.  Emmerson,  2  Ad.  &  E.  184,  one  ques- 
tion was,  whether  a  partner  could  bind  his  copartners  by  a  parol  submission 
to  arbitration.  But  the  case  being  disposed  of  on  other  points,  it  became 
unnecessary  to  decide  that  question.  However,  Sir  F.  Pollock,  who  had  to 
maintain  the  affirmative,  in  the  course  of  his  argument  observed,  that  the 
point  might  be  considered  as  res  Integra,  and  admitted  that  '  one  partner 
cannot  bind  another  in  a  matter  of  arbitration,  where  the  submission  is  by 
deed  ;  because,  in  general,  he  cannot  bind  his  partner  by  any  deed.'  Harrison 
V.  Jackson,  7  T.  R.  207.  But  it  does  not  follow  that  one  of  several  persons, 
who  are  general  partners,  cannot  in  any  way  bind  the  rest  by  a  submission 
to  arbitration,   upon  a  specific  matter  of  partnership  right.     One  partner 


CHAP.  YII.]  POWERS    AND    AUTHORITIES.  205 

§  115.  It  may  not  perhaps  seem  very  easy  to  see, 
since  one  partner  alone  may  release,  or  even  compound, 
or  compromise  a  partnership  debt,^  in  what  essential 
respect  the  latter  power  differs  from  that  which  re- 
spects a  submission  to  arbitration.  A  release  by  one 
partner  certainly  binds  all  the  partners,  as  indeed  a 
receipt  for  the  debt  would ;  because,  as  a  debtor  may 
lawfully  pay  his  debt  to  one  of  them,^  he  ought  also 
to  be  able  to  obtain  a  discharge  upon  due  pay- 
may  bring,  or  settle  an  action  on  behalf  of  the  rest.  Furnival  v.  Weston, 
7  J.  B.  Moore,  356  ;  Harwood  v.  Edwards,  Gow  on  P.  65,  note  (g),  3d  ed. 
Why  may  he  not  enter  into  an  agi'eement  to  refer  the  subject-matter  ?  And 
if  so,  why  may  not  one  agree,  on  behalf  of  the  rest,  to  be  governed  by  an 
opinion,  in  which  both  they  and  the  opposite  party  may  confide?  In  Strang- 
ford  V.  Green,  2  Mod.  228,  the  submission  appears  to  have  been  by  arbitra- 
tion bond,  and  therefore  the  partner  could  not  be  bound.  In  Stead  v.  Salt, 
3  Bing.  101,  the  parties  were  not  partners  generally,  but  only  in  the  dealings, 
to  which  the  award  related  ;  the  matter  was  twice  referred.  In  the  first 
instance,  four  partners  signed  the  agreement  of  i-eferenee  ;  the  arbitration 
went  off,  and  the  new  agreement  was  signed  by  three  only.  In  the  absence 
of  any  explanation,  it  was  reasonable  to  suppose,  that,  if  both  agreements 
were  signed  by  the  authoi-ity  of  all  the  partners,  the  second  would  have  been 
executed  by  the  same  number  as  the  first.  The  passage  cited  in  that  case, 
from  Com.  Dig.  Arbitrament,  J).  2,  from  which  it  was  implied  that  a  partner 
cannot  bind  his  copartner,  probably  refers  to  submissions  by  deed.  There 
is  no  ground  in  reason  for  sajing,  that,  in  the  case  of  a  general  partnership 
in  a  banking  firm,  one  partner  cannot  submit,  on  behalf  of  all,  to  such  a 
mode  of  settling  a  dispute  upon  a  partnership  concern  as  was  adopted  here. 
Suppose  the  question  had  been  a  practical  one,  as  to  something  to  be  done 
in  the  course  of  business,  might  not  a  partner  have  agreed  to  take  the  judg- 
ment of  an  experienced  person,  as  a  custom-house  oflicer,  a  dock-master, 
or  an  eminent  merchant?  And  if  so,  why  not  the  opinion  of  counsel  in  the 
present  case  ?  To  hold,  that  the  opinion  could  not  be  so  taken,  would  throw 
great  impediments  in  the  way  of  a  very  common,  useful,  and  economical 
mode  of  settling  such  disputes."     See  post,  §  122,  note. 

^  See  Gow  on  P.  c.  2,  §  2,  p.  61,  3d  ed.,  and  Ellison  v.  Dezell,  there  cited  ; 
Metcalfe  v.  Rycroft,  6  M.  &  S.  75  ;  Coll.  on  P.  B.  3,  c.  2,  §  1,  p.  311,  312,  2d 
ed. ;  [Hambidge  v.  De  la  Crouee,  3  C.  B.  742]  ;  {Wallace  v.  Kelsall,  7  M. 
&  W.  264 ;  Lind.  on  P.  221,  222.  See  Nottidge  v.  Prichard,  2  CI.  &  Fin. 
379.  Payment  to  one  partner  is  a  defence  to  an  action  at  law  by  the  firm, 
though  the  other  partner  has  given  notice  to  the  debtor  not  to  pay  to  such 
partner.  Koyes  v.  2^ew  Haven,  New  London,  »&  Stonington  R.  R.  Co.  30 
Conn.  1. } 


206  PARTNERSHIP.  [cHAP.  VII. 

ment.^  There  is  another  technical  reason,  applicable  to 
such  a  case  ;  which  is,  that  the  release  certainly  operates 
as  against  the  partner  himself;  and  if  so,  since  no  suit 
could  be  brought  for  the  debt  without  uniting  him  as 
plaintiff,  the  release  of  one  plaintiff  would  necessarily 
bar  the  action  as  to  the  others.^  The  compromise  of 
a  debt,  by  taking  less  than  its  nominal  amount,  seems 
to  be  an  incident  to  the  collection  of  the  debt,  and  may 
fairly,  therefore,  be  deemed  within  the  discretion  con- 
fided to  each  partner ;  and  indeed  in  practice  it  is  so 
ordinarily  treated.  These  cases,  therefore,  seem  clearly 
distinguishable  from  that  of  a  submission  to  arbitra- 
tion, since  they  steer  wide  of  the  objections,  which 
have  been  already  mentioned,  as  applicable  to  the 
latter. 

§  116,  The  Roman  law  coincides  in  many  respects 
with  ours  on  this  subject.  It  admits  a  release  or  dis- 
charge by  one  joint  creditor  to  the  debtor,  or  a  release 


1  Stead  V.  Salt,  3  Bing.  101 ;  Coll.  on  P.  B.  3,  c.  2,  §  l,p.  313,  314;  Id. 
B.  3,  c.  4,  §  2,  p.  452,  453 ;  Id.  B.  3,  c.  5,  §  5,  p.  485,  2d  ed. ;  Pierson  v. 
Hooker,  3  Johns.  68 ;  Wats,  on  P.  c.  4,  p.  225,  2d  ed. ;  Story  on  Ag.  §  49. 

■  See  Adams  w.^Bankart,  1  Cr.  M.  &  R.  681 ;  Wats,  on  P.  c.  4.  p.  222,  2d 
ed. ;  Coll.  on  P.  B.  3,  c.  2,  §  1,  p.  311,  312,  2d  ed. ;  Hawkshawr.  Parkins, 
2  Swans.  539 ;  Halsey  v.  Whitney,  4  Mason,  206 ;  Pierson  v.  Hooper,  3 
Johns.  68 ;  Bulkley  v.  Dayton,  14  Johns.  387  ;  Bruen  v.  Marquand,  17 
Johns.  58 ;  Ruddock's  Case,  6  Co.  25  a ;  Salmon  t'.  Davis,  4  Binn.  375 ; 
Napier  u.  McLeod,  9  Wend.  120.  {Arton  v.  Booth,  4  Moore,  192;  Furni- 
val  V.  Weston,  7  Moore,  356  ;  Phillips  v.  Clagett,  11  M.  &  W.  84.  If  the  re- 
lease has  been  obtained  by  fraudulent  collusion  with  one  of  the  partners,  it 
will  not  be  a  defence  to  an  action.  See  §  132  ;  Barker  v.  Richardson,  1  Y.  & 
J.  362  ;  Aspinall  v.  London  &  X.  W.  R.  R.  Co.,  11  Hare,  325  ;  1  Am.  Lead. 
Gas.  453,4th  ed.}  But  although  one  partner  may  release  a  debt  of  the 
partnership  in  his  own  name  alone ;  yet,  if  he  enters  into  a  covenant  in  his 
own  name  with  a  debtor  of  the  partnership,  not  to  sue  him  therefor,  that 
is  no  release  of  the  debt ;  and  will  not  prevent  a  suit  from  being  maintained 
by  a  partner,  in  the  names  of  all  the  partners  for  the  debt.  The  remedy 
for  tlie  debtor  in  such  a  case  is  by  a  suit  against  that  partner  for  breach  of 
his  covenant.  Walmsley  v.  Cooper,  3  Per.  &  Dav.  149  ;  s.  c.  11  Ad.  &  E. 
216;  post,  §323,  324. 


CHAP.  YII.]  POWERS    AND    AUTHORITIES.  207 

01"  discharge  to  one  joint  debtor  by  the  creditor,  to  be 
an  extinguishment  of  the  entire  contract.  Cum  duo 
eandem  pecunimn  aut  promiser'mt^  aut  stijmlati  sunt, 
ipso  jure  et  singuli  in  soUdimi  dehentur,  et  singidi  de- 
hent.  Ideoqiie  jietltione  cicceptilatione  unius  tota  solmtur 
ohligatio}  And  yet  by  the  Roman  law  it  is  not  compe- 
tent for  one  of  two  creditors,  or  for  one  of  two  partners, 
to  compromise  a  suit,  or  to  submit  a  controversy  touch- 
ing their  joint  demands  to  arbitration,  without  the  con- 
sent of  both  ;  for  in  such  a  case  each  can  act  only  as 
the  agent  of  the  other ;  and  a  general  authority  is  not 
deemed  to  include  such  a  right.  Mandato  generali  non 
contineri  etiam  trcmsactlonem  decidendi  causa  interpo- 
sitam.^  The  same  doctrine  is  fully  recognized  in  the 
law  of  France,^  and  probably  in  that  of  many  other 
nations  of  continental  Europe. 

§  117.  In  the  next  place  it  is  a  general  rule  of  the 
common  law,  that  one  partner,  from  that  mere  relation, 
cannot  bind  the  others  by  a  deed  or  instrument  under 
seal,  either  for  a  debt  or  any  other  obligation,  even 
when  contracted  in  the  course  of  their  commercial 
dealings  and  business,  and  within  the  scope  thereof; 
unless  indeed  the  authority  be  expressly  given  under 
the  seals  of  the  other  partners,  and  include  the  very 
act  done  under  seal.''     The  reason  of  this  rule  seems  to 

•  D.45,  2,  2. 

'^  D.  3,  3,  60;  Domat,  1,  15,  3,  art.  11. 
3  Poth.  de  Soc.  n.  68. 

*  Wats,  on  P.  c.  4,  p.  218-222,  2ded. ;  Coll.  on  P.  B.  3,  c.  2,  §  1,  p.  308- 
312,  2d  ed. ;  Gow  on  P.  c.  2,  §  2,  p.  57-60,  3d  ed. ;  3  Kent,  47-49 ;  Story 
on  Ag.  §  49-51 ;  Dickerson  v.  ^Vheeler,  1  Humph.  51 ;  Napier  v.  Catron,  2 
Humph.  534;  McXaughten  v.  Patridge,  11  Ohio,  223;  [McDonald  v.  Eg- 
gleston,  26  Vt.  154;  Snyder  «.  May,  19  Ponn.  St.  235;  Henry  v.  Gates,  26 
Mo.  315  ;  Remington  v.  Cummings,  5  Wis.  138]  ;  {Bowker  i\  Burdekin,  11 
M.  &  W.  128  ;  Met.  on  Contr.  124  ;  1  Am.  Lead.  Cas.  449,  4th  ed.  But  see 
Dudgeon  v.  O'Connell,  12  Jr.  E<j.  566.  See  also  Cummings  v.  Parish,  39 
Miss.  412.} 


208  PARTNERSHIP.  [cHAP.  VII. 

be  purely  technical ;  and  has  its  origin  in  the  general 
doctrine  of  agency  at  the  common  law ;  where  it  is 
held,  that  an  agent  or  attorney  cannot  execute  a  deed 
or  sealed  instrument,  in  the  name  of  his  principal,  so 
as  to  bind  him  thereby,  as  the  proper  party  thereto, 
unless  the  authority  is  conferred  upon  him  by  an  in- 
strument of  equal  dignity  and  solemnity,  that  is  by  one 
under  seal.^  And  yet  the  common  law  does  not  seem 
in  all  cases  to  follow  out  its  own  principle ;  for  it  is  not 
required  to  execute  any  instrument  or  writing,  not  un- 
der seal,  that  the  authority  to  an  agent,  or  attorney,  or 
partner,  should  be  in  writing.  It  may  be  by  parol,  or 
even  be  implied  from  circumstances.^  Ordinarily,  also, 
the  dissolution  of  a  contract  is  required  by  the  common 
law  to  be  by  an  instrument  of  the  same  dignity  and 
solemnity,  as  that  by  which  it  is  created.^  Eodem  modo^ 
quo  oritur^  eodem  modo  dissolvitur^ 

§  118.  The  Roman  law  seems  to  have  acted  upon 
one  uniform  principle,  if  not  in  the  formation  of  con- 
tracts, at  least  in  the  dissolution  of  contracts  ;  that  is  to 
say,  that  they  might  and  ought  to  be  dissolved  in  the 
same  mode  in  which  they  were  created.  Nihil  tarn 
naturale  est,  cfiiam,  eo  genere  quidque  dissolvere,  quo 
coUigatum  est.  Ideo  verhorimi  ohligatio  verbis  tollitur  ; 
nudi  consensus  ohligatio  contrario  consensu  dissolvitur.^ 

1  Story  on  Ag.  §  49  ;  Co.  LItt.  48,  b.  ;  Harg.  note  2 ;  Harrison  v.  Jack- 
son, 7  T.  R.  207  ;  Paley  on  Ag.  by  Lloyd,  157,  158  ;  2  Kent,  613 ;  3  Kent,  47, 
48;  Green  v.  Beals,  2  Caines,  254;  Clement  v.  Brush,  3  Johns.  Cas.  180; 
Skinner  I).  Dayton,  19  Jolms.  513;  Berkeley  v.  Hardy,  5  B.  &  C.  355; 
Gow  on  P.  c.  2,  §  2,  p.  58-60,  3d  ed. ;  U.  S.  v.  Astley,  3  Wash.  C.  C.  508 ; 
\_Ex  parte  Bosanquet,  1  De  Gex,  432.] 

2  Story  on  Ag.  §50,  51 ;  Coles  v.  Trecothlck,  9  Ves.  234,  250;  2  Kent, 
613,  614. 

^  Story  on  Ag.  §  49. 

•*  Bac.  Abridg.  Release,  A.  ;  Neal  v.  Sheaffield,  Cro.  Jac.  254.  {See 
§268.} 

^  D.  50,  17,  35;  Both.  Oblig.  n.  571-580. 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  209 

Again :  Prout  quidque  contractum  est,  ita  et  solvi  debet; 
ut  cum  re  contraxerimus,  re  solvi  debet}  And  again: 
Et  cimi  verbis  aliquid  contraxiinus,  vel  re,  vel  verbis, 
obligatio  solvi  debeat ;  verbis,  veluti  cum  acceptum 
promissori  fit ;  re,  veluti  cur)%  solvit,  quod  promisit. 
^que,  cum  emptio,  vel  venditio,  vel  locatio  contracta 
est;  quoniam  consensu  nicdo  contrahi  p>otest,  etiam 
dissensu  contrario  dissolvi  potest.^  But  a  distinction 
was  taken  in  the  Roman  law  between  mere  consensual 
contracts,  and  other  civil  obligations,  which  resulted 
from  real  contracts  or  stipulations  under  that  law.  The 
former  might  be  discharged  by  a  simple  agreement ;  but 
to  discharge  the  latter,  2)leno  jure,  it  was  necessary  for 
the  act  to  be  done  by  the  formality  of  an  acceptilation.^ 

'  D.  46,  3,  80;  Poth.  Pand.  58,  17,  n.  1388. 

2  D.  46,  3,  80. 

^  Inst.  3,  30,  §  1,  2.  —  Pothier  has  expounded  this  doctrine  in  his  Treat- 
ise on  Obligations,  n.  571,  and  says  :  "  According  to  the  principles  of  the 
Roman  law,  there  was  a  difference  between  civil  obligations  resulting  from 
consensual  contracts,  which  were  contracted  by  the  mere  consent  of  the 
pai'ties,  and  other  civil  obligations,  which  resulted  from  real  contracts,  or 
from  stipulations.  With  respect  to  those  contracted  by  the  consent  of  the 
parties,  the  release  might  be  made  by  a  simple  agreement,  by  which  the 
creditor  agreed  with  the  debtor  to  hold  him  acquitted,  and  such  agreement 
extinguished  the  obligation  pleiio  jure.  With  respect  to  other  civil  obliga- 
tions for  the  release  to  extinguish  the  obligation  pleno  jure,  it  was  necessary 
to  have  recourse  to  the  formality  of  an  acceptilation,  either  simple,  if  the 
obligation  resulted  from  a  stipulation,  or  Aquilian,  if  from  a  real  contract. 
A  simple  agreement  by  the  creditor  to  acquit  the  debtor,  did  not  extinguish 
such  obligations  2yleno  jure  ;  but  only  gave  the  debtor  an  exception,  or  Jin 
de  non  re^evoir,  against  the  action  of  the  creditor,  demanding  the  payment 
of  the  debt,  contrary  to  the  faith  of  the  agreement.  This  distinction  and 
these  subtilties  are  not  admitted  in  the  law  of  Fi'ance,  in  which  we  have  no 
such  form  as  an  acceptilation ;  and  all  debts,  of  whatever  kind,  and  in  what- 
ever manner  contracted,  are  extinguished,  pleno  jure,  by  a  simple  agreement 
of  release  between  the  creditor  and  debtor,  provided  the  creditor  is  capable 
of  disposing  of  his  property,  and  the  debtor  is  not  a  person  to  whom  the 
creditor  is  prohibited  by  law  from  making  a  donation.  Therefore  all  that  is 
said  in  the  title,  ff.  de  Accept,  concerning  the  form  of  an  acceptilation,  and 
particularly  that  acceptilation  cannot  be  made  under  a  condition  (L.  4,  ff.  de 
Accept.),  has  no  ap})lication  in  the  law  of  France.  With  us  there  is  notliing 
to  prevent  the  creditor  making  the  release  of  tlie  debt  depend  upon  a  con- 

14 


210  PARTNERSHIP.  [cHAP.  VII. 

§  119.  Upon  the  ground  of  the  general  principle  of 
the  common  law,  it  has  been  held,  that  a  bond,  signed 
by  one  partner  in  the  course  of  the  partnership  busi- 
ness, without  an  authority  under  seal,  binds  only  the 
partner,  who  signs  and  seals  it,  although  it  is  signed 
and  sealed  in  the  name  of  the  firm.^  Thus,  a  bond, 
given  in  the  name  of  the  firm  at  the  custom-house,  for 
the  payment  of  the  duties  on  goods  imported  for  and 
belonging  to  the  partnership,  will  not  bind  the  part- 
nership, but  only  the  partner  signing  and  sealing  the 
same.^     A  fortiori^  if  a  deed  be  made  by  one  partner  in 

dition,  and  the  eflfect  of  such  a  release  is  to  render  the  debt  conditional, 
the  same  as  if  it  had  been  contracted  under  the  opposite  condition  to  that  of 
the  release." 

^  In  Harrison  w.  Jackson,  7  T.  R.  207,  210,  Lord  Kenyon  said:  "The 
law  of  merchants  is  part  of  the  law  of  the  land ;  and  in  mercantile  transac- 
tions, in  drawing  and  accepting  bills  of  exchange,  it  never  was  doubted, 
but  that  one  partner  might  bind  the  rest.  But  the  power  of  binding  each 
other  by  deed  is  now  for  the  first  time  insisted  on,  except  in  the  nisi  prius 
case  cited,  the  facts  of  which  are  not  sufficiently  disclosed  to  enable  me  to 
judge  of  its  propriety.  Then  it  was  said,  that,  if  this  pai'tnership  were  con- 
stituted by  writing  under  seal,  that  gave  authority  to  each  to  bind  the  others 
by  deed.  But  I  deny  that  consequence,  just  as  positively  as  the  former ; 
for  a  general  partnership  agreement,  though  under  seal,  does  not  authorize 
the  partners  to  execute  deeds  for  each  other,  unless  a  particular  power  be 
given  for  that  purpose.  This  would  be  a  most  alarming  doctrine  to  hold  out 
to  the  mercantile  world ;  if  one  partner  could  bind  the  others  by  such  a 
deed  as  the  present,  it  would  extend  to  the  case  of  mortgages,  and  would 
enable  a  partner  to  give  to  a  favorite  creditor  a  real  lien  on  the  estates  of 
the  other  partners."  See  3  Kent,  47,  48.  {But  see  Orr  v.  Chase,  1  Mer. 
729.  In  Fisher  v.  Pender,  7  Jones,  Law,  483,  it  was  held,  following  the  pre- 
vious course  of  decision  in  North  Carolina,  that,  when  it  appeared  on  the  face 
of  an  instrument  that  A.  signed,  sealed,  and  delivered  it,  in  order  to  bind  the 
firm  of  which  he  was  a  member,  and  not  as  his  individual  deed,  they 
were  not  individually  liable.  But  see  contra,  1  Am.  Lead.  Cas.  451,  4th 
ed.     See,  also,  Jarman  v.  Ellis,  7  Jones,  Law,  77.} 

"-  Metcalfe  v.  Rycroft,  6  M.  &  S.  75 ;  Elliot  v.  Davis,  2  B.  &  P.  338 ; 
Hawkshaw  v.  Parkins,  2  Swans.  539  ;  Harrison  v.  Jackson,  7  T.  R.  207  ; 
Skinner  v.  Dayton,  19  Johns.  513.  — To  cure  this  very  difficulty.  Congress 
have  been  compelled  to  pass  an  act,  providing,  that  such  a  bond  given  and 
sealed  in  the  name  of  the  firm,  or  partners,  under  his  seal  (see  Hawk- 
shaw V.  Parkins,  2  Swans.  539),  shall  be  binding  on  all  of  them.  Act  of 
1st  March,  1823,  c.  149.  §  25. 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  211 

the  name  of  the  firm,  conveying  away  the  real  estate 
of  the  firm,  it  will  be  invalid  to  convey  the  title  of  the 
other  partners,  since  the  law  requires,  that  every  con- 
veyance of  real  estate  should  be  by  the  deed  of  the 
party  himself,  who  possesses  the  title ;  and  another 
person  cannot  convey  it  in  his  name,  except  by  an 
authority  under  seal.^ 

§  120.  This  doctrine  seems  peculiar  to  the  common 
law ;  and,  as  has  been  suggested,  seems  mainly  founded 
on  technical  reasoning.  It  has,  however,  been  some- 
times maintained,  as  founded  in  public  policy ;  and  that 
it  would  be  a  dangerous  power,  and  enable  one  partner 
to  give  undue  preferences  to  favorite  creditors.  But 
this  power  now  exists,  as  to  all  personal  property  and 
funds  of  the  partnership ;  and,  as  an  original  founda- 
tion of  the  doctrine,  seems  at  once  inadequate,  and 
unsatisfactory.  Indeed,  a  strong  inclination  has  been 
exhibited  in  our  day  to  get  rid  of  the  doctrine,  or  to 
qualify  and  limit  it  so  far,  that,  practically  speaking,  it 
would  have  little  operation  and  influence.  One  excep- 
tion is,  that  if  the  deed  is  executed  by  one  partner  in 
the  presence  of  and  with  the  assent  of  all  the  partners, 
it  shall  be  deemed  the  deed  of  all.~  But,  perhaps,  this 
is  not  so  properly  an  exception,  as  it  is  an  application 
of  an  old  rule  of  the  common  law,  which  makes  a  deed, 
executed  by  an  agent  in  the  presence  of  his  principal, 
the  deed  of  the  latter,  although  the  authority  to  do  it 
is  merely  by  parol.^     The  case  of  a  release  by  one  part- 

1  {See§  94.} 

*  Ball  V.  Dunsterville,  4  T.  R.  313  ;  Burn  v.  Burn,  3  Ves.  573  ;  Mackay 
V.  Bloodgood,  9  Johns.  285  ;  Halsey  v.  Whitney,  4  Mason,  206  ;  Coll.  on  P. 
B.  3,  c.  2,  §  1,  p.  308-310,  2d  ed.  See  Smith  v.  Winter,  4  M.  &  W.  454. 
See  Hunter  r.  Parker,  7  M.  &  W.  322;  {Anthony  v.  Butler,  13  Pet.  423; 
Potter  V.  McCoy,  26  Penn.  St.  458.} 

^  Lord  Lovelace's  Case,  W.  Jones,  268 ;  Story  on  Ag.  §  51 ;  Gow  on  P. 
c.  2,  §  2,  p.  59,  od  ed. 


212  PARTNERSHIP.  [CHAP.  VII. 

ner,  either  in  his  own  name,  or  in  that  of  the  firm,  of  a 
partnership  debt,  may  also  be  thought  to  constitute 
another  exception.  But,  in  fact,  it  turns,  as  we  shall 
presently  see,  upon  another  distinct  consideration,  that 
a  release  by  one  joint  creditor  discharges  the  action  as 
to  both ;  and  such  a  deed  of  one  partner  is  clearly 
operative  as  to  himself.^ 

§  121.  But  the  main  struggle  has  been,  not  so  much 
to  contest  the  doctrine  of  the  common  law,  that  an  au- 
thority to  execute  a  sealed  instrument  does  not  flow 
from  the  ordinary  relation  of  partnership,  as  to  con- 
test the  doctrine,  that  it  requii-es  a  prior  authority 
under  seal,  or  a  subsequent  ratification  under  seal,  to 
make  the  execution  valid.^  The  old  authorities,  and 
indeed  the  whole  current  of  decisions  in  England,  estab- 
lish the  rigid  doctrine  in  its  fullest  extent.  They  assert, 
that  no  prior  authority,  or  subsequent  ratification,  either 
verbal,  or  by  writing,  without  seal  is  sufficient  to  give 
validity  to  the  instrument,  as  the  sealed  contract  of  the 
party.^  This  is  reducing  the  rule  itself  to  its  true 
technical  character,  and  stripping  it  of  all  pretence  of 
being  founded  in  public  policy.  The  American  courts 
have  in  this  view  strongly  inclined  to  repudiate  it  in  all 
cases,  where  an  express,  or  an  implied  authority  or 
confirmation  could  be  justly  established,  not  under 
seal,  whether  it  be  verbal,  or  in  writing,  or  circum- 
stantial.'' 

1  Gow  on  P.  c.  2,  §  2,  p.  60,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  2,  §  1,  p.  308- 
312,  2d  ed. ;  Cady  v.  Shepherd,  11  Pick.  400;  Gram  v.  Seton,  1  Hall,  262; 
Skinner  15.  Dayton,  19  Johns.  513  ;  Story  on  Ag.  §  49  ;  ante,  §114;  Beckham 
V.  Drake,  9  M.  &  W.  79,  91-94.  {Beckham  v.  Drake,  11  M.  &  W.  315.} 
Beckham  r.  Knight,  1  Man.  &  G.  738 ;  ante,  §  115. 

2  3  Kent,  47,  48. 

3  Gow  on  P.  c.  2,  §  2,  p.  58-60,  3d  ed. ;  Steiglitz  v.  Eggington,  Holt  N. 
P.  141 ;  Hunter  v.  Parker,  7  M.  &  W.  322,  342 ;  Wallace  v.  Kelsall,  7  M.  & 
W.  264,  272. 

*  3  Kent,  47,  48. 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  213 

§  122.  Some  of  the  American  decisions  may  be  sup- 
ported upon  the  general  ground,  that  the  act,  if  done 
by  an  unsealed  instrument,  would  have  been  within  the 
scope  of  the  business  of  the  partnership,  and  the  pow- 
ers and  authorities  belonging  to  each  partner.'  In  such 
cases  there  does  not  seem  any  solid  reason,  why  the 
act,  when  done,  should  be  vitiated  by  being  under  the 
seal  and  signature  of  the  firm.^  There  seems  nothing 
incongruous  in  such  a  case  in  holding,  that  it  is  binding 
on  the  individual  partner,  as  his  sealed  instrument,  and 
on  the  other  partners  as  their  agreement  or  assignment, 
made  by  their  authorized  agent.^     Thus,  a  purchase  of 

'  Tapley  v  Butterfield,  1  Met.  515. 

*  [Purviance  v.  Sutherland,  2  Ohio  St.  478  ;  Sweetzer  v.  Mead,  5  Mich. 
107];  {Milton  v.  Mosher,  7  Met.  244;  Dubois'  Appeal,  38  Penn.  St.  231  i 
Daniel  v.  Toney,  2  Metcalfe,  523;  Human  v.  CunifFe,  32  Mo.  316;  Met.  on 
Contr.  125;  1  Am.  Lead.  Cas.  450.} 

^  See  Harrison  v.  Sterry,  5  Cranch,  289  ;  Cady  v.  Shepherd,  11  Pick.  400. 
—  In  Anderson  v.  Tompkins,  1  Brock.  456,  462,  Mr.  Chief  Justice  Marshall 
said :  "  It  is  said,  this  transfer  of  property  is  by  a  deed,  and  that  one  partner 
has  no  right  to  bind  another  by  deed.  For  this  a  case  is  cited,  which,  I 
believe,  has  never  been  questioned  in  England,  or  in  this  country.  Harrison 
V.  Jackson,  7  T.  R.  207.  I  am  not,  and  never  have  been  satisfied  with  the 
extent  to  which  this  doctrine  has  been  carried.  The  particular  point  decided 
in  it  is  certainly  to  be  sustained  on  technical  reasoning,  and  perhaps  ought 
not  to  be  controverted.  I  do  not  mean  to  controvert  it.  That  was  an  action 
of  covenant  on  a  deed ;  and  if  the  instrument  was  not  the  deed  of  the  de- 
fendants, the  action  could  not  be  sustained.  It  was  decided  not  to  be  the 
deed  of  the  defendants,  and  I  submit  to  the  decision.  No  action  can  be  sus- 
tained against  the  partner,  who  has  not  executed  the  instrument,  on  the  deed 
of  his  copartner.  No  action  can  be  sustained  against  the  partner,  which  rests 
on  the  validity  of  such  a  deed,  as  to  the  person  who  has  not  executed  it. 
This  principle  is  settled.  But  I  cannot  admit  its  application  In  a  case  where 
the  property  may  be  transferred  by  delivery,  under  a  parol  contract,  where 
the  right  of  sale  is  absolute,  and  the  change  of  property  Is  consummated 
by  delivery.  I  cannot  admit,  that  a  sale,  so  consummated,  is  animlled  by 
the  circumstance,  that  It  Is  attested  by,  or  that  the  trusts  under  which  it  Is 
made,  are  described  In  a  deed.  No  case  goes  thus  far;  and  I  think  such  a 
decision  could  not  be  sustained  on  principle."  See  also  Sale  v.  Dishman's 
Executors,  3  Leigh,  548;  Coll.  on  P.  B.  3,  c.  2,  §  1,  p.  313,  2d  ed. ;  s.  P. 
Hunter  v.  Parker,  7  M.  &  W.  322.  [In  Ex  parte  Bosanquct,  De  Gex,  432, 
the  Chief  Judge  in  Bankruptcy  said:  "  As  to  the  objection,  that  the  security 


214  PARTNERSHIP.  [cHAP.  VII. 

goods,  in  the  course  of  the  trade  and  business  of  the 
partnership,  under  the  seal  of  the  lirm,  has  been  held 
binding  on  the  firm.^  But  the  more  general  doctrine, 
and,  indeed,  that  which  is  principally  relied  on,  is,  that 
a  prior  authority,  or  a  subsequent  ratification,  not  un- 
der seal,  but  either  express  or  implied,  verbal  or  written, 
is  sufficient  to  establish  the  deed,  as  the  deed  of  the 
firm,  and  binding  upon  it  as  such.^ 

being  effected  by  a  deed  executed  by  one  partner  could  not  bind  the  firm,  it 
might  be  true  that  the  instrument  would  not  take  effect  as  the  deed  of  the  firm; 
but  the  transaction  itself  was  one  within  the  authoi'ity  of  the  partner,  and  the 
circumstance  of  a  deed  being  executed  would  not  invalidate  the  contract." 
See  also  Everit  v.  Strong,  7  Hill,  (N.  Y.)  585.] 

*  Cady  V.  Shepherd,  11  Pick.  400. 

2  Skinner  v.  Dayton,  19  Johns.  513;  Cady  v.  Shepherd,  11  Pick.  400; 
Gram  v.  Seton,  1  Hall,  262;  [Herbert  v.  Hanrick,  16  Ala.  581;  Smiths. 
Kerr,  3  Comst.  144;  McDonald  v.  Eggleston,  26  Vt.  154;  Drumright  v. 
Philpot,  16  Ga.  424;  Swan  v.  Stedman,  4  Met.  548;  Ely  v.  Hair,  16  B. 
Monr.  230.]  The  whole  reasoning  on  which  this  doctrine  depends,  as  well  as 
the  authorities  on  which  it  is  founded,  were  most  ably  and  elaborately  re- 
viewed in  the  case  of  Cady  v.  Shepherd,  11  Pick.  405,  406,  and  in  Gram  v. 
Seton,  1  Hall,  262.  In  the  latter  case  especially,  all  the  English,  as  well  as 
the  American  authorities,  were  examined  at  great  length  by  Mi*.  Chief 
Justice  Jones,  and  his  judgment  is  worthy  of  a  most  attentive  perusal.  On 
that  occasion  he  said :  "  The  principle,  that  a  partner  cannot,  by  virtue  of 
the  authority  he  derives  from  the  relation  of  copartnership,  bind  his  co- 
partner by  deed,  has  been  too  long  settled  to  be  now  shaken.  It  is  the 
technical  rule  of  the  common  law  applicable  to  deeds,  which  has  been  in- 
grafted into  the  commercial  system  of  the  law  of  partnership ;  and  unless 
the  charter-party  in  question  can,  under  the  circumstances  of  this  case,  be 
construed  to  be  the  deed  of  Bunker,  the  defence  must  prevail.  The  reasons 
for  the  restrictions  are  not  very  satisfactory ;  for  all  the  mischiefs,  which  the 
expositors  of  the  rule  ascribe  to  the  authority  of  members  of  a  copartnership 
to  seal  for  their  copartners,  may  flow  almost  as  extensively,  and  nearly  with 
equal  facility,  from  the  use  of  the  name  and  signature  of  the  copartnership. 
The  dangers  of  allowing  the  use  of  a  seal  to  the  members  of  a  copartnership 
are  supposed  to  consist  in  these  two  attributes  of  the  seal ;  that  it  imports  a 
consideration,  and  that  it  is  competent  to  convey  absolutely,  or  to  charge  and 
encumber  real  estate.  But  negotiable  paper,  by  which  the  partner  may  bind 
the  firm,  efjually  imports  a  consideration  with  a  seal ;  and  upon  general  prin- 
ciples, the  use  of  the  seal  of  the  copartner,  equally  with  the  signature  of  the 
copartnership,  would,  if  permitted,  be  restricted  to  copartnership  purposes 
and  copartnersiiip  operations  solely ;  and  the  joint  deed  of  the  copartners, 


CHAP.  VIl]  powers    AND    AUTHORITIES.  215 

§  122  a.  In  the  next  place,  although  one  partner  may 
procure  advances  of  money  to  carry  on  the  business  of 

executed  by  the  present  for  the  absent  members,  be  held  competent  to  con- 
vey or  to  encumber  the  copartnership  property  alone,  and  to  have  no  oper- 
ation upon  the  private  funds  or  separate  estate  of  the  copartners.  With 
these  restrictions  upon  the  use  and  operation  of  the  seal,  is  not  the  power  of 
a  partner  to  bind  his  copartner,  and  to  charge  and  encumber  his  estate,  as 
great  and  as  mischievous,  without  the  authority  to  use  the  seal  of  the  absent 
partner,  as  it  would  be  with  that  authority  ?  Those  powers  undeniably 
place  the  fortune  of  the  members  of  a  general  copartnership,  to  a  great  de- 
gree, at  the  disposal  of  any  one  of  the  copartners  ;  but  it  is  necessary  to  the 
beneficial  management  of  the  joint  concern,  that  extensive  powers  should  be 
vested  in  the  members  who  compose  it ;  and  when  the  copartners  live  re- 
motely from  each  other,  their  joint  business  concerns  cannot  be  advanta- 
geously conducted  or  carried  on,  without  a  latitude  of  authority  in  each,  which 
is  inconsistent  with  the  perfect  safety  of  the  other  copartners.  It  cripples 
the  operation  of  a  partner,  whose  distant  residence  precludes  a  personal  co- 
operation, to  deny  him  the  use  of  the  seal  of  his  copartner  for  instruments 
requiring  it,  and  which  the  exigencies  of  their  joint  concerns  render  expe- 
dient or  beneficial  to  them.  He  must  be  clothed  with  the  power  to  execute 
deeds  for  his  copartner  when  necessarily  required  for  the  purposes  of  the 
trade ;  and  if  that  authority  is  not  inherent  in  the  copartnership,  it  must  be 
conferred  by  letter  of  attorney,  and  it  must  be  general,  or  it  will  be  inade- 
quate to  the  ends  of  its  creation.  A  copartnership,  especially,  which  is  em- 
ployed in  foreign  trade,  and  has  occasion  to  employ  ships  for  the  transporta- 
tion of  merchandise,  or  to  borrow  money  on  respondentia,  if  its  members  are 
dispersed,  as  is  often  the  case,  must  be  seriously  embarrassed  in  its  operations 
by  the  application  of  the  rule,  that  requires  every  copartner,  who  is  to  be 
bound  by  the  charter-party  or  the  respondentia  bond,  to  seal  it  personally, 
or  by  attorney  duly  constituted  for  that  specific  purpose,  with  his  own  seal. 
Similar  difliculties  would  arise  out  of  the  same  rule,  when  the  operations  of 
the  house  required  the  copartnership  to  execute  other  deeds.  Can  it  then 
be,  that  this  stern  rule  of  the  common  law,  which  has  its  appropriate  sphere 
of  action,  and  a  most  salutary  operation  on  those  relations  of  society,  where 
men,  not  otherwise  connected,  are  the  owners  of  undivided  property,  is  to 
be  applied  in  all  its  force,  and  to  govern,  with  unbending  severity,  in  the 
concerns  of  copartners,  whose  intimate  connection  and  mutual  interest  re- 
quire such  large  power  and  ample  confidence  in  the  integrity  and  prudence 
of  each  other,  to  give  to  their  operations  efficiency,  vigor,  and  success  ? 
The  pressure  of  these  considerations  has  induced  a  relaxation  of  the  com- 
mon-law rule,  to  adapt  it  to  the  exigencies  of  commercial  copartnerships, 
and  other  associations  of  individuals  operating  with  joint  funds  for  the  com- 
mon benefit.  The  rule  itself  remains ;  but  the  restrictions  it  imposes  are 
qualified  by  the  application  of  other  principles.  The  general  authority  of 
a  partner,  for  example,  derived  from  his  relation  to  his  copartners,  does  not 


216  PARTNERSHIP.  [cHAP.  VII. 

an  established  partnership,  and  thereby  bind  the  firm  ; 
yet  if  the  partnership  is  not  estabhshed,  one  partner  has 
not  an  implied  authority  to  bind  the  firm  for  advances 
in  the  incipient  state  thereof  to  raise  capital  therefor.^ 

§  123.  These  seem  to  be  the  principal  exceptions  to 
the  authority  of  one  partner  to  bind  the  partnership  by 
his  own  acts  and  contracts,  done  within  the  scope  of 
partnership  trade  and  business,  and  for  the  purposes 
thereof.  But  another  question  may  arise  ;  and  that  is, 
whether  in  cases  of  partnership  the  majority  is  to  gov- 
ern in  case  of  a  diversity  of  opinion  between  the  part- 
ners, as  to  the  partnership  business  and  the  conduct 
thereof;  or,  whether  one  partner  can,  by  his  dissent, 
arrest  the  partnership  business,  or  suspend  the  ordinary 
powers  and  authorities  of  the  other  partners  in  relation 

empower  him  to  seal  an  instrument  for  them,  so  as  to  make  it  binding  upon 
them  without  their  assent,  and  against  their  will.  This  is  the  fair  import  of 
the  modern  cases,  and  is,  I  apprehend,  the  principle  courts  are  disposed  to 
apply  to  the  use  of  a  seal  in  joint  contracts  for  copartnership  purposes.  An 
absent  partner  is  not  bound  by  a  deed  executed  for  him  by  his  copartner, 
without  his  previous  authority  or  permission,  or  his  subsequent  assent  and 
adoption.  But  the  previous  authority  or  permission  of  one  partner  to  an- 
other to  seal  for  him,  or  his  subsequent  adoption  of  the  seal  as  his  own,  will 
impart  efficacy  to  the  instrument  as  his  deed ;  and  that  previous  authority  or 
subsequent  adoption  may  be  by  parol.  These  are  the  results,  which  I  de- 
duced from  the  judicial  decisions,  especially  those  of  our  own  courts,  on  the 
subject ;  and  if  I  am  correct  in  my  deduction,  the  conclusion  must  be  favor- 
able to  the  validity  of  this  charter-party,  as  the  deed  of  both  the  partners." 
{Bond  V.  Aitkin,  6  W.  &  S.  165  ;  Johns  v.  Battin,  30  Penn.  St.  84.  The 
same  rule  has  been  extended  to  instruments  affecting  real  estate.  Haynes  v. 
Seachrest,  13  Iowa,  455  ;  Wilson  v.  Hunter,  14  AVis.  683.  Lowery  v.  Drew, 
18  Tex.  786.  The  previous  authority  or  subsequent  ratification  must  be 
proved.  Dillon  v.  Brown,  11  Gray,  179.  Butterfield  v.  Hemsley,  12  Gray, 
226.  Fox  r.  Norton,  9  ]\lich.  207.  In  Delaware  authority  cannot  be  proved 
by  parol.  Little  v.  Hazzard,  5  Harring.  291.  Nor  perhaps  in  Tennessee.  Tur- 
beville  v.  Ryan,  1  Humph.  113  ;  Napier  v.  Catron,  2  Humph.  534;  but  see 
Lambden  v.  Sharp,  9  Humph.  224.  The  several  partners  may  use  one  and 
the  same  seal.  Tasker  v.  Bartlett,  5  Cush.  359,  364.  Lambden  v.  Sharp. 
uhi  sup.  Contra,  Rex  v.  Inhab.  of  Austrey,  6  M.  &  S.  319.} 
1  Fisher  v.  Tayler,  2  Hare,  218,  229.     {See  §  146.} 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  217 

thereto,  against  the  will  of  the  majority.  Where  there 
is  no  stipulation  in  the  partnership  articles  to  control  or 
vary  the  result  (for  if  there  be  any  stipulation,  that 
ought  to  govern),^  the  general  rule  would  seem  to  be, 
that  each  partner  has  an  equal  voice,  however  unequal 
the  shares  of  the  respective  partners  may  be,  because  in 
such  a  case,  each  partner  has  a  right  to  an  equal  share 
of  the  profits  ;  ^  and  the  majority,  acting  fairly  and  hona 
fide,  have  the  right  and  authority  to  conduct  the  part- 
nership business,  within  the  true  scope  thereof,  and  dis- 
pose of  the  partnership  property,  notwithstanding  the 
dissent  of  the   minority.^     Where  there   are   but  two 

1  Const  V.  Harris,  Turn.  &  R.  496,  517,  518,  521  ;  3  Kent,  45  ;  {§  213.} 

"  See  ante,  §  24. 

*  Coll.  on  P.  B.  2,c.  2,  §  1,  p.  129,  130;  Id.  B.  3,  c.  1,  §  262,  2d  ed. ;  3 
Chitty  on  Comm.  and  Manuf.  c.  4,  p.  236  ;  Const  v.  Harris,  Turn  &  R.  496, 
517,  518,  524,  525  ;  Kirk  v.  Hodgson,  3  Johns.  Ch.  400,  405,  406  ;  [Johnston 
V.  Dutton,  27  Ala.  245]  ;  {Western  Stage  Co.  v.  Walker,  2  Iowa,  504.  See 
Noyes  v.  New  Haven,  Kew  London,  &  Stonington  R.  R.  Co.  30  Conn.  1 ;  Lind. 
on  P.  508-518.}  It  is  not  easy  to  say,  that  this  doctrine  is  so  entirely  settled, 
as  to  admit  of  no  controversy.  The  elementary  writers  are  not  all  agreed 
about  it ;  and  the  dicta  of  judges  do  not  always  admit  its  correctness.  Still 
it  appears  to  me,  that  the  text  states  the  true  doctrine,  fairly  deducible  from 
a  just  survey  of  all  the  leading  authorities.  On  one  occasion.  Lord  Eldon 
said :  "  If  I  consider  them  (a  lodge  of  freemasons)  as  individuals,  the  ma- 
jority had  no  right  to  bind  the  minority."  Lloyd  v.  Loaring,  6  Ves.  773,  777. 
But  that  was  not  a  case  strictly  of  partnership;  but  rather  of  a  club.  Mr.  Wat- 
son, in  his  Treatise  on  Partnership  (c.  4,  p.  194,  2d  ed.),  says :  "We  have  seen  in 

V.  Layfield,  1  Salk.  292,  Lord  Holt  held,  that  the  act  of  one  partner 

should  be  presumed  the  act  of  the  others,  and  should  bind  them,  unless  they 
could  show  a  disclaimer.  And  it  would  seem,  that,  even  during  the  subsistence 
of  the  partnership,  and  in  the  established  course  of  trade,  one  partner  may,  to 
a  certain  degree,  limit  his  responsibility.  If  there  be  any  particular  specula- 
tion or  bargain  proposed,  which  he  disapproves  of,  by  giving  distinct  notice 
to  those  with  whom  his  copartners  are  about  to  contract,  that  he  will  not  in 
any  manner  be  concerned  in  it,  they  could  not  have  recourse  upon  him ;  as 
proof  of  this  notice  would  rebut  Yns  prima  facie  liability.  The  partnership  in 
that  case  might  either  be  considered  as  dissolved,  or  quoad  hoc  as  suspended. 
Where  three  persons  entered  into  partnership  in  the  trade  of  sugar-boiling, 
and  agreed,  that  no  sugars  should  be  bought  without  the  consent  of  the 
majority ;  one  of  them  afterwards  makes  a  protest,  that  he  would  no  longer 
be  concerned  in  partnership  with  them.     The  other  two  persons  after  make 


218  PARTNERSHIP.  [CHAP.  VII. 

persons  in  the  firm,  and  they  dissent  from  each  other, 
it  would  seem  a  just  result,  that  it  amounts  to  a  tempo- 
rary suspension  of  the  right  and  authority  of  each  to 
carry  on  or  manage  the  partnership  business,  or  dispose 
of  the  partnership  property,  in  respect  to  all  persons 
having  notice  of  such  disagreement.^  But  in  every 
case,  where  the  decision  of  the  majority  is  to  govern,  it 
would  seem  reasonable,  that  the  minority,  if  practicable, 
should  have  notice  thereof  and  be  consulted  ;  and  if  the 
majority  should  choose  wantonly  to  act  without  infor- 
mation to,  or  consultation  with  the  minority,  it  would 
hardly  be  deemed  a  ho7ia  fide  transaction,  obligatory 
upon  the  latter.^ 

a  contract  for  sugars,  the  seller  having  notice,  that  the  third  had  disclaimed 
the  partnership,  he  shall  not  be  charged."  The  case  in  1  Salkeld,  292,  will  not 
be  found  to  justify  the  broad  conclusion  of  the  author.  It  was  there  held, 
that  partners  would  be  presumed  to  have  assented  to  a  transaction  designed 
for  their  benefit,  unless  they  had  refused  to  be  concerned  in  it.  The  case  in 
16  Vin.  Abr.  244,  A.  pi.  12,  is,  indeed,  directly  in  point.  But  the  same  case 
is  reported  under  the  name  of  Minnit  v.  Whinery,  3  Bro.  P.  C.  523  (5  Bro. 
P.  C.  by  Tomlins,  489),  where  it  appears,  that  the  case  turned  upon  very 
different  considerations,  and  facts  estabhshing  an  exclusive  credit  to  the  other 
partners,  contracting  the  debt,  and  that  there  had  been  a  dissolution  of  the 
partnership  at  the  time.  See  Coll.  on  P.  B.  -3,  c.  1,  p.  261,  2d  ed.  In  the 
case  of  Vice  v.  Fleming,  1  Y.  &  J.  227,  230,  Mr.  Chief  Baron  Alexander 
said :  "  It  is  clear  that  the  defendant  might,  by  an  absolute  notice,  have  dis- 
charged himself  from  all  future  liability,  whether  he  ceased  or  continued  to 
be  a  partner."  Mr.  Baron  Garrow  added :  "  All  the  partners  of  a  firm  are 
liable  for  the  debts  of  the  firm ;  but  this  responsibility  may  be  limited  by 
express  notice  by  one,  that  he  will  not  be  liable  for  the  acts  of  his  copartners." 
It  does  not  seem  to  me,  that  the  facts  of  that  case  required  so  strong  a  state- 
ment, or  that  the  point  was  positively  in  judgment.  The  case  of  Willis  v. 
Dyson,  1  Stark.  164,  is  not  in  point;  for  there  were  but  two  partners,  and 
they  dissented  in  opinion,  and  notice  was  given  by  one.  In  Lord  Gal  way  v. 
Matthew,  1  Camp.  403,  s.  c.  10  East,  264,  a  majority  of  the  partners  did  not 
c  o  ncurin  giving  the  note.  See  Booth  v.  Quin,  7  Price,  193;  3  Kent,  45  ; 
Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  129,  130,  2d  ed.;  Gow  on  P.  c.  2,  §  2,  p.  52,  3d 
ed.  and  note,  ibid,  of  American  editor  (Mr.  Ingraham) ;  Id.  c.  4,  §  1,  p.  149. 

'  Willis  V.  Dyson,  1  Stark.  164;  {Donaldson  v.  Williams,  1  Cr.  &  M. 
345.} 

*  Const  V.  Harris,  Turn.  &  R.  496,  525,  527.  — In  this  case  Lord  Eldon 
said :  "  I  call  that  the  act  of  all,  which  is  the  act  of  the  majority,  provide  d 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  219 

§  124.  The  Roman  law  seems  to  have  ado])ted  the 
general  rule,  that  no  act  was  binding  upon  all  the  part- 
ners, unless  so  far  as  it  was  expressly  or  impliedly 
agreed  to  by  all ;  and  consequently  the  refusal  or  pro- 
hibition of  one  rendered  the  act  a  nullity,  as  to  him- 
self. In  this  respect,  the  partner  prohibiting  was  held 
to  have  a  superior  right  against  the  others.  In  re 
com7nuni  7ieminem  dominorum,  jure  facere  quicqicam, 
invito  altera^  posse.  Unde  manifestum  est  prohihendi 
jus  esse  ;  in  re  enim  j^ciri  p)otiore'>n  causmn  esse  prohi- 
hentis  constat.  Sed  etsi  in  communi  prohiberi  socius 
a  socio,  ne  quid  faciat,  potest,  ut  tamen  factum  opus  tol- 
lat,  cogi  non  jwtest,  si,  cum  p)roMhere  poterat,  hoc  prcB- 
termisit}  The  French  law  has  adopted  the  same  doc- 
trine, in  the  absence  of  all  counter  stipulations  of  the 
parties.-  But  if  the  administration  of  the  partnership  be 
confided  to  one  or  more  of  the  partners,  the  others  can- 
not recall  that  authority,  or  annul  or  prohibit  its  ex- 
ercise during  the  existence  of  the  partnership,  or  the 
presumed  duration  of  the  authority.^  Such  also  is  the 
rule  of  the  Scottish  law  ;  "*  and  of  the  Louisiana  Code.^ 

all  are  consulted,  and  the  majority  are  acting  hona  fide,  meeting  not  for  the 
purpose  of  negativing  what,  when  they  are  met  together,  they  may,  after 
due  consideration,  think  proper  to  negative.  For  a  majority  to  say,  We  do 
not  care  what  one  partner  may  say,  we  being  the  majority,  will  do  what  we 
please,  is,  I  apprehend,  what  this  court  will  not  allow."  Again :  "  In  all 
partnerships,  whether  it  is  expressed  in  the  deed  or  not,  the  partners  are 
bound  to  be  true  and  faithful  to  each  other.  They  are  to  act  upon  the  joint 
opinion  of  all,  and  the  discretion  and  judgment  of  any  one  cannot  be  ex- 
cluded. What  weight  is  to  be  given  to  it  is  another  question.  The  most 
prominent  point  on  which  the  court  acts,  in  appointing  a  receiver  of  a  part- 
nership concern,  is,  the  circumstances  of  one  partner  having  taken  upon 
himself  the  power  to  exclude  another  partner  from  as  full  a  share  in  the 
management  of  the  partnership,  as  he,  who  assumes  that  power,  himself 
enjoys." 

'  D.  10,  3,  28;  Poth.  Pand.  17,  2,  n.  27;  Domat,  1,  3,  4,  art.  22. 

"  Poth.  de  Soc.  n.  87-91.  «  Poth.  de  Soc.  n.  71,  90. 

*  1  Stair,  Inst.  tit.  16,  §  4,  p.  157.  *  q^^^^^  ^rt.  2838,  2839,  2841. 


220  PARTNERSHIP.  [cHAP.  VII. 

§  125.  The  doctrine  of  the  common  law  above  stated, 
as  to  the  right  of  the  majority  to  govern  in  all  cases, 
where  the  stipulations  of  the  articles  of  the  partner- 
ship do  not  import  the  contrary,  must  be  strictly 
confined  to  acts  done  within  the  scope  of  the  business 
of  the  partnership,  and  does  not  extend  to  the  right  to 
change  any  of  the  articles  thereof  In  such  a  change, 
it  is  essential  that  all  should  unite ;  otherwise  it  is  not 
obligatory  upon  them.^  This  is  emphatically  true  in 
case  of  joint  associations,  and  joint-stock  companies  of 
an  extensive  nature,  in  the  constitution  of  which  certain 
articles  are  treated  as  fundamental,  and  cannot  be  al- 
tered or  varied  without  the  consent  of  all  the  members ; 
for  the  rule,  which  applies  to  public  bodies,  strictly  so 
called,  that  the  majority  is  to  govern  in  all  cases,  is 
inapplicable  to  private  associations,  where  the  terms 
originally  prescribed  for  the  association  must  and 
ought  to  remain  in  full  force,  until  abrogated  by  the 
consent  of  all  the  associates.^ 

'  [Thus,  if  written  articles  of  partnership  stipulate  that  there  shall  be  no 
trade  in  spirituous  liquors,  and  they  be  so  changed  by  the  majority  as  to 
allow  such  trade,  this  is  a  material  alteration,  at  least  when  such  trade  is  con- 
trary to  law,  and  will  justify  the  minority  in  withdrawing  from  the  firm. 
Abbot  V.  Johnson,  32  N.  H.  9.] 

*  Livingston  v.  Lynch,  4  Johns.  Ch.  573,  596.  —  In  this  case  Mr.  Chan- 
cellor Kent  said:  "Lord  Coke,  Co.  Litt.  181,  b.  took  the  distinction  between 
public  and  private  associations,  and  admitted,  that,  in  matters  of  public  con- 
cern, the  voice  of  the  majority  should  govern,  because  it  was  for  the  public 
good,  and  the  power  was  to  be  more  favorably  expounded  than  when  it  was 
created  for  private  purposes.  In  Viner,  tit.  Authority,  B.,  we  have  several 
cases  marking  the  same  distinction ;  and  it  is  now  well  settled,  that  in  matters 
of  mere  private  confidence,  or  personal  trust  or  benefit,  the  majority  cannot 
conclude  the  minority.  But  where  the  power  is  of  a  public  or  general  nature, 
the  voice  of  the  majority  will  control,  on  grounds  of  public  convenience;  and 
this  is  also  part  of  the  law  of  coii^orations.  Attorney-General  v.  Davy,  2 
Atk.  212;  The  King  v.  Beeston,  3  T.  R.  592;  Withnell  v.  Gartham,  6  T.  R. 
388 ;  Grindley  v.  Barker,  1  B.  &  P.  229  ;  Green  v.  Miller,  6  Johns.  39 ;  5 
Co.  63,  a.  In  Lloyd  v.  Loaring,  6  Ves.  773,  there  was  a  suit  by  three  per- 
sons, on  behalf  of  themselves  and  all  the  other  members  of  a  lodge  of  free- 


CHAP.  VII.]  POWERS    AND    AUTHORITIES.  221 

masons ;  and  Lord  Eldon  observed, '  that  if  he  considered  them  as  individuals, 
the  majority  had  no  right  to  bind  the  minority.  One  individual  has  as  good 
a  riglit  to  possess  the  pro2;)erty  as  any  other,  unless  he  can  be  affected  by 
some  agreement.'  Mr.  Abbott,  I^aw  of  Shipping,  Part  1,  c.  3,  §  2,  admits 
the  extreme  inconvenience,  under  the  law  of  England,  of  enjoying  personal 
chattels  vested  in  several  distinct  proprietors,  without  a  common  consent  and 
agreement  among  them.  But  the  case  most  applicable  to  the  one  before  us, 
is  that  of  Davies  v.  Hawkins,  3  M.  &  S.  488.  A  company  was  formed  for 
brewing  ale,  and  by  deed  they  confided  the  conduct  of  the  business  to  two 
persons,  who  were  to  be  trustees  of  the  company.  General  quarterly  meet- 
ings of  the  company  were  to  be  held.  It  was  resolved  by  the  K.  B.,  that  one 
person  only  could  not  be  appointed  at  a  general  quarterly  meeting,  in  place 
of  the  two  originally  appointed  under  the  deed,  unless  such  alteration  was 
made  by  the  consent  of  all  the  subscribers.  Lord  Ellenborough  said,  that  '  a 
change  had  been  made  in  the  constitution  of  this  company,  which  could  not 
be  made  without  the  consent  of  the  whole  body  of  the  subscribers.  It  was 
such  a  substituted  alteration  in  its  constitution,  as  required  the  assent  of 
all.'"  {Natusch  v.  Irving,  Gow  on  P.  app.  398,  3d  ed. ;  Lind.  on  P.  511- 
514.} 


222  PARTNERSHIP.  [CHAP.  VIII. 


CHAPTER  VIII. 

LIABILITIES    AND    EXEMPTIONS    OF    PARTNERS    AS    TO    THIRD 

PERSONS. 

j  §  126.  Proof  of  authority  to  bind  the  firm  sometimes  necessary. 

127.  In  case  of  a  guaranty. 

128.  Firm  not  bound  to  a  party  who  knows  the  want  of  authority. 

129.  Foreign  law  on  the  subject. 

130.  Illustrative  cases. 

131.  So  a  fortiori,  in  cases  of  fraud. 

132.  Firm  not  bound  by  the  use  of  its  property  or  credit  in  favor  of  a 

partner's  private  creditor, 

133.  This  a  presumptive  rule  only. 
133  a,  Equity  will  prevent  such  use, 

134.  Firm  not  liable  when  credit  Is  given  to  one  partner. 

135.  Roman  law. 

136.  Emly  v.  Lye,  15  East,  7, 

137.  French  law. 

138.  Rule  not  ajjplicable  to  a  dormant  partner. 

139.  Firm  business  carried  on  In  the  name  of  one  partner. 

140.  Taking  a  separate  security. 

141.  Stage-coach  proprietors. 

142, 143.  Negotiable  paper  in  the  name  of  a  partner. 
■  144.  Clubs. 

145.  Joint  purchases, 

146.  Commencement  of  liability, 
147-151.  Illustrative  cases. 

152,  153.  Liability  of  incoming  partner. 

154.  A  firm  sometimes  not  bound  though  the  creditor  meant  to  bind  it. 

155.  Extinguishment  of  llablHty. 

156.  By  credit  given  to  a  partner, 

157.  Appropriation  of  payments. 

158.  Discharge  of  retiring  partner. 

159.  Liability  of  retiring  partners  for  future  debts.     Dormant  partners. 

160.  Ostensible  partners, 

161.  What  is  sufficient  notice  of  retirement, 

162.  Notice  of  a  dissolution  other  than  by  retirement, 

163.  Fraudulent  retirement, 

164.  Joint-stock  companies, 

165.  Scottish  law. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  223 

166.  Liability  of  the  partnership  for  torts. 
16  7.  Torts  several  as  well  as  joint. 
168.  Release  of  one  partner  releases  all. 
168 o.  Notice  of  copartners' acts.} 

§  126.  There  are  certain  powers  and  authorities, 
which  from  long  usage  and  recognition  are  so  generally 
attached  to  all  sorts  of  partnerships,  that  they  will  be 
deemed  to  exist  by  presumption  of  law  Q^resumptione 
juris  et  dejure),  unless  there  is  clear  evidence  to  repel 
the  presumption,  or  some  positive  contrary  stipulation 
be  agreed  upon  between  the  parties.  Thus,  for  exam- 
ple, each  partner  may,  as  we  have  seen,  buy  and  sell 
goods,  belonging  to  or  for  the  use  of  the  partnership 
or  the  ordinary  business  thereof;  ^  each  partner  may 
pledge  the  partnership  property,  or  borrow  money  for 
partnership  purposes,  on  the  credit  of  the  firm.^  These 
cases  are  sufficiently  clear  from  what  has  been  already 
suggested  in  a  former  section.^  But  the  same  doctrine 
cannot  be  as  universally  affirmed,  as  to  the  right  to 
draw,  or  indorse,  or  accept,  or  negotiate  bills  of  ex- 
change, or  to  make,  or  indorse  promissory  notes,  not 
being  the  securities  of  third  persons,  held  by  the  firm, 
as  a  part  of  the  funds  thereof,  and  therefore  disposable 
accordingly.  For  although,  in  the  ordinary  course  of 
commercial  partnerships,  these  are  known  and  univer- 

^  Coll.  on  P.  B.  3,  c.  1,  §  1,  p.  263-265,  267,  2d  ed. ;  Hyat  v.  Hare,  Comb. 
383;  Thicknesse  v.  Bromilow,  2  Cr.  &  J.  425;  ante,  §  102;  Livingston  v. 
Roosevelt,  4  Johns.  251 ;  U.  S.  Bank  v.  Binney,  5  Mason,  176  ;  s.  c.  5  Pet. 
529. 

2  Coll.  on  P.  B.  3,  c.  1,  §  l,p.  263,  267;  Id.  290,  291,  2d  ed. ;  Rothwell 
V.  Humphreys,  1  Esp.  406  ;  Thicknesse  v.  Bromilow,  2  Cr.  &  J.  425 ;  Bank  of 
U.  S.  V.  Binney,  5  Mason,  176;  s.  C.  5  Pet.  529;  Fox  v.  Hanbury,  Cowp. 
445;  Raba  v.  Ryland,  Gow,  132;  Tupper  v.  Haythorn,  Gow,  135;  Reid  v. 
Hollinshead,  4  B.  &  C.  867;  Church  i\  Sparrow,  5  Wend.  223;  Livingston 
V.  Roosevelt,  4  Johns.  251,  265  ;  2  Bell,  Couim.  B.  7,  p.  615,  616,  5th  ed. ; 
3  Kent,  43-46  ;  Gow  on  P.  c.  2,  §  2,  p.  36-56,  3d  ed. ;  Wats,  on  P.  c.  4,  p. 
195 ;  U.  S.  Bank  v.  Binney,  5  Mason,  176  ;  s.  c.  5  Pet.  529. 

*  Ante,  §  102. 


224  PARTNERSHIP.  [CHAP.  VIII. 

sally  acknowledged  operations,  which  any  partner  is 
competent  to  transact,  because  they  arise  from  the 
usages  of  trade,  and  the  previous  consent  of  all  the 
partners,  and  from  this  universality  in  practice,  they 
are  now  adopted  as  a  general  rule  of  law  ;  ^  yet  it  by 
no  means  follows,  that  the  like  rule  prevails  in  all  other 
sorts  of  partnership,  or  in  such  as  are  of  a  special  and 
peculiar  nature.^  The  foundation  of  any  general  and 
known  usage  may  here  altogether  fail,  and  the  very 
nature,  or  organization,  or  objects  of  the  partnership 
may  show,  that  it  is  neither  a  proper  nor  a  necessary 
power  to  be  exercised  by  a  partner.^  Thus,  if  a  part- 
nership is  organized  for  mining,  or  for  farming  purposes, 
the  directors  or  active  agents  thereof  will  not,  as  inci- 
dent thereto,  possess  a  power  to  draw  or  accept  bills,  or 
to  draw  or  indorse  notes  for  the  company.  But  there 
should  be  some  proof,  that  an  express  authority  is  given 
for  this  purpose,  or  that  it  is  implied  by  the  usages  of 
the  business,  or  the  ordinary  exigencies  and  objects 
thereof.'* 

'  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  268-279,  2d  ed. ;  Thicknesse  v.  Bromilow, 
2  Cr.  &  J.  425  ;  U.  S.  Bank  v.  Binney,  5  Mason,  1  76,  184 ;  s.  c.  5  Pet.  529 ; 
Livingston  v.  Roosevelt,  4  Johns.  251 ;  Swan  v.  Steele,  7  East,  210;  Gow  on 
P.  c.  2,  §  2,  p.  38-50,  3d  ed.;  Le  Roy  v.  Johnson,  2  Pet.  186;  Harrison  v. 
Jackson,  7  T.  R.  207. 

2  Dickinson  v.  Valpy,  10  B.  &  C.  128;  Thicknesse  v.  Bromilow,  2  Cr.  &  J. 
425,  430.  [But  this  rule  was  extended  to  banking  partnerships,  in  Bank  of 
Australasia  v.  Breillat,  6  Moore,  P.  C.  152,  where  the  language  of  the  text  is 
cited  with  approbation.]     {See  §  102  a.} 

'  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  329,  330,  2d  ed.;  Gow  on  P.  c.  4,  §  1,  p. 
149,  150,  3d  ed. 

*  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  269,  2d  ed. ;  Dickinson  v.  Valpy,  10  B.  &  C. 
128;  MuUett  v.  Huchinson,  7  B.  &  C.  639;  Thicknesse  v.  Bromilow,  2  Cr.  & 
J.  425  ;  Greenslade  v.  Dower,  7  B.  &  C.  635.  [In  Ricketts  v.  Bennett,  4  C. 
B.  686,  it  was  held  that  one  of  several  co-adventurers  in  a  mine  has  not, 
as  such,  any  authority  to  pledge  the  credit  of  the  general  body  for  money 
borrowed  for  the  concern.  And  the  fact  that  he  had  the  ffencral  manage- 
ment of  the  mine  makes  no  difference,  in  the  absence  of  circumstances  from 
which  an  implied  authority  for  that   jiurpose  can    be  inferred.      See  also 


CHAP.  Vlir.]         LIABILITIES    AND    EXEMPTIONS.  225 

§  127.  The  like  observations  apply  with  increased 
force  to  cases  of  guaranty.^  If  one  partner  gives  a 
letter  of  credit  or  guaranty  in  the  name  of  the  part- 
nership, it  is  not  to  be  treated,  as  of  course  binding  on 
the  partnership  ;  for  it  is  not  a  natural  or  necessary  in- 
cident in  all  sorts  of  partnerships,  for  one  partner  to 
possess  the  power  to  bind  his  copartners  by  a  guaranty.^ 
It  must  be  shown  to  be  justified,  either  by  the  usages 
of  the  particular  trade  or  business,  or  by  the  known 
habits  of  the  particular  partnership,  or  by  the  express 
or  implied  approbation  of  all  the  partners  in  the  given 
case.^     The  same  rule  will  apply  to  cases,  where  one 

Tredwen  v.  Bourne,  6  M.  &  W.  461  ;  Hawtayne  v.  Bourne,  7  M.  &  W.  595  ; 
Hawken  v.  Bourne,  8  M.  &  W.  703.]  Pothier  has  put  several  cases  illustrative 
of  au  analogous  doctrine,  in  cases  of  partnerships  not  commercial.  Poth.  de 
Soc.  102-104.  Mr.  Chancellor  Kent  has  well  summed  up  the  doctrine  in 
his  Commentaries,  3  Kent,  46.  He  says :  "  It  was  formerly  understood,  that 
one  partner  might  bind  his  copartners  by  a  guaranty,  or  letter  of  credit, 
in  the  name  of  the  firm ;  and  Lord  Eldon,  in  the  case  of  Ex  parte  Gardom, 
considered  the  point  too  clear  for  argument.  But  a  different  principle  seems 
to  have  been  adopted ;  and  it  is  now  held,  both  in  England  and  in  this  coun- 
try, that  one  partner  is  not  authorized  to  bind  the  partnership  by  a  guaranty 
of  the  debt  of  a  third  person,  without  a  special  authority  for  that  j^urpose, 
or  one  to  be  implied  from  the  previous  course  of  dealing  between  the  parties, 
unless  the  guaranty  be  afterwards  adopted  and  acted  upon  by  the  firm.  The 
guaranty  must  have  reference  to  the  regular  course  of  business  transacted 
by  the  partnership,  and  then  it  will  be  obligatory  ujjon  the  company,  and 
this  is  the  principle  on  which  the  distinction  rests.  The  same  general  rule 
applies,  when  one  partner  gives  the  copartnership  as  a  mere  and  avowed 
surety  for  another,  without  the  authority  or  consent  of  the  firm ;  for  this 
would  be  pledging  the  partnership  responsibility,  in  a  matter  entirely  un- 
connected with  the  partnership  business." 

'  2  Bell,  Comm.  B.  7,  p.  618,  5th  ed. ;  3  Kent,  46.     { See  previous  note.} 
^  [Sweetser  v.  French,  2  Cush.  309  ;  Andrews  v.  Planters'  Bank,  15  Miss. 
192;  Langan  v.  Hewett,  21  Id.   122;  Tutt  v.  Addams,  24  Mo.  186]  ;   {1  Am. 
Lead.  Cas.  457,  4th  ed.} 

*  Duncan  v.  Lowndes,  3  Camp.  478;  Sandilands  v.  Marsh,  2  B.  &  Aid. 
673  ;  Payne  v.  Ives,  3  Dow.  &  Ry.  664  ;  Ex  parte  Nolte,  2  Glyn  &  J.  295,  306  ; 
Coll.  on  P.  B.  3,  c.  1,  §  3,  p.  279-281,  2(1  ed. ;  Crawford  v.  Stirling,  4  Esp. 
207  ;  Theobald  on  Prin,  and  Surety,  29-31  ;  2  Bell,  Comm.  B.  7,  c.  1,  p.  618, 
5th  ed. ;  3  Kent,  46,  47;  Sutton  v.  Irwine,  12  S.  &  R.  13;  Hamill  r.  Purvis, 

15 


226  '     PARTNERSHIP.  [cHAP.  VIII. 

partner  signs  or  indorses  the  name  of  a  firm  to  a  note, 
as  surety  for  a  third  person,  in  which  note  the  partner- 
ship has  no  interest,  and  where  it  is  not  in  the  course 
of  their  business.^ 

2  Penn.  177;  Gow  on  P.  c.  2,  §  2,  p.  37,  38,  56-58;  Id.  c.  4,  §  1,  p.  148, 
149,  3d  ed.  ;  Dob  v.  Halsey,  16  Johns.  34;  [Rollins  v.  Stevens,  31  Me.  254]  ; 
Foot  V.  Sabin,  19  Johns.  154;  N.  Y.  F.  Ins.  Co.  v.  Bennett,  5  Conn.  574  ; 
{Alliance  Bank  v.  Tucker,  15  Weekly  Rep.  992.}  There  is  some  apparent 
discrepancy  in  the  authorities.  But  the  text  contains  what  seems  to  me  the 
just  results  belonging  to  the  doctrine ;  and  it  is  accordingly  adopted  by  Mr. 
Chancellor  Kent  in  his  Commentaries.  3  Kent,  46,  47,  In  Hope  v.  Cust, 
cited  by  Mr.  Justice  Lawrence  in  Shirreff  v.  Wilks,  1  East,  48,  53,  Lord 
Mansfield  is  reported  to  have  said  :  "  There  is  no  doubt  but  that  the  act  of 
every  single  partner  in  a  transaction  relating  to  the  partnership,  binds  all 
others.  If  one  gives  a  letter  of  credit  or  guaranty  in  the  name  of  all  the 
partners,  it  binds  all."  Lord  Mansfield  was  here  addressing  himself  to  the 
case  of  bankers,  when  it  might  perhaps  be  within  the  ordinary  scope  of  their 
business.     On  the  other  hand,  Lord  EUenborough,  in  Duncan  v.  Lowndes, 

3  Camp.  478,  in  the  case  of  a  commercial  partnership,  said:  "As  it  is  not 
usual  for  merchants  in  the  common  course  of  business  to  give  collateral 
engagements  of  this  sort,  I  think  you  must  jirove  that  Lowndes  had  authority 
from  Bateson  to  sign  the  partnership  firm  to  the  guaranty  in  question.  It 
is  not  incidental  to  the  general  power  of  a  partner  to  bind  his  copartners  by 
such  an  instrument.  The  case  was  not,  however,  a  guaranty  in  the  partner- 
ship business,  but  a  guaranty  of  the  acceptances  of  a  third  person,  not 
belonging  to  the  partnershijj  funds.  In  Sandilands  r.  Marsh,  2  B.  &  Aid.  673, 
a  guaranty  of  an  annuity  by  one  partner,  the  partnership  not  dealing  in 
annuities,  but  the  dealing  in  this  annuity  being  known  to  the  other  partner, 
and  not  disapproved  of  by  him,  and  he  having  no  knowledge  of  the  guaranty, 
was  held  to  bind  the  partnership,  upon  the  ground  that  the  transaction  as  to 
the  annuity,  being  adopted  as  a  part  of  the  business  binding  on  the  partner- 
ship, the  whole  transaction  bound  the  partnership,  although  the  guaranty  was 
not  known.  This  must  have  been  sustained  upon  the  notion,  that  dealers  in 
annuities,  in  the  ordinary  course  of  things,  were  accustomed  to  guaranty 
them ;  for  the  mere  adoption  of  an  act  of  one  partner,  where  there  was  a 
concealment  of  material  circumstances,  might  not  bind  him,  if  the  business 
were  not  within  the  scope  of  their  ordinary  business."  {The  decision  in  Ex 
parte  Gardom,  15  Ves.  286,  and  Lord  Mansfield's  dictum,  must  be  considered 
as  overruled,  and  the  law  in  England  settled  in  accordance  with  the  text  by 
Hasleham  v.  Young,  5  Q.  B.  833,  and  Brettel  v.  Williams,  4  Exch.  623.} 

'  Laverty  v.  Burr,  1  Wend.  529,  531 ;  Bank  of  Rochester  v.  Bowen,  7 
Wend.  158 ;  Wilson  r.  Williams,  14  Wend.  146  ;  Catskill  Bank  v.  Stall,  15 
Wend.  3G4 ;  [Rollins  v.  Stevens,  31  Me.  454]  ;  {McQuewans  v.  Hamlin, 
35  Penn.  St.  517  ;  Selden  v.  Bank  of  Commerce,  3  Minn.  166, 1  Am.  Lead  Cas. 


CHAP.  YIII.]         LIABILITIES    AND    EXEMPTIONS.  227 

§  128.  In  the  next  place,  every  contract  in  the 
name  of  the  firm,  in  order  to  bind  the  partnership, 
must  not  only  be  within  the  scope  of  the  business  of 


455,  4th  ed.  See  Butterfield  v.  Hemsley,  12  Gray,  226. }  The  American  cases 
are  very  generally  agreed  on  this  point.  In  Laverty  v.  Burr,  1  Wend.  529, 
531,  Mr.  Justice  Sutherland,  in  delivering  the  opinion  of  the  court,  said: 
"  Hosmer,  the  agent  of  the  plaintiffs,  took  t^ie  note  in  question  for  a  debt 
due  from  Allen,  the  maker,  to  them.  He  refused  to  take  Allen's  note  with- 
out seciu'ity.  The  security  given  was  the  indorsement  of  Burr  and  Baldwin, 
the  defendants,  and  of  Smith  and  Jenkins,  the  second  indorsers.  The 
plaintiffs,  therefore,  knew,  when  they  took  the  note,  that  the  indorsement 
of  the  defendant  was  made  by  one  of  the  partners,  in  the  name  of  the  firm, 
as  security  for  Allen,  and  not  for  a  debt  due  from  the  firm.  The  partner, 
who  did  not  sign  the  note,  is  not  bound  by  it  under  such  circumstances, 
unless  he  was  previously  consulted,  and  assented  to  the  transaction ;  and 
the  burden  of  proving,  that  the  partner,  who  did  not  sign  the  note,  con- 
sented to  be  bound,  is  thrown  on  the  creditor.  Dob  v.  Halsey,  16  Johns. 
34,  and  Foot  v.  Sabin,  19  Johns.  154.  In  England,  the  assent  of  all  the 
partners  is  presumed,  and  the  burden  of  avoiding  the  security  is  thrown  on 
the  firm,  and  they  are  required  to  prove,  that  the  note  was  signed  by  one 
of  the  partners  on  his  individual  account,  without  the  knowledge  and 
against  the  consent  of  the  others,  and  that  the  creditor  knew  that  fact,  when 
he  took  the  paper  of  the  firm.  Here  the  07iits  j^robaiuli  is  thrown  on  the 
creditor.  The  law  upon  this  subject  is  very  fully  considered  and  clearly 
established  in  the  cases  referred  to,  and  also  in  Livingston  v.  Hastie,  2 
Caines,  246,  Lansing  v.  Gaine,  2  Johns.  300,  and  Livingston  v.  Roosevelt,  4 
Johns.  251.  The  only  distinction  between  this  case  and  that  of  Foot  v. 
Sabin,  19  Johns.  154,  is  this.  In  that  case  the  note  was  signed  by  one 
of  the  partners  in  the  name  of  the  firm  as  sureties ;  here  it  was  indorsed ; 
and  it  was  urged  upon  the  argument  of  this  cause,  that  in  eveiy  general 
partnership,  each  member  necessarily  possesses  the  power  of  signing  or 
indorsing  negotiable  commercial  paper  in  the  customary  way  of  business, 
though  the  power  of  pledging  the  firm  as  sureties  for  third  persons  may  not 
exist.  The  form  of  the  transaction  cannot  be  material,  except  by  way 
of  evidence.  AVhen  paper  is  signed  by  one  partner  in  the  name  of  the 
firm,  as  sureties  for  a  third,  it  carries  on  the  face  of  it  evidence  that  it  was 
not  given  for  a  partnership  debt,  and  proof  of  that  fact  becomes  unneces- 
sary. But  when  it  is  signed  or  indorsed  in  the  ordinary  manner,  such  proof 
must  be  given.  But  when  the  fact  is  established,  that  it  was  not  given  for  a 
partnership  debt,  and  that  the  person  to  whom  it  was  passed  knew  it, 
no  matter  what  the  form  of  the  instrument  is,  it  does  not  bind  the  partners, 
who  did  not  sign  or  assent  to  it.  In  this  case,  the  assent  of  Baldwin  is  not 
shown,  and  he  is  therefore  entitled  to  judgment."  [The  authority,  however, 
may  be  proved  by  circumstances.     Butler  v.  Stocking,  4  Seld.  4U8.] 


228  PARTNERSHIP.  [cHAP.  VIII. 

the  partnership,  but  it  must  be  made  with  a  i^arty  who 
has  no  knowledge,  or  notice,  that  the  partner  is  acting 
in  violation  of  his  obligations  and  duties  to  the  firm,  or 
for  purposes  disapproved  of  by  the  firm,  or  in  fraud  of 
the  firm.^  For  every  such  contract,  made  with  such 
knowledge  or  notice,  will  be  void  as  to  the  firm,  how- 
ever binding  it  may  be  upon  the  individual  partner 
making  it.-  This  is  a  natural  result  of  the  principles 
of  justice  and  equity  applied  to  every  other  contract, 
as  well  as  to  that  of  partnership  contract.  It  also 
follows  from  the  known  limitations  of  the  law  of 
agency :  for  no  agent  can  bind  his  principal  in  any 
transaction,  in  which  he  knowingly  exceeds  his  author- 
ity, or  knowingly  colludes  with  another  person,  having 
notice,  in  any  violation  of  the  rights  of  his  principal.^ 
§  129.  The  same  principles  are  incorporated  into  the 
foreign  law,  of  the  modern  nations  of  Europe,  in 
respect  to  partnership.  Thus,  Pothier  says,  that  in 
cases  of  partnership,  the  signature  of  the  firm  by  one 
partner  will  not  oblige  the  partnership,  if  it  appears 
from  the  very  nature  of  the  contract,  that  it  does  not 
concern  the  business  of  the  partnership.'*  So,  Mr.  Bell 
asserts  the  like  principles  to  belong  to  the  Scottish  law. 
When  (says  he)  the  party  has  notice  of  a  stipulated 
restraint  on  the  power  of  the  partners  ;  or  when,  by  the 
circumstances,  or  in  its  own  nature,  the  transaction  is 
such  as  to  carry  evidence  with   it  of  a  misapplication  of 

>  fLind.  on  P.  260-269;  1  Am.  Lead.  Cas.  442,  4th  ed.} 

-  See  Stainer  v.  Tysen,  3  Hill,  (N.  Y.)  279. 

3  Story  on  Ag.  §  125,  165;  3  Kent,  44-46;  Gow  on  P.  c.  2,  §  2,  p.  42; 
Id. p.  4D-56,  3d  ed.;  Coll.  on  P.  B.  3,  c.  1,  p.  261,  2d  ed.  [Thus,  if  a  per- 
son seeking  to  enforce  a  contract  for  goods  sold  a  firm  upon  the  negotiation  of 
one  partner,  knew  that  such  partner  was  not  authorized  by  the  articles  of  co- 
partnership to  purchase  goods  for  the  firm,  the  other  partners  are  not  liable 
therefor.     Hastings  r.  Hopkinson,  28  Vt.  108.] 

■»  Poth.  on  Oblig.  n.  83  ;  Poth.  de  Soc.  n.  101. 


CHAP.  Till.]         LIABILITIES    AND    EXEMPTIONS.  229 

the  firm  to  what  is  an  mdividual  concern  only,  and 
not  a  matter  in  which  the  company  is  interested, 
the  company  and  the  other  partners  will  not  be 
bound.  ^ 

§  130.  This  doctrine  may  be  illustrated  in  various 
ways ;  but  the  same  principle  pervades  the  whole  of  the 
cases.  Thus,  if  a  person  should  trust  a  firm,  with  a  full 
knowledge  that  one  partner  had  withdrawn  from  it,  or 
that  the  firm  was  dissolved,  or  that  the  other  partners 
disavowed  or  repudiated  any  such  transaction ;  in  each 
of  these  cases  he  would  have  no  remedy  against  any  of 
the  partners,  except  the  one  with  whom  he  had  entered 
into  the  contract.^     So,  also,  if  the  creditor  should  have 

1  2  Bell,  Comm.  B.  7,  p.  616,  5th  ed. 

2  Minnit  v.  AVhinery,  or  Whitney,  5  Bro.  P.  C.  by  Tomlins,  489  ;  s.  c.  16 
Vin.  Ab.  244  ;  s.  c.  2  Bro.  P.  C.  323  ;  Le  Roy  v.  Johnson,  2  Pet.  186  ;  Gow 
on  P.  c.  2,  §  2,  p.  48,  49,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  1,  p.  262,  2d  ed.;  Willis 
V.  Dyson,  1  Stark.  164;  Alderson  v.  Pope,  1  Camp.  404,  note.  {See  Lind.  on 
P.  46};  Gow  on  P.  c.  2,  §  2,  p.  55-57,  2ded.;  Id.  c.  4,  §  1,  p.  148-150.— 
Mr.  Gow  (on  P.  c.  2,  p.  48,  49,  3d  ed.)  has  stated  the  whole  doctrine  very 
clearly  and  distinctly.  "  On  the  subject "  (says  he)  "  of  negotiable  instru- 
ments, it  remains  to  be  observed,  that  even  in  transactions,  in  which  all  the 
partners  are  interested,  the  authority  of  one  partner  to  make,  draw,  accept, 
or  indorse  promissory  notes  or  bills  of  exchange  in  the  joint  name  is  only  im- 
plied, and  may,  therefore  be  rebutted  by  express  previous  notice,  to  the  party 
taking  a  joint  security  from  one  partner,  of  his  want  of  authority,  or  that  the 
others  will  not  be  liable  upon  it.  Such  a  power  is  not  indispensably  essential 
to  the  existence  of  a  partnership ;  the  partners  may  stipulate  between  them- 
selves that  it  shall  not  be  exercised ;  and  if  a  third  person,  apprised  of  such 
stipulation,  will  take  a  joint  security,  he  cannot  sue  the  firm  upon  it,  although 
it  were  truly  represented  to  him,  by  the  partner  giving  the  security,  that  the 
money  to  be  advanced  on  It  was  required  for  the  purpose  of,  and  was  in  fact 
applied  in  liquidating  the  partnership  debts ;  much  less  can  he  hold  the  firm 
responsible  on  a  security  so  obtained,  if  he  take  it  in  defiance  of  a  positive 
notice,  previously  given  by  one  of  the  members,  that  he  will  not  be  answera- 
ble for  any  bill  or  note  signed  and  negotiated  by  the  others.  And  the  power 
of  one  partner  to  bind  the  firm  by  a  negotiable  security,  where  it  Is  capable 
of  being  exercised.  Is  only  co-existent  with  the  duration  of  the  partnership  it- 
self; for,  immediately  on  its  dissolution,  the  power  ceases."  But  although  a 
partner  has  withdrawn  from  a  partnership,  and  it  is  known  to  the  other  party, 
yet  if  his  name  is  still  to  continue  in  the  firm  for  a  limited  period,  that  will 


230  PARTNERSHIP.  [CHAP.  VIII. 

notice  of  any  private  arrangement  between  the  partners 
by  which  the  power  of  one  partner  to  bind  the  fu-m,  or 
his  liabiUty  on  the  partnership  contracts  is  quahfied, 
restricted,  or  defeated ;  the  creditor  would  be  bound  by 
such  arrangement,  and  could  not  enforce  any  right  in 
contravention    thereof.^       The    cases   have    gone    yet 

create  a  liability  on  his  part  as  a  partner  for  that  period,  since  he  thereby  holds 
himself  out  to  the  world,  as  responsible  for  their  engagements  for  that  period,  not- 
withstanding the  dissolution  of  the  partnership.  Brown  v.  Leonard,  2  Chitty, 
120. 

1  Coll.  on  P.  B.  3,  c.  1,  p.  261  ;  Id.  p.  329,  2d  ed.  ;  Minnit  v.  VVhinery, 
583  ;  Bignold  v.  Waterhouse,  1  M.  &  S.  255  ;  Gow  on  P.  c.  2,  §  2,  p.  54-56, 
2  Bro.  P.  C.  323  ;  s.  c.  5  Bro.  P.  C.  by  Tomlins,  489  ;  Ex  parte  Harris,  1  Madd. 
3d  ed. ;  Id.  c.  4,  §  1,  p.  149-151.  —  In  Lord  Galway  v.  Mathew,  10  East,  264> 
Lord  EUenborough  said :  "  The  general  authority  of  one  partner  to  draw 
bills  or  promissory  notes  to  charge  another  is  only  an  implied  authority  ;  and 
that  implication  was  rebutted  in  this  instance  by  the  notice  given  by  Smithson, 
who  is  now  sought  to  be  charged,  which  reached  the  plaintiff,  warning  him 
that  Mathew  had  no  such  authority.  It  is  not  essential  to  a  partnership,  that 
one  partner  should  have  power  to  draw  bills  and  notes  in  the  partnership  firm 
to  charge  the  others ;  they  may  stipulate  between  themselves,  that  it  shall  not 
be  done  ;  and  if  a  third  person,  having  notice  of  this,  will  take  such  a  securi- 
ty from  one  of  the  partners,  he  shall  not  sue  the  others  upon  it,  in  breach  of 
such  stipulation,  nor  in  defiance  of  a  notice  previously  given  to  him  by  one  of 
them,  that  he  will  not  be  liable  for  any  bill  or  note  signed  by  the  others."  Mr. 
Gow,  speaking  on  this  subject,  says  :  "  So  if  the  person,  with  whom  the  single 
partner  deals,  is  at  the  time  conscious  of  the  misconduct  of  that  partner  in 
pledging  the  joint  name  to  a  separate  transaction,  he  cannot  enforce  against 
the  firm  any  claim  that  may  arise  to  him  out  of  such  dealings.  Neither  can 
he  call  upon  the  firm  to  fulfil  a  contract  which  has  been  made  by  one  partner, 
if  he  be  privy  to  a  private  agreement  between  the  partners  themselves,  the  effect 
of  which  is  to  throw  the  responsibility  upon  the  single  partner  alone.  There- 
fore, where  four  persons  are  partners  in  a  coach  concern,  but  one  by  agree- 
ment provides  the  coaches  at  a  certain  rate  per  mile,  he  alone  is  responsible 
for  repairs  done  to  the  coach  by  a  person  cognizant  of  this  arrangement,  al- 
though the  names  of  all  four  appear  on  the  vehicle.  So,  if  it  be  notorious, 
that  the  proprietors  have  separate  departments  and  interests,  they  must  be 
sued  separately  by  the  tradesmen,  who  may  supply  each  with  goods." 

I  Mr.  Lindley  (Lind.  on  P.  266)  says  :  "  Granting  that  a  person,  knowing 
the  limits  of  a  partner's  authority  as  set  by  his  copartners,  cannot  hold  them 
responsible  for  an  act  done  by  him  in  excess  of  his  authority,  it  still  remains  to 
determine  the  elFect  of  notice,  by  non-partners,  of  stipulations  entered  into 
between  the  partnei-s  themselves. 

"In  Galway  v.  Mathew,  10  East,  264,  Lord  EUenborough  is  reported  to 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  231 

further  ;  and  it  has  been  held,  that  where  a  note  has 
been  made  or  indorsed  by  a  partner,  in  violation  of  his 

have  said,  '  It  is  not  essential  to  a  partnership  that  one  partner  sliould  have 
power  to  draw  bills  and  notes  in  the  partnership  firm  to  charge  the  others ; 
they  may  stipulate  hettveen  themselves  that  it  shall  not  he  done  ;  and  if  a  third 
person,  having  notice  of  this,  tcill  take  such  a  security  from  one  of  the  partners,  he 
shall  not  sue  the  others  upon  it  in  breach  of  such  stipulation.' 

"  Again,  in  Alderson  v.  Pope,  1  Camp.  404,  note,  the  same  judge  held  '  that 
where  there  was  a  stipulation  between  A.,  B.,  and  C,  who  appeared  to  the 
world  as  copartners,  that  C.  should  not  participate  in  profit  and  loss,  and  should 
not  be  liable  as  a  partner,  C.  was  not  liable  as  such,  to  those  who  had  notice  of 
this  stipulation.'  These  dicta  appear  to  authorize  the  statement  that  if  part- 
ners stipulate  amongst  themselves  that  certain  things  shall  not  be  done,  no 
person  who  is  aware  of  this  stipulation  is  entitled  to  hold  the  firm  liable  for 
what  may  be  done  by  one  of  the  members,  contrary  to  such  stipulation.  But 
it  is  submitted  that  this  proposition  is  too  wide.  A  stranger  dealing  with  a 
partner  is  entitled  to  hold  the  firm  liable  for  whatever  that  partner  may  do  on 
its  behalf  within  certain  limits.  To  deprive  the  stranger  of  this  right,  he  ought 
to  have  distinct  notice  that  the  firm  will  not  be  answerable  for  the  acts  of  one 
member,  even  within  these  limits.  Now  notice  of  an  agreement  between  the 
members  that  one  of  them  shall  not  do  certain  things,  is  by  no  means  neces- 
sarily equivalent  to  notice  that  the  firm  will  not  be  answerable  for  them  if  he 
does.  For  there  is  nothing  inconsistent  in  an  agreement  between  the  mem- 
bers of  a  firm  that  certain  things  shall  not  be  done  by  one  of  them,  and  a 
readiness  on  the  part  of  all  the  members  to  be  responsible  to  strangers  for  the 
acts  of  each  other,  as  if  no  such  agreement  had  been  entered  into.  It  is  im- 
material to  a  stranger  what  stipulations  partners  may  make  amongst  them- 
selves, so  long  as  they  do  not  seek  to  restrict  their  responsibility  as  to  him : 
and  it  is  only  when  knowledge  of  an  agreement  between  partners  necessarily  in- 
volves knowledge  that  they  decline  to  be  responsible  for  the  acts  of  each  other, 
within  the  ordinary  limits,  that  a  stranger's  rights  against  the  firm  can  be  pre- 
judiced by  what  he  may  know  of  the  private  stipulations  between  its  members. 

"In  Galway  i'.  Matthew,  1  Camp.  403,  and  10  East,  264,  the  2:)laintiff's 
knowledge  of  want  of  authority  was  derived,  not  from  notice  of  any  agreement 
between  the  partners,  but  from  an  advertisement  published  by  one  of  them, 
warning  all  persons  that  he  would  no  longer  be  liable  for  drafts  drawn  by  the 
others  on  the  partnership  account.  (Distinct  notice  to  the  same  effect  existed 
in  Minnit  v.  Whitney,  16  Vin.  Ab.  244,  s.  C  5  Bro.  P.  C.  489;  Willis  v. 
Dyson,  1  Stark.  164.)  The  passage,  therefore.  In  the  judgment,  and  extracted 
above,  was  by  no  means  necessary  for  the  decision  of  the  case.  With  re- 
spect to  Alderson  v.  Pope,  1  Camp.  404,  note,  if  all  that  was  meant  was  that  a 
person  knowing  that  C.  did  not  authorize  A.  or  B.  to  act  on  his  behalf,  could  not 
hold  C.  liable  for  their  acts,  the  case  presents  no  dllHculty ;  but  if  anything 
more  than  tlils  was  meant,  the  authorltj'  of  the  decision  becomes  at  least 
doubtful,  it  having  been  held  in  another  case  that  a  person  who  holds  himself 
out  as  a  partner  with  others  with  whom  he  has  no  concern,  is  liable  for  their 


232  PARTNERSHIP.  [cHAP.  YIII. 

duty  and  authority,  if  the  holder,  who  receives  it,  has 
been  guilty  of  gross  negligence  in  receiving  it,  it  will 
not  be  binding  in  his  hands  upon  the  partnership.^ 

§  131.  The  same  doctrine  applies,  a  fortiori  to  cases 
of  fraud ;  for,  although  in  cases  of  partnership,  a  fraud 
committed  by  one  partner  in  the  course  of  the  part- 
nership business  and  transactions,  without  the  knowl- 
edge of  the  other  partners,  will  bind  the  firm,  and 
create  a  liability  co-extensive  therewith ;  ^  yet  it  would 
be  absurd  to  apply  this  principle  to  any  cases,  w^here 
the  fraud  is  known  to,  or  participated  in,  or  connived  at 
by,  the  third  person,  whose  interest  it  affected ;  for  that 
would  be  to  allow  him  to  take  advantage  of  his  own 
wrong,  and  would  affect  the  innocent  with  the  grossest 
injustice.      Thus,  for  example,  if  one   partner  should 

acts,  eveu  to  persons  having  notice  of  the  true  state  of  aflfiiirs  ;  and  the  de- 
cision was  based  upon  the  very  ground  that  a  person,  who  holds  himself  out  as 
a  partner  with  others,  expresses  his  readiness  to  incur  the  responsibilities  of  a 
partner  as  regards  strangers,  whatever  he  may  intend  shall  be  the  case  be- 
tween him  and  those  with  whom  he  associates  his  name.  Brown  v.  Leonard, 
2  Chitty,  120.  Against  the  general  proposition  in  question  it  may  be  further 
urged  that  if  partners  agree  not  to  be  liable  beyond  a  certain  amount,  and  a 
stranger  has  notice  of  that  agreement,  the  notice  avails  nothing  against  him. 
Such  an  agreement,  coupled  wjth  notice  of  it  on  the  part  of  a  person  dealing 
with  the  firm,  is  by  no  means  equivalent  to  a  contract  between  him  and  it, 
that  he  shall  not  hold  the  members  responsible  beyond  the  amount  which  they 
may  have  agreed  between  themselves  to  contribute  respectively.  See  Green- 
wood's Case,  2  De  G.  M.  &  G.  459,  476.  The  writer  is  not  acquainted  with  any 
case  in  which  it  has  been  decided  that  persons  who  are  aware  of  the  terms 
upon  which  partners  have  agreed  together  to  carry  on  business  are  deemed  to 
contract  with  them  upon  the  basis  of  the  agreement  come  to  amongst  them- 
selves. In  all  cases  of  this  description,  the  real  question  to  be  determined 
seems  to  be  whether  there  was  distinct  notice  that  the  firm  would  not  be  an- 
swerable to  strangers  for  acts  which,  without  such  notice,  would  clearly  impose 
liability  upon  it ;  and  in  case  of  any  doubt  upon  this  point,  the  firm  ought 
clearly  to  be  liable,  the  onus  being  on  it  to  show  sufficient  reason  why  liability 
should  not  attach  to  it."} 

'  Lloyd  V.  Freshfield,  2  C.  &  P.  325  ;  s.  c.  9  Dow.  &  Ky.  19  ;  N.  Y.  F. 
Ins.  Co.  U.Bennett,  5  Conn.  5  74;  {Chapman  v.  Devereux,  32  Vt.  616.} 

2  Ante,  §  108  ;  Coll.  on  P.  B.  3,  c.  1,  §  5,  p.  293-304,  2d  ed. ;  Gow  on  P.  c.  2, 
§  2,  p.  55,  3d  ed. ;  Id.  c.  4,  §  1,  p.  146-148. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  233 

make  a  negotiable  security  in  the  name  of  the  partner- 
ship, and  dispose  of  it  to  a  third  person,  who  knew  that 
*  the  proceeds  were  to  be  applied  in  fraud  of  the  firm,  or 
for  purposes  not  within  the  scope  of  their  business,  or 
for  illegal  purposes,  it  would  not  be  binding  on  the  firm.^ 
A  fortiori,  if  the  whole  transaction  should  be  a  medi- 
tated fraud  to  accomplish  a  mere  gaming  purpose,  or 
some  other  illegal  purpose,  between  the  very  parties,  the 
same  rule  would  apply.- 

§  132.  Similar  principles  will  apply,  although  not 
always  to  the  same  extent,  or  with  the  same  certainty, 
where  one  partner  misapplies  the  funds,  or  securities,  or 
other  effects  of  the  partnership  in  discharge  or  payment 
of  his  own  private  debts,  claims,  or  contracts.  In  such 
cases  the  creditor,  dealing  with  the  partner,  and  know- 
ing the  circumstances,  will  be  deemed  to  act  mala  fide, 
and  in  fraud  of  the  partnership,  and  the  transaction, 
by  which  the  funds,  securities,  and  other  effects  of  the 
partnership  have  been  so  obtained,  will  be  treated  as 
a  nullity.^  The  same  rule  will  ordinarily  apply  to  the 
case  of  a  note,  or  indorsement,  or  acceptance,  given  by 
one  partner  in  the  name  of  the  firm  for  his  own  separate 
debt  or  contract ;  for  it  is  a  clear  misapplication  of  the 
partnership  credit.'*     So,  a  release  of  a  paitnership  debt 

^  {See  Connecticut  River  Banlc  v.  French,  6  All.  313  ;  Warren  v.  French, 
6  All.  31 7.} 

-  Coll.  on  P.  B.  5,  c.  1,  §  5,  p.  293-303,  •2d  ed. ;  Gow  on  P.  c.  2,  §  2,  p.  55,  56, 
3d  ed. ;  Id.  c.  4,  §  1,  p.  147-151  ;  Sandilands  v.  Marsh,  2  B.  &  Aid.  673. 

^  Gow  on  P.  c.  2,  §  2,  p.  42-48,  od  ed. ;  3  Kent,  42,  43  ;  Ex  parte  Agace, 
2  Cox,  312 ;  Coll.  on  P.  B.  3,  c.  2,  §  3,  p.  331-347,  2d  ed. ;  Hope  v.  Cast, 
cited  1  East,  53 ;  Arden  v.  Sharpe,  2  Esp.  524 ;  Shirreff  v.  Wilks,  1  East, 
48;  [Kemeys  v.  Richards,  11  Barb.  312] ;  Green  v.  Deakin,  2  Stark.  347; 
Ex  parte  Goulding,  2  Glyn  &  J.  118;  Snaith  r.  Burridge,  4  Taunt.  G84 ; 
Rogers  V.  Batchelor,  12  Pet.  221 ;  [7ix  jmiie  Bushell,  3  Mont.  D.  &  De  G. 
615;  Burwell  v.  Springfield,  15  Ala.  273.] 

*  Gow  on  P.  c.  2,  §  2,  p.  44-48,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  2,  §  3,  p. 
331-347,  2d  ed. ;  Wats,  on  P.  c.  4,  p.  196,  197,  2d  ed. ;  Wliitaker  c. 
Brown,  11  Wend.  75;  Gansevoort  i?.  Williams,  14  Wend.  133;  Wilson  v. 


234  PARTNERSHIP.  [CHAP.  VIII. 

by  one  partner  (which  ordinarily   will  extinguish  the 
partnership  debt),  will  be  held  inoperative  and  void,  as 

Williams,  14:  Wend.  146  ;  Dob  v.  Halsey,  16  Johns.  34  ;  [Lang  v.  Waring, 
17  Ala.  145]  ;  {Ex  parte  Thorpe,  3  Mont.  &  Ayr.  716,  1  Am.  Lead.  Cas. 
454,  4th  ed. ;  Fall  River  Union  Bank  v.  Sturtevant,  12  Cush.  372 ;  Clay 
V.  Cottrell,  18  Penn.  St.  408  ;  Venable  v.  Levick,  2  Head,  351.}  In  Arden 
V.  Sharpe,  2  Esp.  524,  525,  Lord  Kenyon  said:  "The  bill  is  indorsed  by 
one  partner  in  the  name  of  the  firm.  One  partner  certainly  may  indorse  a 
bill  in  the  partnership  name  ;  and  if  it  goes  into  the  world,  and  gets  into  the 
hand  of  a  bona  fide  holder,  who  takes  it  on  the  credit  of  the  partnership 
name,  and  is  ignorant  of  the  circumstances,  though  in  fact  the  bill  was  first 
discounted  for  that  one  partner's  own  use,  in  such  case  the  partnership 
is  liable.  But  the  case  is  different,  where  the  party,  who  brings  the  action, 
was  himself  the  person  who  took  the  bill  with  the  indorsement  by  one  part- 
ner only,  and  was  informed  that  the  transaction  was  to  be  concealed  from 
the  other.  He  cannot  sue  the  partnership.  The  transaction  indicates  that 
the  money  was  for  that  partner's  own  use,  and  not  raised  on  the  partnership 
account,  therefore  he  shall  not  be  allowed  to  resort  to  the  security  of  the 
partnership,  to  whom  in  the  original  transaction  he  neither  looked  nor 
trusted."  In  Livingston  v.  Roosevelt,  4  Johns.  251,  265,  Mr.  Justice  Van 
Ness  said:  "The  distinction  between  general  and  special  partnerships 
is  probably  coeval  with  their  existence.  A  general  rule  applicable  to  both 
is,  that  in  transactions  relating  to  the  joint  concern,  one  of  several  partners 
may  bind  the  rest.  He  may  sign  notes,  indorse  or  accept  bills  for  the  com- 
mon benefit,  &c.,  without  applying  to  the  rest  in  every  particular  case.  But 
this  authority  of  a  single  partner  has  its  limitations.  Formerly,  as  appears 
by  the  case  of  Pinkney  v.  Hall,  1  Salk.  126,  and  s.  c.  1  Ld.  Raym.  175,  it 
was  probaljly  less  extensive  than  at  this  day.  One  partner  of  the  concern 
has  no  authority  to  pledge  the  pai'tnership  goods  for  his  own  debt ;  nor  can 
he  bind  the  firm  to  any  engagements,  known  at  the  time  to  be  unconnected 
with,  and  Ibreign  to,  the  partnership.  This  has  not  only  been  so  settled  by 
this  court,  but  now  is,  and  always  has  been,  the  established  law  in  England. 
Not  an  adjudged  case,  nor,  I  believe,  a  single  dictum  can  be  found  the 
other  way.  This  will  appear  from  most  of  the  cases,  which  I  shall  presently 
have  occasion  to  mention  for  another  purpose.  In  special  partnerships, 
however,  this  power  of  the  individuals  composing  them  is  restricted  to  still 
narrower  limits,  and  can  only  be  legally  exercised  within  the  compass  of  that 
particular  business  to  which  the  partnership  relates.  It  is  as  circumscribed 
as  the  partnership  itself.  It  is,  therefore,  analogous  to  that  which  is  con- 
ferred on  an  agent,  appointed  for  a  special  purpose,  Avho,  if  he  exceed  his 
authority,  cannot  bind  his  principal.  Fenn  v.  Harrison,  3  T.  R.  757. 
This  analogy  is  complete,  in  all  cases,  where  third  persons  have  dealings 
with  a  special  partner,  with  notice  that  he  is  such.  And,  accordingly,  it  has 
been  i-epeatedly  ruled,  that,  whenever  such  a  partner  pledges  the  partnership 
funds,  or  credit,  in  a  transaction,  which  is  known  to  be  unconnected  with, 


CHAP,  yill.]         LIABILITIES    AND    EXEMPTIONS.      '  235 

to  the  firm,  if  it  was  taken  in  discharge  of  the  separate 
debt  of  the  partner  releasing  it  by  his  creditor  knowing 
all  the  circumstances.^ 

^  133.  But  althous:!!  this  is  the  general  doctrine  in 
the  absence  of  all  controlling  circumstances ;  yet  the 
presumption  of  any  fraud  or  misapplication  may  be 
rebutted  by  the  circumstances  of  the  particular  case. 
Thus  it  may  be  shown,  that  the  other  partners  have 
directly  or  by  fair  implication  authorized  or  confirmed 
the  application  of  the  partnership  funds,  securities, 
effects,  or  credits  to  the  very  purpose,^  or  that  the  part- 
ner had  acquired,  with  the  consent  of  his  partners,  an 
exclusive  interest  therein,  or  that,  from  other  circum- 
stances, the  transaction  was  actually  bona  fide,  and  un- 
exceptionable, although  it  went  to  the  discharge  of  the 
private  debt  by  one  partner  only.^      For,  it  has  been 

and  not  flxirly  and  reasonably  within,  the  compass  of  the  partnership,  it  is, 
as  to  the  other  partners,  fraudulent  and  void.  They,  however,  to  entitle 
themselves  to  the  protection  of  this  rule  of  law,  must  not  do,  or  consent  to, 
or  suifer  any  thing  to  be  done,  which  may  hold  them  out  to  the  world  as 
general  partners  ;  and  it  would  always  be  prudent  and  proper  (though  I  will 
not  say  it  is  indispensably  necessary)  to  give  public  notice  to  the  community, 
that  the  partnership  is  special,  and  of  the  particular  species  of  traffic  or 
business  to  which  it  is  confined;  Willet  v.  Chambers,  Cowp.  814;  De  Ber- 
kom  V.  Smith,  1  Esp.  29  ;  Arden  v.  Sharpe,  5  Esp.  524 ;  Shirrefi"  v.  Wilks, 
1  East,  48.  In  the  ease,  Ex  ijarte  Bonbonus,  8  Ves.  o40,.  Lord  Eldon  ex- 
presses himself  thus  :  '  I  agree  it  is  settled,  that  if  a  man  gives  a  partnership 
engagement  in  the  partnership  name,  with  regard  to  a  transaction,  not  in 
its  nature  a  partnership  transaction,  he,  who  seeks  the  benefit  of  that 
engagement,  must  be  able  to  say,  that  though  in  its  nature  not  a  particular 
transaction,  yet  there  was  some  authority  beyond  the  mere  circumstance  of 
partnership,  to  enter  into  that  contract,  so  as  to  bind  the  partnership ;  and 
then  it  depends  upon  the  degree  of  evidence.' "  [See  also  Ex  parte 
Bushell,  3  Mont.  D.  &  De  G.  615.] 

^  Gram  v.  Cadwell,  5  Cowen,  489  ;  Evernghim  v.  Ensworth,  7  Wend. 
326;  Farrar  v.  Hutchinson,  9  Ad.  &  E.  641;.  {1  Am.  Lead.  Cas.  453,  4th 
ed.  ;  Williams  r.  Bramhall,  13  Gray,  462.  But  see  Halls  v.  Coe,  4  McCord, 
136.} 

2   [Wheeler  v.  Rice,  8  Gush.  205]  ;   {Darling  t'.  March,  22  Me.  184.} 
^  Gow  on  P.  c.  2,  §  2,  p.  44-48,  3d  ed.  ;  Id.   c.  4,   §   1,  p.  149-151 ;  3 
Kent,  42-44 ;  Coll.  on  l\  B.  3,  c.  1,  §  4,  p.  287-289 ;  Id.  p.  313-331 ;  Id. 


236  •  PARTNERSHIP.  [cHAP.  VIII. 

very  justly  remarked,  that  the  application  by  a  single 
partner  of  a  joint  security,  in  discharge  of  his  individ- 
ual debt,  by  no  means  necessarily  establishes,  that  it  is 
a  fraud  upon  the  firm ;  for  it  may  not  only  have  been 
expressly  authorized  by  the  firm,  but  it  may  frequently 
result  from  prudential  considerations  and  arrangements, 
referable  to   their  own  business  and    interests.^       The 

c.  2,  §  3,  p.  331-338,  2d  ed. ;  Ex  jyarf eAga.ce,  2  Cox,  312  ;  Ripley  v.  Taylor, 
13  East,  175,  178,  182  ;  AVintle  v.  Crowtlier,  1  Cr.  &  J.  316  ;  Bairdu.  Coch- 
ran, 4  S.  &  R.  897  ;   {1  Am.  Lead.  Cas.  454,  4th  ed. } 

1  See  Gow  on  P.  c.  4,  §  1,  p.  149,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  2,  §  3,  p. 
331-347,  2d  ed. ;  Ex  imrte  Bonbonus,  8  Ves.  540 ;  Frankland  v.  McGusty, 
1  Knapp,  274;  Ridlej' u.  Taylor,  13  East,  175,  178,  182;  Wats,  on  P.  c.  4, 
p.  202,  2d  ed. ;  ShirretF  v.  Wilks,  1  East,  42 ;  2  Bell,  Coram.  B.  7,  p.  616,' 
617,  5th  ed. ;  {Carter  v.  Beaman,  6  Jones,  Law,  44.}  — In  Ex  paiie  Bon- 
bonus, 8  Ves.  540,  543,  544,  Lord  Eldon  said  :  "  This  petition  is  presented 
upon  a  principle,  which  it  is  very  difficult  to  maintain  ;  that  if  a  partner  for 
his  own  accommodation  pledges  the  partnership,  as  the  money  comes  to  the 
account  of  the  single  partner  only,  the  partnership  is  not  bound.  I  cannot 
accede  to  that.  I  agree,  if  it  is  manifest  to  the  persons  advancing  money, 
that  it  is  upon  the  separate  account,  and  so,  that  it  is  against  good  faith, 
that  he  should  pledge  the  partnership,  then  they  should  show  that  he  had 
authority  to  bind  the  partnership.  But  if  it  is  in  the  ordinary  course  of 
commercial  transactions,  as  upon  discount,  it  would  be  monstrous  to  hold, 
that  a  man  borrowing  money  upon  a  bill  of  exchange  pledging  the  partner- 
ship, without  any  knowledge  in  the  bankers  that  it  is  a  separate  transaction, 
merely  because  that  money  is  all  carried  into  the  books  of  tlie  individual, 
therefore  the  partnership  should  not  be  bound.  No  case  has  gone  that 
length.  It  was  iloubted,  whether  Hope  v.  Cast  Avas  not  carried  too  far,  yet 
that  does  not  reach  this  transaction  ;  nor  Shirreff  v.  Wilks  ;  as  to  which  I 
agree  with  Lord  Kenyon,  that,  as  partners,  whether  they  expressly  provide 
against  it  in  their  articles  (as  they  generally  do,  though  unnecessarily),  or 
not,  do  not  act  with  good  faith,  when  pledging  the  partnership  property  for 
the  debt  of  the  individual,  so  it  is  a  fraud  in  the  person  taking  that  pledge 
for  his  separate  debt.  The  question  of  fact,  whether  this  was  flxir  matter 
of  discount,  or,  being  an  antecedent,  separate  debt  of  Rogers,  the  discount 
was  obtained  merely  for  the  purpose  of  paying  that  debt  by  the  application 
of  the  partnersliip  funds,  which  question  is  brought  forward  by  the  affidavits, 
though  not  by  the  petition,  must  lead  to  further  examination.  If  the  partners 
are  privy,  and  silent,  peruiitting  him  to  go  on  dealing  in  this  way,  without 
giving  notice,  the  cpiestion  will  be,  whether  subsequent  approbation  is  not 
for  this  purpose  equivalent  to  previous  consent.  Purnell,  therefore,  must 
explain  himself  upon  this  ;  for  if  he  admits  all  these  circumstances  to  have 
been  in  his  knowledge,  it  will  be  very  difficult  to  say  he  is  entitled  to  the 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  237 

mere  fact,  that  a  note,  or  security,  or  fund  of  the  firm 
has  been  taken  in  discharge  or  payment  of  the  separate 
debt  of  one  partner,  is  not  alone  decisive  of  collusion,  or 
fraud,  or  misapplication  thereof.     Neither  is  the  fact, 

benefit  of  that  principle,  Avhich  is  established  for  the  safety  of  partners. 
That  explanation,  if  material  in  1793,  is  much  more  so  now;  when  one  of 
the  partners  is  dead ;  another  gone  abroad ;  the  managing  clerk  dead. 
Under  these  circumstances,  if  the  examination  as  to  the  propriety  of  tlie 
proof  made  in  1793,  which  I  consider  a  sort  of  judgment  for  the  debt,  can- 
not be  gone  into  but  under  most  unfavorable  circumstances  to  those  who 
made  it,  I  cannot  throw  that  difficulty  upon  those  who  come  forward  then ; 
and  permit  the  inattention  of  the  others,  who  might  have  come  at  any  time 
since,  to  be  prejudicial  to  third  persons."  Again  he  added  :  "In  Fordyce's 
Case,  Lord  Thurlow  and  the  Judges  had  a  great  deal  of  conversation  ujion 
the  law ;  and  they  doubted,  ujjon  the  danger  of  placing  every  man,  with 
whom  the  paper  of  a  partnership  is  pledged,  at  the  mercy  of  one  of  the 
partners  with  reference  to  the  account  he  may  afterwards  give  of  the  trans- 
action. There  is  no  doubt,  now,  the  law  has  taken  this  course ;  that  if, 
under  the  circumstances,  the  party  taking  the  paper  can  be  considered  as 
being  advertised  in  the  nature  of  the  transaction,  that  it  was  not  intended 
to  be  a  partnership  proceeding,  as  if  it  was  for  an  antecedent  debt,  2)rima 
facie,  it  will  not  bind  them ;  but  it  will,  if  you  can  show  previous  positive 
authority.  In  many  cases  of  partnership  and  different  private  concerns,  it 
is  frequently  necessary,  for  the  salvation  of  the  partnership,  that  the  private 
demand  of  one  partner  should  be  satisfied  at  the  moment ;  for  the  ruin  of 
one  partner  would  sjiread  to  the  others,  Avho  would  rather  let  him  liberate 
himself  by  dealing  with  the  firm.  The  nature  of  the  subsequent  transactions, 
therefore,  must  be  looked  to,  as  well  as  that  at  the  time.  It  is  impossible 
now  to  forget,  whatever  I  might  have  thought  of  it  in  1793,  that  the  person, 
upon  whose  evidence  this  joint  demand  could  be  cut  down,  is  Purnell,  the 
bankrupt ;  who  could  not  be  a  witness  at  law ;  whose  duty,  also,  it  Avas  to 
protect  the  partnership  against  this  proof;  and  who  has  permitted  it  to 
stand  all  this  time ;  and  who,  upon  all  the  circumstances  appearing  in  these 
affidavits,  if  he  should  deny  notice,  could  not  be  believed  by  a  jury."  See 
also  Hood  V.  Aston,  1  Russ.  412,  415.  [So,  the  use  of  a  partnership  name 
by  one  partner  for  his  own  private  benefit,  may  be  ratified  by  the  other  part- 
ner ;  and  no  independent  consideration  is  necessary  to  support  a  subsequent 
promise  by  the  other  partner  to  pay  such  partnership  obligation.  Com- 
mercial Bank  v.  Warren,  15  N.  Y.  577.]  {But  in  Taylor  v.  Hillyer,  3  Blackf. 
433,  it  was  held  that  such  subsequent  promise  by  the  other,  if  oral,  was 
within  the  Statute  of  Frauds,  and  did  not  bind  him,  qiicere  tamen.  And  a 
note  given  in  the  firm  name  with  the  consent  of  all  the  partners,  for  the 
debt  of  one  partner,  may  be  renewed  in  the  firm  name  by  that  partner,  and 
it  will  not  be  necessary  for  the  holder  of  the  note  to  show  that  the  other 
members  authorized  the  renewal.      Tilford  r.  Ramsey,  37  Mo.  563.} 


238  PARTNERSHIP.  [cHAP.  VIII. 

that  the  amount  thereof  has  been  passed  to  the  separate 
private  credit  on  account  of  one  partner ;  nor  that  a 
note  or  security  of  the  firm  has  been  in  part  discounted, 
or  applied  to  pay  a  separate  debt  of  one  partner ;  for 
all  these  circumstances  may  be  consistent  Avith  entire 
good  faith,  and  without  gross  negligence  on  the  part  of 
the  creditor.  There  must,  therefore,  be  some  other 
ingredients  in  the  case,  importing  some  knowledge  or 
suspicion  of  mala  Jides,  or  some  reasonable  grounds, 
which  should  put  the  creditor  upon  further  inquiry.^ 
It  may,  however,  be  taken  as  the  general  rule,  that 
where  a  note,  or  security,  or  fund  of  the  firm  has  been 
taken  in  discharge  of  a  separate  debt  of  one  partner, 
the  burden  of  proof  is  on  the  holder  or  creditor  to  show 
circumstances,  sufiicient  to  repel  every  presumption  of 
fraud,  or  collusion,  or  misconduct,  or  negligence,  on  his 
own  part,  unless  indeed  the  ckcumstances,  already  in 
proof  on  the  other  side,  repel  such  presumption.^     And 

1  See  Coll.  on  P.  B.  3,  e.  2,  §  3,  p.  331-347,  2d  ed. ;  Ridley  v.  Taylor, 
13  East,  175  ;  Ex  parte  Bonbonus,  8  Ves.  540-54:5  ;  Hood  v.  Aston,  IRuss. 
412,  415. 

*  Frankland  v.  McGusty,  1  Knapp,  274,  301,  305,  306 ;  Ex  parte  Bon- 
bonus, 8  Ves.  540 ;  CoU.  on  P.  B.  3,  c.  2,  §  3,  p.  342,  343 ;  Lloyd  v.  Fresh- 
field,  9  Dow.  &  Ry.  19  ;  s.  c.  2  C.  &  P.  325 ;  Foot  v.  Sabin,  19  Johns.  154,  157, 
158;  Dob  v.  Halsey,  16  Johns.  34,  38;  Gansevoort  v.  Williams,  14  "Wend. 
133 ;  {1  Am.  Lead.  Cas.  454,  4th  ed.  ;  Robinson  v.  Aldridge,  34  !Miss.  352 ; 
King  V.  Faber,  22  Penn.  St.  21. }  —  Li  Frankland  v.  MeGusty,  1  Knapp,  274, 
301.  Sir  John  Leach  (Master  of  the  Rolls),  in  delivering  the  opinion  of  the 
coui-t,  said :  "  I  take  it  to  be  clear,  from  all  the  cases  upon  the  subject,  that  it 
lies  upon  a  separate  creditor,  who  takes  a  partnership  security  for  the  payment 
of  his  separate  debt,  if  it  be  taken  simpliciter,  and  there  is  nothing  more  in 
the  case,  to  prove  that  it  was  given  with  the  consent  of  the  other  pai'tners. 
But  there  may  be  other  circumstances  attending  the  transaction,  which  may 
afford  the  separate  creditor  a  reasonable  ground  of  belief  that  the  security, 
so  given  in  the  partnership  name,  is  given  with  the  consent  of  the  other  part- 
ners ;  and  those  circumstances  occurred  in  the  case  which  was  cited,  and 
which  seemed  to  be  inconsistent  with  the  other  authorities.  I  refer  now  to 
the  case  of  Ridley  v.  Taylor.  In  that  case  the  bill  was  dated  eighteen  days 
before  its  delivery  by  tlie  partner  to  his  separate  creditor,  and  it  was  not 
known  by  the  creditor  that  it  was  drawn  and  indorsed  by  the  debtor  alone ; 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  239 

if  the  securities  or  funds  of  the  partnership  are  received 
in  payment  of  the   separate   debt    of   one   partner   by 

and  the  bill  was  to  a  greater  amount  than  tlie  separate  debt.  The  court 
therefore  were  of  opinion,  that  there  was  reasonable  ground  for  the  separate 
creditor  believing  it  not  to  have  been  given  to  him  in  fraud  of  the  partner- 
ship, and  that  the  general  presumption,  that  a  partnership  security,  when 
applied  in  payment  of  a  separate  debt,  is  in  fraud  of  the  partnership,  was 
repelled  by  the  special  circumstances  which  belonged  to  that  particular 
occasion.  Upon  a  consideration,  therefore,  of  all  the  authorities,  I  am  of 
opinion,  that  the  law  is,  that  taken  simpliciter  the  separate  creditor  must 
show  the  knowledge  of  the  partnership ;  but  if  there  are  circumstances  to 
show  a  reasonable  belief,  that  it  was  given  with  the  consent  of  the  part- 
nership, it  lies  upon  the  partners  to  prove  the  frfeud.  I  think  that  will 
reconcile  all  the  cases."  And  again  (Id.  p.  305,  306):  "The  counsel 
seemed  to  be  perfectly  satisfied  with  a  reference  to  one  of  the  members 
of  the  court  to  examine  what  the  law  was  in  that  case,  it  having  been  ad- 
mitted here,  that  there  was  no  direct  evidence,  whether  these  bills  had 
been  given  with  the  assent  of  the  pai-tners,  or  whether  they  had  not  been 
given  with  their  assent;  and  the  question  therefore  was,  when  bills  had 
been  given  by  an  individual  partner  in  the  name  of  the  partnership  firm, 
for  his  individual  debt,  upon  whom  the  burden  of  proof  lay  to  show  that  the 
other  partners  did  not  assent  to  the  formation  of  those  bills.  Upon  the  con- 
sideration of  that  question,  and  examining  all  the  authorities,  it  appeared 
to  the  member  of  the  court,  who  had  the  duty  of  that  examination,  that, 
simpliciter,  bills  drawn  by  one  partner  for  a  separate  debt  in  the  partnership 
name,  could  not  be  recovered  upon,  as  against  the  partnership  firm ;  but 
that  the  person  claiming  payment  of  the  bills  must  prove  either  a  direct  as- 
sent of  the  other  partners  to  the  formation  of  the  bills,  or  if  not  such  direct 
assent,  that  there  were  some  circumstances  in  the  transaction,  from  which 
the  party  taking  them  might  reasonably  infer,  that  they  were  given  with  the 
consent  of  the  other  partners."  In  Dob  v.  Halsey,  16  Johns.  34,  38,  Mr. 
Chief  Justice  Spencer,  in  delivering  the  opinion  of  the  court,  said:  "This 
court  has  decided,  in  several  cases,  that  where  a  note  is  given  in  the  name 
of  the  firm,  by  one  of  the  partners,  for  the  private  debt  of  such  partner, 
and  known  to  be  so  by  the  person  taking  the  note,  the  other  partuers  are 
not  bound  by  such  note,  unless  they  have  been  previously  consulted,  and 
consent  to  the  transaction.  Livingston  v.  Hastie,  2  Caipes,  24G ;  Lansing  v. 
Gaine,  2  Johns.  300;  Livingston  v.  Roosevelt,  4  Johns.  251.  In  Ridley  v. 
Taylor,  13  East,  175,  the  Court  of  King''s  Bench  held,  that  if  one  partner 
draw  or  indorse  a  bill  in  the  name  of  the  partnership,  it  will,  prima  facie, 
bind  the  fii-m,  although  passed  by  one  partner  to  a  separate  creditor,  in  dis- 
charge of  his  ])rivate  debt,  unless  there  be  covin  between  such  separate 
debtor  and  creditor,  or,  at  least,  the  want  of  authority,  either  express  or  im- 
plied, in  the  debtor  partner,  to  give  the  security  of  the  firm  for  his  separate 
debt.      The  only  difference  between  the  decision  of  this  court  and  that 


2-10  PARTNERSHIP.  [chap.  YHI. 

his  creditor,  it  will  not  be  necessary  for  the  partners  to 
establish  the  fact,  that  the   creditor  knew  at  the  time, 

of  the  King's  Bench,  consists  in  this  :  We  require  the  separate  creditor, 
who  has  obtained  the  partnership  paper  for  the  private  debt  of  one  of  the 
partners,  to  show  the  assent  of  the  whole  firm  to  be  bound ;  the  rule  of 
the  Iving's  Bench  throws  the  burden  of  avoiding  such  security  on  the  firm, 
by  requiring  them  to  prove  that  the  act  was  covinous  on  the  part  of  the 
partner,  for  whose  private  debt  the  paper  of  the  firm  was  given,  by  show- 
ing, that  it  was  done  without  the  knowledge  and  against  the  consent  of 
the  other  partners,  and  that  the  fact  was  known  to  the  separate  creditor, 
when  he  took  the  paper  of  the  firm.  I  can  perceive  no  substantial  differ- 
ence, whether  the  note  of  a  firm  be  taken  for  a  private  debt  of  one  of  the 
partners,  by  a  separate  creditor  of  the  partner  pledging  the  security  of 
the  firm,  and  taking  the  property  of  the  firm  ujjon  a  purchase  of  one  of 
the  partners,  to  satisfy  his  private  debt.  In  both  cases,  the  act  is  equally 
injurious  to  the  other  partners ;  it  is  taking  their  common  property  to 
pay  a  private  debt  of  one  of  the  partners."  The  same  point  was  decided 
in  Foot  V.  Sabin,  19  Johns.  1.54,  157,  158,  where  the  same  learned  judge 
said:  "The  plaintiff  proved  Holmes"s  signature  to  the  note,  and,  also, 
that  Wilson  and  Foot  were  partners,  and  that  Wilson  signed  the  name  of 
the  firm ;  and  it  appeared  on  the  face  of  the  note,  that  they  signed  as 
'  sureties '  to  Holmes.  Whether  we  apply  this  proof  to  the  general  issue 
or  to  the  special  plea,  the  plaintiff  has  not  maintained  either  issue.  It  was 
incumbent  on  him  to  show,  that  all  the  defendants  were  liable  on  the  note, 
and  that  Wilson  executed  the  note  with  the  express  assent  and  authority  of 
Foot.  In  this  case,  it  appearing,  that  the  signature  of  the  name  of  the 
firm,  by  Wilson,  was  not  for  a  partnership  debt,  Wilson  could  not  bind  his 
partner,  Foot.  All  the  cases  were  reviewed  in  Dob  v.  Halsey,  16  Johns,  oi, 
and  the  principle  established  is  this,  that  where  a  note  is  given  in  the  name 
of  a  firm,  by  one  of  the  partners,  for  the  private  debt  of  such  partner,  and 
known  to  be  so  by  the  person  taking  the  note,  the  other  partner  is  not 
bound,  unless  he  has  been  previously  consulted,  and  has  consented  to  the 
transaction ;  and  the  burden  of  the  proof,  that  the  partner,  who  did  not 
sign  the  note,  consented  to  be  bound,  is  thrown  on  the  creditor.  The  same 
principle  applies  with  greater  foix-e,  when  one  of  the  partners  becomes 
security  for  another  person,  and  attempts  to  bind  his  copartners.  The 
creditor  is  aware,  that  he  is  pledging  the  partnership  responsibility  in  a 
matter  in  nowise  connected  with  the  partnersliip  business  ;  and  that  is  a 
I'raud  on  such  of  the  partners  as  do  not  assent  expressly  that  the  firm  shall 
be  bound.  When,  therefore,  it  appeared,  from  the  plaintiff's  own  showing, 
that  the  note  was  signed  by  Holmes,  as  principal,  and  by  Wilson,  with  the 
name  of  the  firm  of  Wilson  and  Foot,  as  sureties  for  Holmes,  nothing  was 
shown  to  bind  Foot,  and  the  plaintilF  failed  to  maintain  the  issue.  On  the 
motion  for  a  nonsuit,  the  court  iield,  that  the  plaintiff  was  bound  to  prove 
the  authoritv  or  consent  of  Foot,  to  the  making  the  note,  which  the  court 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  241 

that  it  was  a  misapplication  of  the  securities  or  funds  ; 

considered  he  had  done.  There  was  no  proof  of  any  authority  or  consent 
of  Foot,  except  the  proof  of  the  signature  of  Wilson  of  the  name  of  the 
firm.  The  court,  then,  certainly  drew  a  very  incorrect  legal  inference  from 
the  fact  proved."  Perhaps  the  whole  doctrine  cannot  be  summed  up  better 
than  it  is  done  by  Mr.  Chancellor  Kent  in  his  learned  commentaries.  "  In 
all  contracts,"  says  he,  "  concerning  negotiable  paper,  the  act  of  one  part- 
ner binds  all ;  and  even  though  he  signs  his  individual  name,  provided  it 
appears  on  the  face  of  the  paper,  to  be  on  partnership  account,  and  to  be 
intended  to  have  a  joint  operation.  But  if  a  note  or  bill  be  drawn  by  one 
partner,  in  his  own  name  only,  and  without  appearing  to  be  on  pai-tnership 
account,  or,  if  one  partner  borrow  money  on  his  OAvn  security,  the  partner- 
ship is  not  bound  by  the  signature,  even  though  it  was  made  for  a  partner- 
ship purpose,  or  the  money  applied  to  a  partnership  use.  The  borrowing 
partner  is  the  creditor  of  the  firm,  and  not  the  original  lender.  If,  how- 
ever, the  bill  be  drawn  by  one  partner  in  his  own  name,  upon  the  firm  or 
partnership  account,  the  act  of  drawing  has  been  held  to  amount,  in  judg- 
ment of  law,  to  an  acceptance  of  the  bill  by  the  drawer  in  behalf  of  the 
firm,  and  to  bind  the  firm  as  an  accepted  bill.  And  though  the  partnership 
be  not  bound  at  law  in  such  a  case,  it  is  held,  that  equity  will  enforce  pay- 
ment from  it,  if  the  bill  was  actually  drawn  on  partnership  account.  Even 
if  the  paper  was  made  in  a  case,  which  was  not  in  its  nature  a  partnership 
transaction,  yet  it  will  bind  the  firm,  if  it  was  done  in  the  name  of  the  firm, 
and  there  be  evidence  that  it  was  done  under  its  express  or  implied  sanc- 
tion. But  if  partnership  security  be  taken  from  one  partner,  without  the 
previous  knowledge  and  consent  of  the  others,  for  a  debt,  which  the  creditor 
knew  at  the  time  was  the  private  debt  of  the  particular  partner,  it  would  be 
a  fraudulent  transaction,  and  clearly  void  in  respect  to  the  partnership.  So, 
if  from  the  subject-matter  of  the  contract,  or  the  course  of  dealing  of  the 
partnership,  the  creditor  was  chargeable  with  constructive  knowledge  of 
that  fact,  the  partnership  is  not  liable.  There  is  no  distinction  in  principle 
upon  this  point  between  general  and  special  partnerships ;  and  the  question, 
in  all  cases,  is  a  question  of  notice,  express  or  constructive.  All  partnei'ships 
are  more  or  less  limited.  There  is  none  that  embraces,  at  the  same  time, 
every  branch  of  business  ;  and  when  a  person  deals  with  one  of  the  partners 
in  a  matter  not  within  the  scope  of  the  partnership,  the  intendment  of  law 
will  be,  unless  there  be  circumstances  or  proof  in  the  case  to  destroy  the 
presumption,  that  he  deals  with  him  on  his  private  account,  notwithstanding 
the  partnership  name  he  assumed.  The  conclusion  is  otherwise,  if  the  sub- 
ject-matter of  the  contract  was  consistent  with  the  partnership  business ;  and 
the  defendants  in  that  case  would  be  bound  to  show,  that  the  contract  was 
out  of  the  regular  course  of  the  partnership  dealings.  When  the  business  of 
a  partnership  is  defined,  known,  or  declared,  and  the  company  do  not  ap- 
pear to  the  world  in  any  other  light  than  the  one  exhibited,  one  of  the 
partners  cannot  make  a  valid  partnership  engagement,  except  on  partner- 
ship account.     There  must  be  at  least  some  evidence  of  previous  authority 

16 


242  PARTNERSHIP.  [CHAP.  VTII. 

for  the  very  nature  of  such  a  transaction  ought  to  put 

beyond  the  mere  circumstance  of  partnership,  to  make  such  a  contract  bind- 
ing.    If  the  public  have  the  usual  means  of  knowledge  given  them,  and  no 
acts  have  been  done  or  suffered  by  the  partnership  to  mislead  them,  every 
man  is  presumed  to  know  the  extent  of  the  partnership,  with  whose  mem- 
bers he  deals.     And  when  a  person  takes  a  partnership  engagement,  with- 
out the  consent  or  authority  of  the  firm,  for  a  matter  that  has  no  reference 
to  the  business  of  the  firm,  and  is  not  within  the  scope  of  its  authority,  or  its 
regular  course  of  dealing,  he  is,  in  judgment  of  law,  guilty  of  a  fraud.     It  is 
a  well-established  doctrine,  that  one  partner  cannot    rightfully   apply  the 
partnership  funds  to  discharge  liis  own  pre-existing  debts,  without  the  express 
or  implied  assent  of  the  other  partners.    This  is  the  case  even  if  the  creditor 
had  no  knowledge  at  the  time  of  the  fact  of  the  fund  being  partnership 
property.     The  authority  of  each  partner  to  dispose  of  the  partnership  funds 
strictly  and  rightfully  extends  only  to  the  partnership  business,  though  in  the 
case  of  bona  Jicle  purchasers,  without  notice,  for  a  valuable  consideration,  the 
partnership  may,  in  certain  cases,  be  bound  by  the  act  of  one  partner."     3 
Kent,  41-43.     The  question  upon  whom  the  burden  of  proof  lies  to  show, 
that  the  partnership  funds  or  securities  have  or  have  not  been  misapplied, 
by  the  application  thereof  to  the  payment  of  a  separate  debt  of  one  part- 
ner, has  been  elaborately  discussed  in  some  other  cases  in  the  American 
Reports ;  and  the  conclusion  is  uniformly  maintained,  that  the   burden  of 
proof  is  on  the  holder,  and  not  on  the  other  partners.     In  Gansevoort  v. 
Williams,  14  Wend.  133,  135,  Mr.  Justice  Xelson,  in  delivering  the  opinion 
of  the  court,  examined  all  the  cases  at  large.     The  following  extract  may 
not  be  unacceptable  to  the  learned  reader:  "The  English  cases  upon  this 
subject   are   not  always  consistent  with  themselves ;    and   even   the   same 
court,  while  they  profess  to  adhere  to  their  general  position,  namely,  that 
the  partner  denying   the    authority  of   his  associate    must   prove   affirma- 
tively, that  the  holder  knew  the  paper  was  given  in  a  transaction  uncon- 
nected with  the  partnership ;  and  also,  that  he  did  not  assent,  sometimes 
substantially  disregard  the  latter  qualification  of  the  rule  in  the  application 
of  it  to  the  facts.     The  case  of  Hope  v.  Cust,  before  Lord  Mansfield,  in  1774, 
cited  by  Lawrence,  J.,  in   1  East,  53,  is  an  instance.     There  one  Fordyce, 
who  traded  largely  in  his  private  capacity,  as  well  as  in  the  business  of  a 
banker  with  others,  had  considerable  dealings  in  his  private  capacity  with 
Hope  «&  Co.,  in  Holland,  and  gave  to  them  a  general  guaranty  in  the  part- 
nership name,  for  money  due  in  his  separate  capacity.     The  plaintiffs  failed 
in  recovering  on  the  guaranty.    Lord  Mansfield,  in  reporting  the  case  to  the 
Court  of  Chancery,  it  being  an  issue  from  that  court,  said  he  left  it  to  the 
jury  to  say,  whether,  under  the  circumstances,  the  taking  of  the  guaranty 
was,  in  respect  to  the  partners,  a  fair  transaction,  or  covinous,  with  suffi- 
cient notice  to  the  plaintiffs  of  the  injustice  and  breach  of  trust  Fordyce  was 
guilty  of  in  giving  it.     Chitty  on  Bills,  33.     The  case  seems  to  have  been 
put  to  the  jury,  from  the  history  given  of  it,  upon  the  gross  negligence  of 
the  plaintifl's  in  not  discovering  that  Fordyce  was  committing  a  fraud  upon 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  243 

him  upon  further  inquiry  ;  and  however  bona  fide  his 

his   associates.     But   it   does   not   appear,  that  there  was  any  affirmative 
evidence  showing  that  the  other  partners  had  not  assented,  and  that  this  was 
known  to  the  pLiintiffs.     In  Ex  parie  Bonbonus,  8  Ves.  540,  Lord  Chan- 
cellor Eldon  says,  in  Fordyce's   case,  Lord  Thurlow  and  the  judges  had 
a  great  deal  of  conversation  upon  the  law,  and  they  doubted  upon  the 
danger  of  placing  every  man,  with  whom  the  paper  of  the  pai'tnership  is 
pledged,  at  the  mercy  of  one  of  the  partners,  with  reference  to  the  account 
he  may  afterwards  give  of  the  transaction.    But  he  says,  'there  is  no  doubt 
now  the  laAv  has  taken  that  course ;  that  if,  under  the  circumstances,  the 
party  taking  the  paper  can  be  considei'ed  as  being  advertised  in  the  nature 
of  the  transaction,  that  it  was  not  intended  to  be  a  partnership  proceeding, 
as  if  it  was  for  an  antecedent  debt,  prima  facie  it  will  not  bind  them.' 
The  case  of  ShirrefF  v.  Wilks,  1  East,  48,  is  another  instance.      There  the 
plaintiff,  Oct.  1795,  sold  a  quantity  of  porter  to  B.  &  W.,  partners,  which 
was  shipped  by  them  to  the  West  Indies.     In  April,  1796,  R.  came  into  the 
firm  and  continued  till  November  following,  when  it  was  dissolved.     The 
balance  due  for  the  porter,  as  settled  by  W.,  was  £78,  for  which  the  plain- 
tiffs drew  upon  the  defendants  the  bill  in  question,  which  was  accepted  by  B. 
in  the  name  of  the  then  firm.     The  court  decided  R.  was  not  bound,  and 
Lord  Kenyon  says,  R.  had  no  concern  with  the  matter,  and  was  no  debtor 
of  the  plaintiffs  ;  that  no  assent  of  his  was  found,  and  nothing  to  show  that 
he  had  any  knowledge  of  the  transaction ;  that  the  transaction  was  fraudu- 
lent upon  its  face.     In  Ridley  v.  Taylor,  13  East,  175,  the  rule  was  applied 
by  Lord  Ellenborough  with  more  strictness.     There  he  required  something 
more  than  the  naked  fact,  that  the  Bill  in  the  name  of  the  firm  was  given  for 
the  private  debt  of  the  member  who  drew  it,  and  that  fact  known  to  the 
plaintiffs.     The  court  would  not  infer  want  of  authority  or  fraud  upon  these 
facts ;  and  they   considered  the   circumstances   of  the  case   of  ShirrefF  v. 
Wilks,   as  having  fairly  authorized  such  a  presumption,   and  that   it  was 
decided  upon   that  ground.      But  in   Green  v.   Deakin,   2  Stark.   347,  a 
partnership  security  (a  bill)  was  given  by  one  member  for  his  private  debt 
to  the  plaintiff;  and  although  it  appeai'ed  expressly,  that  the  plaintiff  was 
not  informed,  that  the  associate  had  not  concurred,  yet  Lord  Ellenborough 
held,  that  the  nature  of  the  transaction  was  intrinsically  notice,  and  he  non- 
suited him.     So,  in  Wood  v.  Holbeck,   Chitty  on  Bills,    83,  note  z,  the 
action  was  on  a  bill  against  three  acceptors,  where  it  appeared  they  were 
partners  in  a  tea  speculation,  and  the  drawer,  a  wine  merchant,  drew  it  in 
payment  of  wine  delivered  to  one  of  them ;  the  jury  Avere  directed,  if  they 
found  it  was  drawn  without  the  knowledge  or  concurrence  of  the  other  two, 
they  were  not  liable,  omitting  the  necessity  of  bringing  home  affirmatively 
notice  to  the  holder.     It  is  not  material  to  look  any  further  into  these  cases  ; 
they  will  be  found  stated  and  referred  to  in  Chitty  on  Bills,   p.  29,  33. 
They  all  clearly  prove,  that  while  the  English  courts  hold  to  the  position, 
that  the  firm  is  liable  on  a  bill  or  note  made  by  one  out  of  the  partnersiiip 
business,  unless  the  holder  knows  that  it  was  so  made,  and  that  the  other 


244  PARTNERSHIP.  [CHAP.  VIII. 

conduct  may  be,  it  is  a  case  of  negligence  on  his  part, 

partners  did  not  concur,  the  frequent  practical  operation  and  effect  of 
it  under  their  direction  does  not  essentially  differ  from  the  rule  as  settled  in 
this  court.  They  undoubtedly  put  the  defence  of  the  copartner  upon  the 
ground  of  fraud,  committed  upon  him  by  his  associate  and  the  holder.  But 
this  is  sometimes  inferred  from  the  fact,  that  the  bill  or  note  is  given  for  a 
private  debt,  and  that  known  to  the  holder ;  and  at  other  times  further 
proof  is  required  negativing  a  presumed  concurrence  of  the  copartner.  In 
this  court,  the  cases  are  believed  to  be  uniform  from  that  of  Livingston 
V.  Hastie,  2  Caines,  246,  down  to  the  present  time,  that  where  a  note  or  other 
security  is  given  in  the  name  of  the  firm,  by  one  partner  for  his  private  debt, 
or  in  a  transaction  unconnected  with  the  partnership  business,  which  is  the 
same  thing,  and  known  to  be  so  by  the  person  taking  it,  the  other  partners 
are  not  bound,  unless  they  have  consented.  11  Jolins.  544;  16  Johns.  34; 
19  Johns.  154;  3  Wend.  418;  5  Wend.  223;  6  Wend.  615;  7  Wend.  158, 
309.  Prima  facie,  the  execution  of  the  bill  or  note  in  the  name  of  the  firm 
by  one  partner  binds  the  whole.  The  burden,  therefore,  of  proving  a 
presumptive  want  of  authority,  and  of  course  fraud,  for  that  necessarily 
follows,  lies  upon  the  copartners.  11  Johns.  544.  We  hold,  that  the 
fact  of  the  paper  of  the  firm  being  given  out  of  the  partnership  business 
by  one  member  is  presumptive  evidence  of  want  of  authority  to  bind  the 
other  members  of  the  firm,  and  if  the  person  taking  it  knows  the  flict  at 
the  time,  he  is  chargeable  with  notice  of  want  of  authority,  and  guilty  of 
concurring  in  an  attempted  fraud  upon  the  other  partners.  It  may  be 
asked,  why  should  the  partners  be  bound  at  all,  when  the  paper  is  in  fact 
signed  without  their  authority  ?  This  is  no  doubt  against  general  princi- 
ples, and  involves  the  injustice  of  subjecting  a  person  to  answer  for  an  act 
of  another,  to  which  he  never  expressly  or  impliedly  assented.  The  an- 
swer is  founded  upon  the  law  merchant.  By  entering  into  the  partner- 
ship, each  reposes  confidence  in  the  other,  and  constitutes  him  a  general 
agent  as  to  all  the  partnership  concerns ;  and  the  inconvenience  to  com- 
merce, if  it  were  necessaiy,  that  the  actual  consent  of  each  partner  should 
be  obtained,  or  that  it  should  be  ascertained,  that  the  transaction  was  for  the 
benefit  of  the  firm  in  the  ordinary  transaction  of  their  business,  suggested 
the  rule,  that  the  act  of  one,  when  it  has  the  appeai-ance  of  being  on  behalf 
of  the  firm,  is  considered  the  act  of  the  rest;  and  whenever  a  bill  is  drawn, 
accepted,  or  indorsed  by  one  of  several  partners,  on  behalf  of  the  firm 
during  its  continuance,  which  comes  into  the  hands  of  a  bona  jide  holder, 
the  partners  are  liable  to  him,  though  in  truth  one  partner  only  nego- 
tiated the  bill  for  his  own  benefit,  without  the  consent  of  the  copartners. 
Swan  V.  Steele,  7  East,  210;  Chitty  on  Bills,  30.  There  appears  never  to 
have  been  a  doubt  in  England  or  in  this  State,  in  any  of  the  cases,  but  that 
all  the  partners  are  bound,  unless  the  bona  Jides  can  be  impeached.  What 
shall  amount  to  an  impeachment  is  oftentimes  a  debatable  question,  and  in 
England  seems  to  rest  very  much  upon  the  circumstances  of  the  case. 
There  is  more  uniformity  and  precision  in  the  application  of  the  rule  here. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  245 

which  will  not  entitle  him  to  recover  against  the  part- 
nership.^ 

It  is  undoubtedly  the  practice  of  mercantile  firms  to  indorse  the  bank  paper 
of  each  other  by  the  hand  of  any  one  of  the  members.  Upon  a  strict  appli- 
cation of  the  rule  in  this  court,  and  upon  some  of  the  cases  in  England, 
such  paper  would  not  bind  the  firm,  if  the  bank  had  knowledge  of  the 
facts.  It  is  not  within  the  purpose  and  business  of  a  mercantile  firm  to 
indorse  paper  for  their  neighbors.  Such  business  is  not  within  the  contem- 
plation of  the  partnership,  and  therefore  no  authority  is  to  be  implied  or 
attached  to  any  one  of  the  members.  It  might  well  alarm  the  mercantile 
community  to  lay  down  the  position,  that  the  partnership  indorsement  of 
accommodation  paper,  by  one  of  the  firm,  for  any  person  that  might  ask 
him,  M'ould  be  binding  upon  all,  whether  the  holder  knew  the  facts  or  not. 
Even  the  authority  of  one  partner  to  sign  bills  and  notes  for  the  firm  when 
interested,  is  only  implied,  and  may  be  rebutted  by  notice.  Chitty  on  Bills, 
33.  It  would  be  a  strange  implication  of  authority,  where  the  firm  had  no 
interest.  But  if  it  should  appear,  that  a  house  was  in  the  habit  of  indorsing 
at  the  bank  or  elsewhere  for  another,  such  general  course  of  dealing  would 
be  sufficient  evidence  of  authority  from  all  the  members  of  the  firm,  and 
such  use  of  it  by  one  would  bind  all.  Duncan  v.  Lowndes,  3  Camp.  478. 
The  authority  would  not  How  from  the  partnership,  but  from  facts  and 
considerations  independently  of  it."  See,  also,  on  the  same  point,  Wilson  v. 
Williams,  14  Wend.  146 ;  Rogers  v.  Batchelor,  12  Pet.  221,  229-232. 

1  Rogers  v.  Batchelor,  12  Pet.  229-232  ;  [Powell  v.  Messer,  18  Tex.  401]  ; 
|Purdy  V.  Powers,  6  Penn.  St.  492 ;  1  Am.  Lead.  Cas.  453,  456,  4th  ed.}  — 
This  point  came  directly  before  the  Supreme  Court  of  the  United  States  in  the 
case  of  Rogers  v.  Batchelor,  12  Pet.  221,  229,  and  was  much  discussed.  Upon 
that  occasion  the  Court  said  :  "  The  first  instruction  raises  these  questions  ; 
whether  the  funds  of  a  partnership  can  be  rightfully  applied  by  one  partner 
to  the  discharge  of  his  own  separate  pre-existing  debt,  without  the  assent, 
express  or  implied,  of  the  other  partner ;  and,  whether  it  makes  any  differ- 
ence, in  such  a  case,  that  the  separate  creditor  had.no  knowledge  at  the 
time  of  the  fact  of  the  fund  being  partnership  property.  We  are  of  opinion 
in  the  negative  on  both  questions.  The  implied  authority  of  each  partner  to 
dispose  of  the  partnership  funds  strictly  and  rightfully  extends  only  to  the 
business  and  transactions  of  the  partnership  itself;  and  any  disposition  of 
those  funds,  by  any  partner,  beyond  such  purposes,  is  an  excess  of  his 
authority  as  partner,  and  a  misappropriation  of  those  funds,  for  which  the 
partner  is  responsible  to  the  partnership ;  though  in  the  case  of  bona  fide 
purchasers,  without  notice,  for  a  valuable  consideration,  the  partnership  may 
be  bound  by  such  acts.  Whatever  acts,  therefore,  are  done  by  any  partner, 
in  regard  to  partnership  property  or  contracts,  beyond  the  scope  and  objects 
of  the  partnership,  must,  in  general,  in  order  to  bind  the  partnership,  be 
derived  from  some  further  authority,  express  or  implied,  conferred  upon 
such  partner,  beyond  that  resulting  from  his  character  as  partner.     Such  is 


246  PARTNERSHIP.  [CHAP.  VIII. 

§  133  a.  Upon  like  principles,  if  the  acting  partners 
of  a  firm,  or  the  governing  body  of  a  joint-stock  company 

the  general  principle  ;  and,  in  our  judgment,  it  is  founded  in  good  sense  and 
reason.  One  man  ought  not  to  be  permitted  to  dispose  of  the  property,  or 
to  bind  the  rights  of  another,  unless  the  latter  has  authorized  the  act.  In 
the  case  of  a  partner,  paying  his  own  separate  debt  out  of  the  partnership 
funds,  it  is  manifest,  that  it  is  a  violation  of  his  duty  and  of  the  rights  of 
his  partners,  unless  they  have  assented  to  it.  The  act  is  an  illegal  con- 
version of  the  funds  ;  and  the  separate  creditor  can  have  no  better  title  to 
the  funds  than  the  partner  himself  had.  Does  it  make  any  difference,  that 
the  separate  creditor  had  no  knowledge,  at  the  time,  that  there  was  a  mis- 
appropriation of  the  partnership  funds  ?  We  think  not.  If  he  had  such 
knowledge,  undoubtedly  he  would  be  guilty  of  gross  fraud ;  not  only  in 
morals,  but  in  law.  That  was  expressly  decided  in  ShirrefFw.  Wilks,  1  East, 
48 ;  and,  indeed,  seems  too  plain  upon  principle,  to  admit  of  any  serious 
doubt.  But  we  do  not  think,  that  such  knowledge  is  an  essential  ingredient 
in  such  a  case.  The  true  question  is,  whether  the  title  to  the  property  has 
passed  from  the  partnership  to  the  separate  creditor.  If  it  has  not,  then 
the  partnership  may  re-assert  their  claim  to  it  in  the  hands  of  such  cred- 
itor. The  case  of  Ridley  v.  Taylor,  13  East,  175,  has  been  supposed  to 
inculcate  a  different  and  more  modified  doctrine.  But  upon  a  close  exam- 
ination, it  will  be  found  to  have  turned  upon  its  own  peculiar  circum- 
stances. Lord  EUenborough  in  that  case  admitted,  that  one  partner  could 
not  pledge  the  partnership  property  for  his  o^vn  separate  debt ;  and  if  he 
could  not  do  such  an  act  of  a  limited  nature,  it  is  somewhat  difficult  to 
see,  how  he  could  do  an  act  of  a  higher  nature,  and  sell  the  property. 
And  his  judgment  seems  to  have  been  greatly  influenced  by  the  consider- 
ation, that  the  creditor  in  tliat  case  might  fairly  presume,  that  the  partner 
was  the  real  owner  of  the  partnership  security ;  and  that  there  was  an 
absence  of  all  the  evidence  (which  existed  and  might  have  been  produced) 
to  show,  that  the  other  partner  did  not  know,  and  had  not  authorized  the 
act.  If  it  had  appeared  from  any  evidence,  that  the  act  was  unknown  to, 
or  unauthorized  by  the  other  partners,  it  is  very  far  from  being  clear,  that 
the  case  could  have  been  decided  in  favor  of  the  separate  creditor ;  for 
his  Lordship  seems  to  have  put  the  case  upon  the  ground,  that  either 
actual  covin  in  the  creditor  should  be  shown,  or,  that  there  should  be 
pregnant  evidence,  that  the  act  was  unauthorized  by  the  other  partners. 
The  case  of  Green  v.  Deakin,  2  Stark.  347,  before  Lord  EUenborough, 
seems  to  have  proceeded  upon  the  ground,  that  fraud,  or  knowledge  by  the 
separate  creditor,  was  not  a  necessary  ingredient.  In  the  recent  case.  Ex 
parte  Goulding,  cited  in  Coll.  on  P.  283,  284,  1st  ed.,  the  Vice-Chan- 
cellor  (Sir  John  Leach)  seems  to  have  adopted  the  broad  ground,  upon 
which  we  are  disposed  to  place  the  doctrine.  Upon  the  appeal,  his  decision 
was  confirmed  by  Lord  Lyndhurst.  Upon  that  occasion  his  Lordship  said  : 
*  No  principle  can  be  more  clear,  than  that,  where  a  partner  and  a  creditor 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  247 

should  unite  with  a  stranger  to  produce  a  fraud  against 
the  firm  or  company  for  whom    they  act,    a  court  of 

enter  into  a  contract  on  a  separate  account,  the  partner  cannot  pledge  the 
partnership  funds,  or  give  the  partnership  acceptances  in  discharge  of  this 
contract,  so  as  to  bind  the  firm.'  There  was  no  pretence  in  that  case  of  any 
fraud  on  the  part  of  the  separate  creditor.  And  Lord  Lyndhurst  seems  to 
have  put  his  judgment  upon  the  ground,  that  unless  the  other  partner  as- 
sented to  the  transaction  he  was  not  bound ;  and  that  it  was  the  duty  of  the 
creditor  to  ascertain,  whether  there  was  such  assent  or  not.  The  same  ques- 
tion has  been  discussed  in  the  American  courts  on  various  occasions.  In 
Dob  V.  Halsey,  16  Johns.  34,  it  was  held  by  the  court,  that  one  partner 
could  not  apply  partnership  property  to  the  payment  of  his  own  separate 
debt,  without  the  assent  of  the  other  partners.  On  that  occasion,  Mr.  Chief 
Justice  Spencer  stated  the  difference  between  the  decisions  in  Xew  York, 
and  those  in  England,  to  be  merely  this  :  that  in  New  York  the  court  re- 
quired the  separate  creditor,  who  had  obtained  the  partnership  paper  for  the 
private  debt  of  one  of  the  partners,  to  show  the  assent  of  the  whole  firm  to 
be  bound ;  and  that  in  England,  the  burden  of  proof  was  on  the  other  part- 
ners to  show  their  want  of  knowledge  or  dissent.  The  learned  judge  add- 
ed :  '  I  can  perceive  no  substantial  difference,  whether  the  note  of  a  fii-mbe 
taken  for  a  private  debt  of  one  of  the  partners  by  a  separate  creditor  of  a 
partner,  pledging  the  security  of  the  firm ;  and  taking  the  property  of  the 
firm,  upon  a  purchase  of  one  of  the  partners  to  pay  his  private  debt.  In 
both  cases,  the  act  is  equally  injurious  to  the  other  partners.  It  is  taking 
their  common  property  to  pay  a  private  debt  of  one  of  the  partners.'  The 
same  doctrine  has  been,  on  various  occasions,  fully  recognized  in  the  Supreme 
Court  of  the  same  State.  And  we  need  do  no  more  than  refer  to  one  of 
the  latest;  the  case  of  Evernghim  y.  Ensworth,  7  Wend.  326.  Indeed,  it 
had  been  fully  considered  long  before,  in  Livingston  v.  Roosevelt,  4  Johns. 
251.  It  is  true,  that  the  precise  point  now  before  us,  does  not  appear  to 
have  received  any  direct  adjudication ;  for  in  all  the  cases  above  mentioned, 
there  was  a  known  application  of  the  funds  or  securities  of  the  partnership 
to  the  payment  of  the  separate  debt.  But  we  think,  that  the  true  principle 
to  be  extracted  from  the  authorities  is,  that  one  partner  cannot  apply  the 
partnership  funds  or  securities  to  the  discharge  of  his  own  private  debt  with- 
out their  consent ;  and  that  without  their  consent  their  title  to  the  property 
is  not  devested  in  favor  of  such  separate  creditor,  whether  he  knew  it  to  be 
partnership  property  or  not.  In  short,  his  right  depends,  not  upon  his  knowl- 
edge, that  it  was  partnership  property ;  but  upon  the  fact,  whether  the 
other  partners  had  assented  to  such  disposition  of  it  or  not.''' 

[But  if  one  partner  indorse  and  negotiate  a  note  in  the  firm  name,  but  out 
of  the  legitimate  business  of  the  company,  a  subsequent  holder  will  be  entitled 
to  recover  against  the  partnership,  on  proving  that  he  became  a  holder  before 
maturity,  for  a  valuable  consideration,  and  without  notice  of  the  fraud.  Gil- 
dersleeve  v.  Mahony,  5  Duer,  383;]   {1  Am.  Lead.  Cas.  455,  4th  ed. ;  Roth 


248  PARTNERSHIP.  [CHAP.  VIII. 

equity  might  interfere  and  repudiate  such  acts,  and 
ask  {1}  to  be  reheved  against  them.^ 

§  134.  There  are  other  cases,  which  constitute  excep- 
tions to  the  general  liability  of  partners  for  acts  or  con- 
tracts concerning  the  partnership  business,  which  deserve 
special  notice  in  this  connection.  One  of  them  is,  where 
in  the  very  transaction,  although  it  may  be  for  the  benefit 
or  use  of  the  partnership,  and  in  the  business  thereof, 
yet  the  credit  is  exclusively  given  to  the  partner,  trans- 
acting it,  upon  his  sole  and  separate  liability.  The 
law  is  exceedingly  clear  and  well  settled  upon  this 
point.     If  money  is  borrowed,  or  goods  bought,  or  any 

V.  Colvin,  32  Vt.  125.  A  partner  drew  a  check  in  the  name  of  the  firm,  pay- 
able to  bearer,  for  the  purpose  of  paying  a  debt  due  from  the  firm  to  H., 
but  instead  of  so  using  it,  he  retained  it,  and  paid  the  debt  due  H.  by  setting 
off  against  it  a  debt  due  from  H.  to  him  individually,  and  paying  the  balance 
in  cash.  Subsequently  he  transferred  the  check  to  B.  to  pay  a  private  debt. 
Held,  that  B.  could  maintain  an  action  on  the  check  against  the  firm.  Gale 
V.  Miller,  44  Barb.  420. 

Any  doubt  thrown  on  the  rule  as  to  the  burden  of  proof,  by  Lord  Ellen- 
borough's  dictum  in  Kidley  v.  Taylor,  lo  East,  175,  must  be  considered  as 
removed  by  the  recent  case  of  Leverson  v.  Lane,  13  C.  B.  n.  s.  278,  in  which 
it  was  held  that  one  who  takes  from  a  partner  in  a  firm,  for  his  separate  debt, 
a  bill  accepted  in  the  firm  name,  must  show  that  the  acceptance  was  with  the 
concurrence  of  the  other  partners.  In  this  case  Mr.  Justice  Williams  said: 
"  I  do  not  mean  to  deny  that  there  is  in  the  judgment  of  Lord  Ellenborough, 
in  Ridley  v.  Taylor,  13  East,  175,  a  dictum  which  is  to  some  extent  inconsis- 
tent with  the  law  as  laid  down  in  this  case.  But  that  dictum  is  clearly  at 
variance  with  all  the  authorities  both  before  and  since  that  judgment ;  "  and 
Mr.  Justice  Byles  said:  "I  adopt  the  law  as  laid  down  in  a  text-book  of 
very  great  value,  —  Smith's  Mercantile  Law,  where  I  think  it  is  correctly  laid 
down  (p.  44),  and  evidently  well  considered,  and  after  reading  Lord  Ellen- 
borough's  judgment  in  Ridley  v.  Taylor,  13  East,  175,  '  It  would  seem,' says 
the  learned  author,  '  that  the  unexplained  fact  that  a  partnership  security  has 
been  received  from  one  of  the  partners  in  discharge  of  a  separate  claim 
against  himself,  is  a  badge  of  fraud,  or  of  such  palpable  negligence  as 
amounts  to  fraud,  which  it  is  incumbent  on  the  party  who  so  took  the  security  to 
remove,  by  showing  either  that  the  partner  from  whom  he  received  it  acted  un- 
der the  authority  of  the  rest,  or  at  least  that  he  himself  had  reason  to  believe 
so.'"  See  also  Hogg  r.  Skeen,  18  C.  B.  n.  s.  426.} 
1  Vigors  V.  Pike,  8  CI.  &  Fin.  562,  648. 


CHAP.  Vlir.]         LIABILITIES    AND    EXEMPTIOISS.  249 

other  contract  is  made  by  one  partner  upon  his  own  ex- 
clusive credit,  he  alone  is  liable  therefor ;  and  the  part- 
nership, although  the  money,  property,  or  other  con- 
tract is  for  their  proper  use  and  benefit,  or  is  applied 
thereto,  will  in  no  manner  be  liable  therefor.^  For  it  is 
entirely  competent  for  one  partner  to  borrow  money,  or 
to  buy  goods,  or  to  enter  into  contracts  on  his  own  sole 
and  exclusive  credit  with  third  persons  ;  and,  on  the 
other  hand,  it  is  equally  competent  for  them  to  rely  on 
that  exclusive  credit,  and  either  to  refuse  to  contract 
with  the  firm,  or  to  exonerate  the  firm  from  all  liability 
upon  any  contract,  which  would  otherwise  bind  the  firm, 
as  being  for  then-  account  and  benefit.  For  the  maxim 
of  the  common  law  here  applies  with  its  full  force  : 
Modus  et  conventio  vincunt  legem;  and  either  party 
may  at  his  pleasure  waive  or  relinquish  rights,  to  which 
he  would  otherwise  be  entitled.  It  is  but  following  out 
the  rule  of  natural  justice  and  the  exposition  of  the  in- 
tention of  the  parties  recognized  in  the  Pandects.  Ante 
omnia  enim  animadvertendiim  est,  ne  conventio  in  alia 
re  facta,  aut  cum  alia  persona,  in  alia  re,  aliave  persona 
noceati^ 

§  135.  This  very  case  was  directly  put  in  the  Roman 
law,  in  relation  to  joint  employers  of  ships,  where  one 

'  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  819,  2d  ed. ;  Id.  p.  342,  343 ;  Ex  parte 
Emly,  1  Rose,  61 ;  Ex  parte  Bonbonus,  8  Ves.  540;  Sylvester  v.  Smith,  9 
Mass.  119,  121;  Gow  on  P.  c.  4,  p.  154,  155,  3d  ed.  ;  Lloyd  v.  Freshfield, 
2  C.  &  P.  325 ;  9  Dow.  &  Ry.  19 ;  Ketchura  v.  Durkee,  1  HofT.  538 ;  Le 
Roy  V.  Johnson,  2  Pet.  186,  198-200.  See  Trueman  v.  Loder,  11  Ad.  &  E. 
589,  595  ;  De  Mautort  v.  Saunders,  1  B.  &  Ad.  ^98 ;  Bonfield  v.  Smith,  12  M. 
&  W.  405;  [Green  v.  Tanner,  8  Met.  411.  And  if  the  contract  is  made 
with  one  alone,  and  credit  is  given  to  him,  he  is  liable  on  such  contract, 
without  joinifig  his  copartnei's.  Hagar  v.  Stone,  20  Vt.  106  ;  Stansfeld  v. 
Levy,  3  Stark.  8;  Murray  v.  Soraerville,  2  Camp.  99,  n.  ;  Cleveland  v. 
Woodward,  15  Vt.  302]  ;  {Lind.  on  P.  290-292;  1  Am.  Lead.  Cas.  448, 
4th  ed.} 

^  D.  2,  14,  27,  4 ;  Poth.  Oblig.  n.  85. 


250  PARTNERSHIP.  [cHAP.  VIII. 

acted  as  the  administrator  of  the  concern,  and  con- 
tracted in  his  own  name  exclusively.  Si  2^hires  navem 
exercemit,  cum  quolibet  eorum  in  solidum  agi  j^otest. 
Ne  in  plicres  adversarios  destringatur^  qui  cum  uno 
contraxerit}  The  same  rule  is  adopted  in  the  French 
law ;  and  accordingly  Pothier  says :  When  a  partner 
has  not  contracted  in  the  name  of  the  firm,  but  in  his 
own  name  alone,  he  alone  will  be  bound,  although  the 
contract  has  been  applied  to  the  benefit  of  the  partner- 
ship. Thus,  if  a  partner  has  borrowed  money  in  his 
sole  name,  for  his  own  account,  and  then  he  applies  the 
money  to  partnership  purposes,  the  creditor  cannot 
have  any  action  against  the  firm  ;  for,  according  to  the 
principles  of  law,  a  creditor  has  his  remedy  only  against 
the  party  with  whom  he  has  contracted,  and  not  against 
those  who  have  been  benefited  or  received  profit  from 
it.^  And  this  ao:ain  is  but  the  dictate  of  the  Roman  law. 
Non  adversus  te  creditores^  qui  mutuam  sum^psisti 
pecunicun,  sed  ejus,  cui  hanc  credideras  heredes  experiri, 
contra  ju7^is  formam  evidenter  postulas.^ 

§  136.  One  illustration  may  be  taken  from  a  case, 
which  has  already  passed  into  judgment.  In  that  case, 
one  of  two  partners  drew  bills  of  exchange  in  his  own 
name,  which  he  procured  to  be  discounted  by  a  banker, 
through  the  medium  of  the  same  agent  who  procured 
the  discount  of  other  bills  drawn  in  the  partnership 
name,  with  the  same  banker  ;  it  Avas  held  by  the  court, 
that  the  banker  had  fio  remedy  against  the  firm,  either 
upon  the  bills  so  drawn  in  his  own  name,  or  for  money, 
had  and  received  through  the  medium  of  such  bills, 
although  the  proceeds  were  carried  to  the  partnership 
account.     The  reason  was,  that  the  money  was  advanced 


1  D.  14,  1,  1,  §  25 ;   Id.  14,  1,  2 ;  ante,  §  102. 

*  Poth.  de  Soc.  n.  101,  105,  106.  =>  Cod.  4,  2,  15. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  251 

solely  on  the  security  of  the  parties,  whose  names  were 
on  the  bills,  by  way  of  loan  to  them,  and  not  by  way  of 
loan  to  the  partnership.  And  it  made  no  difference  in 
the  case,  that  the  banker  conceived  at  the  time,  that  all 
the  bills  were  drawn  on  the  partnership  account ;  since 
he  did  not  credit  the  firm,  but  only  the  names  on  the 
bills.i 

§  137.  The  French  law  has  followed  out  the  like 
doctrine  to  its  legitimate  conclusion.  Whenever  one 
partner  in  a  commercial  partnership  contracts  a  debt 
in  his  own  sole  name,  he  alone  will  be  responsible 
therefor ;  and  the  creditor  will  have  no  recourse  against 
the  partnership,  even  although  the  debt  may  have  been 
contracted  in  behalf  of,  or  for  the  benefit  of  the  part- 
nership.^ And  a  fortiori  in  cases  of  non-commercial 
partnerships,  the  doctrine  is  held  to  apply  ;  ^  with  the 
reservation,  however,  that  the  other  partners  have  not 
made  him  their  agent  to  contract  a  joint  obligation  in 
solido,  or  otherwise.^ 

§  138.  Still,  although  the  general  principle  is  clear, 
it  may  not  always  be  easy  to  apply  it  to  the  circum- 
stances of  particular  cases  ;  for  it  is  often  a  matter  of  no 
inconsiderable  difficulty  and  intricacy  at  the  common 
law  to  ascertain  in  point  of  fact,  whether  there  has 
been  an  exclusive  credit  given  to  one  partner  or  not. 
In  the  case  of  a  dormant  and  secret  partner,  the  credit 
is  manifestly  given  only  to  the  ostensible  partner ;  for 
no  other  party  is  known.  Still,  however,  it  is  not 
treated  as  an  exclusive  credit ;  for  the  law  in  all  cases 
of  this  sort  founds  its  decision  upon  the  ground,  that 
the  creditor  has  had  a  choice  or  election  of  his  debtor, 

'  Emly  V.  Lye,  15  East,  7  ;  Siffkin  v.  Walker,  2  Camp.  308 ;  ante,  §  102  ; 
post,  §  142,  243.     See  Faith  v.  Richmond,  11  Ad.  &  E.  339. 
2  Poth.  de  Sec.  n.  100,  101.  =>  Poth.  de  Soc.  n.  105. 

*  Puth.  de  Soc.  n.  104,  105. 


252  PARTNERSHIP.  [CHAP.  VIII. 

which  cannot  be,  where  the  partner  is  dormant  and 
unknown.^  The  credit  therefore  is  not  deemed  ex- 
clusive, but  binding  upon  all,  for  whom  the  partner 
acts,  if  done  in  their  business  and  for  their  benefit, 
as  is  the  case  in  cases  of  agency  for  an  unknown 
principal.^ 

§  139.  Another  case  may  easily  be  put.  Suppose  a 
partnership  to  be  carried  on  in  the  sole  name  of  one  of 
the  partners,  and  he  at  the  same  time  should  transact 
business  upon  his  own  separate  account ;  and  he  should 
borrow  money  in  his  own  name.  In  such  a  case  the 
question  may  arise,  whether  the  partnership  is  bound 
for  such  borrowed  money,  or  the  individual  partner 
only.  And  it  must  be  resolved  by  taking  into  con- 
sideration the  whole  circumstances  of  the  case.  Thus, 
if  the  money  is  in  fact  borrowed  for  the  partnership 
business,  or  it  is  in  fact  applied  to  the  partnership  busi- 
ness, in  the  absence  of  all  controlling  circumstances,  the 
partnership  will  be  bound  therefor  ;  since  the  fair  pre- 
sumption is,  that  it  was  intended  by  the  partner  to 
pledge  the  partnership  credit,  and  not  merely  his  indi- 
vidual credit,  whether  the  partnership  was  known  or 
unknown  to  the  lender.  On  the  other  hand,  if  the 
money  was  borrowed  for  the  separate  use  of  the  indi- 

»  Ante,  §  63. 

2  Story  on  Ag.  §  291,  '292 ;  2  Kent,  630,  631 ;  Paley  on  Ag.  by  Lloyd, 
245,  250,  3d  ed. ;  Thomson  v.  Davenport,  9  B.  &  C.  78,  80,  87 ;  Poth.  on 
Oblig.  n.  82,  83,  447 ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  11,  12,  14,  2d  ed. ;  Id. 
B.  3,  c.  1,  p.  259 ;  Hoare  v.  Dawes,  Doug.  371 ;  Gow  on  P.  c.  4,  §  1,  p. 
162,  163,  3d  ed. ;  Saville  v.  Robertson,  4  T.  R.  720 ;  Robinson  v.  Wilkin- 
son, 3  Price,  538 ;  U.  S.  Bank  v.  Binney,  5  Mason,  176 ;  s.  c.  5  Pet,  529 ; 
Kelley  v.  Hurlburt,  5  Cowen,  534;  Mifflin  v.  Smith,  17  S.  &  R.  25 ;  {Far- 
mers' Bank  of  Missouri  v.  Bayless,  35  Mo.  428  ;  Richardson  v.  Farmer, 
36  Mo.  35;  1  Am.  Lead,  Cas.  448,  4th  ed.}  The  law  with  regard  to 
dormant  partners  extends  only  to  commercial  partnerships.  It  has,  there- 
fore, no  application  to  dormant  partners  in  land  speculations.  Pitts  v. 
Waugh,  4  Mass.  424 ;  Smith  v.  Burnham,  3  Sumn.  435.     { See  §  83. } 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  253 

vidual  partner,  or  actually  applied  to  that  use,  the  con- 
trary presumption  would  prevail.  But,  if  the  business 
of  the  partnership  were  different  from  the  separate 
business  of  the  individual  partner,  and  he  should  bor- 
row expressly  of  the  lender  for  the  one  business  or  for 
the  other,  the  lender  would  be  deemed  to  give  credit  to 
that  particular  business,  and  not  to  the  other  business  ; 
and  then  the  partnership  would  or  would  not  be  bound 
according  to  the  fact,  whether  it  was  borrowed  for  their 
business  or  not.^  And,  in  such  a  case,  it  would  make 
no  difference,  whether  the  lender  did,  or  did  not  know, 
that  there  was  any  partnership  in  either  business,  or 
whether  the  money  was  actually  applied  to  the  business, 
for  which  it  was  expressly  borrowed,  or  not.  But  in 
the  absence  of  all  proofs,  as  to  the  purpose,,  for  which 
the  money  was  borrowed,  or  to  which  it  was  applied,  it 
would  be  deemed  to  be  borrowed  upon  the  separate 
account  of  the  individual  partner.^ 

'  [And  the  declaration  by  the  borrower  at  the  time,  that  it  was  on  part- 
nership account  lias  been  held  sufficient  proof  to  bind  the  firm.  Oliphant 
v.  jMathews,  IG  Barb.  608.]  {See  §  106.  If  one  partner  contracts  a  debt, 
representing  to  the  creditor,  that  it  is  for  the  benefit  of  the  firm,  and  if  the 
contract  is  within  the  scope  of  the  firm  business,  the  firm  is  liable,  whether 
the  representations  are  true  or  false ;  Stockwell  v.  Dillingham,  50  Me. 
442.} 

^  See  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  275-277,  2d  ed. ;  Etheridge  ». 
Binney,  9  Pick.  272 ;  Mifflin  v.  Smith,  17  S.  &  R.  165 ;  U.  S.  Bank  v.  Bin- 
ney,  5  Mason,  176 ;  s.  c.  5  Pet.  529 ;  [Oliphant  r.  Mathews,  16  Barb.  608 ; 
South  Carolina  Bank  v.  Case,  8  B.  «fe  C.  427  ;  Buckner  v.  Lee,  8  Ga.  285.] 
{In  Furze  v.  Sharwood,  2  Q.  B.  388,  it  was  held,  that  under  the  peculiar 
circumstances  of  the  case  the  burden  of  proof  was  on  the  partners  to  show 
that  the  contract  sued  on  was  on  account  of  the  separate  business.  Ex 
parte  Law,  3  Deac.  541  ;  Hubbell  v.  AVoolf,  15  Ind.  204.}  —In  U.  S.  Bank 
V.  Binney,  5  Mason,  176,  183,  184,  the  court  said:  "In  respect  to  both 
general  and  limited  partnershijjs,  the  same  general  principle  apjilies,  that 
each  partner  has  authority  to  bind  the  firm,  as  to  all  things  within  the 
scope  of  the  partnership,  but  not  beyond  it.  Where  the  contract  is  made 
in  the  name  of  the  firm,  it  will,  prima  facie,  bind  the  firm,  unless  it  is  ultra 
the  business  of  the  firm.     Where  the  firm  im[)orts,  on  its  face,  a  company. 


254  PARTNERSHIP.  [CHAP.  VIII. 

§  140.    Various  other  cases  may  be  put  to  illustrate 
the  same  rule.    Thus,  if  a  person  should  advance  money 

as  A.  B.  &  Co.,  or  A.,  B.,  &  C,  there  the  contracts  made  by  the  partners 
in  that  name  bind  the  firm,  unless  they  are  known  to  be  beyond  the  scope 
and  business  of  the  firm.^  But  where  the  business  is  carried  on  in  the 
name  of  one  of  the  partners,  and  his  name  alone  is  the  name  of  the  firm, 
there,  in  order  to  bind  the  firm,  it  is  necessaiy  not  only  to  prove  the  signa- 
ture, but  that  it  was  used  as  the  signature  of  the  firm  by  a  party  author- 
ized to  use  it  on  that  occasion,  and  for  that  purpose.  In  other  words, 
it  must  be  shown  to  be  used  for  partnership  objects,  and  as  a  partnership 
act.  The  proof  of  the  signature  is  not  enough.  The  plaintiffs  must  go 
further,  and  show,  that  it  is  a  partnership  signature.  In  the  present  case, 
the  signature  of  '  John  Winship '  may  be  on  his  own  individual  account,  as 
his  personal  contract,  or  it  may  be  on  account  of  the  partnership.  Upon 
the  face  of  the  paper  it  stands  indifferent.  The  burden  of  proof,  then,  is 
upon  the  plaintiffs  to  establish,  that  it  is  a  contract  of  the  firm,  and  ought  to 
bind  them."  And  again:  "The  notes  are  all  indorsed  in  the  name  of 
'  John  Winship.'  For  aught,  therefore,  that  appears  on  the  face  of  them, 
they  were  notes  only  binding  him  personally.  The  plaintiffs  must,  then, 
go  further,  and  show  either  expressly  or  by  implication,  that  these  notes 
were  ofi'ercd  by  Winship,  as  notes  binding  the  firm,  and  not  mei'ely  on 
himself  personally ;  or  that  the  discounts  were  made  for  the  benefit,  and 
in  the  course  of  the  business  of  the  firm.  It  is  not  sufficient  for  the  plain- 
tiffs to  prove,  that  the  bank,  in  discounting  these  notes,  acted  upon  the 
belief,  that  they  bound  the  firm,  and  were  for  the  benefit  and  busmess  of  the 
firm.  They  must  go  further  and  prove,  that  the  belief  was  known  to  and 
sanctioned  by  Winship  himself  in  offering  the  notes ;  and  that  he  inten- 
tionally held  out  to  them,  that  the  discounts  were  for  the  credit,  and  on 
the  account  of  the  firm ;  and  that  his  indorsement  was  the  indorsement  of 
the  firm,  and  to  bind  them ;  and  that  the  bank  discounted  the  notes  upon 
the  faith  of  such  acts  and  representations  of  Winship.  The  jury  will 
judge  from  the  whole  evidence,  how  the  case  stands  in  these  respects. 
The  mere  fact,  that  the  discounts  so  procured  Avere  applied  to  the  use  of 
the  firm  is  not,  of  itself,  sufficient  to  prove,  that  the  discounts  were  pro- 
cured on  account  of  the  firm.  It  is  a  strong  circumstance,  entitled  to 
weight,  but  not  decisive."  In  Etheridge  v.  Binney,  9  Pick.  272,  274,  the 
court  said:  "  I^ow  as  the  partner,  whose  name  is  assumed  by  the  firm, 
may  also  engage  in  other  branches  of  business,  in  which  he  may  want 
credit  on  his  own  private  account,  if  he  applies  for  a  loan  of  money  to 
one,  who  is  ignorant  of  the  copartnership,  and  no  information  is  given  of 
its  existence,  it  is  a  private  loan,  and  does  not  bind  the  firm,  unless  the 
creditor  sliall  know,  tliat  the  money  borrowed,  or  the  goods  procured,  by 
the  individual,  went  to  the  use  of  the  firm.     The  burden  of  proof  in  such 


1  [Barrett  v.  Swanii,  17  Me.  180;  Holmes  v.  Porter,  39  Me.  157.] 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  255 

for  a  firm,  and  yet  take  the  security  of  one  partner 
therefor,  the  security  would  bind  that  partner  only.^ 
And  indeed,  under  such  circumstances,  if  the  separate 
security  is  knowingly  taken  upon  advances  for  the  firm, 
it  will  ordinarily  be  treated,  as  an  election  by  the  cred- 

case  is  upon  the  creditor,  in  order  to  make  good  his  claim  upon  the  firm  ; 
for  he  credited  the  individual,  and  not  the  firm,  and  it  will  be  presumed  to 
be  fiar  the  private  benefit  of  the  individual,  unless  the  contrary  is  proved. 
But  if  the  existence  of  the  firm  is  known  to  the  person,  who  makes  the 
loan,  and  representations  are  made  to  him  by  the  borrower,  that  he  bor- 
rows for  the  use  of  the  company,  and  that  they  are  answerable  for  the 
debt,  so  that  credit  is  given  to  the  company,  and  not  to  the  individual 
partner,  the  burden  of  proof  is  upon  the  company,  when  sued,  to  show 
that  the  power  confided  to  the  individual  has  been  abused,  and  that  the 
money  borrowed  was  applied  to  his  private  use,  and  also,  that  this  was 
known  to  the  lender  to  be  his  intention.  This  principle  necessarily  follows 
from  cases  settled.  If  a  purchase  is  made  in  the  name  of  a  firm,  or  money 
borrowed,  and  a  note  given  or  indorsed  in  that  name,  this  is  prima  facie 
evidence  of  a  debt  from  the  firm,  and  it  can  onl}-  be  rebutted  by  proof  in 
the  defence,  that  tin's  was  fraudulently  done  by  the  individual  partner  for 
his  own  private  use,  and  that  this  was  known  to  the  creditor.  So  that  in 
the  limited  partnership,  if  the  name  of  the  firm  had  been  John  Winship  & 
Co.,  or  Winship  &  Binney,  all  notes  given  to  any  creditor,  in  either  of  those 
names,  would  be  company  notes,  unless  disproved,  as  before  stated.  Xow, 
the  making  and  oflTering  of  such  a  note  is  nothing  more  than  a  representa- 
tion that  the  money  is  wanted  for  the  use  of  the  company,  and  as  they  con- 
fide in  the  individual,  they  will  be  bound  by  his  acts.  The  name  of  the 
firm  here  being  only  the  name  of  the  individual,  a  note  offered  in  that 
name,  unaccompanied  by  any  representation,  would  of  course  import  only  a 
promise  by  John  Winship  alone  ;  and  the  credit  being  given  to  him  alone, 
the  creditor  would  not  recover  against  the  firm,  without  proving,  that  the 
money  actually  went  into  the  funds  of  the  firm.  But  if  the  borrowing  part- 
ner states  that  he  is  one  of  a  company,  and  that  he  borrows  money  for  the 
company,  or  purchases  goods  for  their  use,  then,  as  there  is  such  company, 
and  as  they  have  given  him  authority  to  use  the  company  credit  to  a  certain 
extent,  and  as  the  creditor  will  have  no  means  of  knowing  whether  he  is 
acting  honestly  towards  his  associates,  or  otherwise,  if  he  lends  the  money 
or  sells  the  goods  on  the  faith  of  such  representation,  the  company  will  be 
bound,  unless  they  prove  that  the  contract  was  for  his  private  benefit,  and 
known  to  be  so  by  the  creditor." 

1  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  315-324,  2d  ed. ;  Siffkin  v.  Walker,  2 
Camp.  308;  Emly  v.  Lye,  15  East,  7.  {If  goods  are  sold  to  a  firm,  taking 
the  note  of  one  member  does  not  discharge  the  firm,  unless  an  agi'eement 
to  discharge  is  afiirmatively  shown.     Folk  v.  Wilson,  21  Md.  53S.} 


256  PARTNERSHIP.  [cHAP.  VIII. 

itor,  to  absolve  the  partnership  from  responsibility,  and 
to  confine  the  credit  to  that  partner  only.^  Nor  will  it 
make  any  difference  in  such  a  case,  that  the  money  has 
not  only  been  borrowed,  but  has  been  applied  to  part- 
nership purposes,  if  the  contract  has  been  exclusively 
upon  the  separate  credit  or  security  of  one  partner.^ 
On  the  other  hand,  if  money  is  actually  borrowed  on 
the  credit  of  the  firm  in  the  course  of  the  business  of 
the  firm,  it  will  make  no  difference  in  the  liability  of 
the  other  partners,  that  it  has  been  misapplied  by  the 
borrowing  partner.^  But  care  must  be  j;aken  to  distin- 
guish between  cases  of  this  sort,  and  cases,  where  the 
separate  security  of  one  partner  has  been  taken,  not  as 
the  primary  debt,  but  merely  as  collateral  security  for 
the  primary  debt,  as  one  of  the  firm ;  for,  in  the  latter 
case,  the  firm  will  undoubtedly  be-  holden,  notwith- 
standing the  separate  security.^ 

§  141.  The  custom  of  a  particular  trade  or  business 
may  in  some  cases  also  furnish  an  exemption  of  the 
partnership  upon  contracts  made  for  their  benefit,  and 
establish,  that  the  credit  is  exclusively  given  to  the 
contracting  partners.  Instances,  however,  of  this  sort 
are  of  rare  occurrence ;  and  it  has  been  remarked  by  a 
learned  writer,  that  perhaps  there  is  no  ordinary  trade 

»  Coll.  on  p.  B.  3,  c.  2,  §  2,  p.  318,  319,  321,  2d  ed. ;  Ex  parte  Hunter, 
1  Atk.  223;  Ex  parte  Emly,  1  Rose,  61;  Gow  on  P.  c.  4,  §  2,  p.  154-156, 
3ded. 

2  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  319,  320,  2d  ed. ;  Bevan  v.  Lewis,  1 
Sim.  376  ;  Lloyd  v.  Freshfield,  2  C.  &  P.  325  ;  Parkin  v.  Carruthers,  3  Esp. 
248 ;  Jaques  v.  Marquand,  6  Cowen,  497 ;  [Green  v.  Tanner,  8  Met.  411]  ; 
{Farmers'  Bank  of  Missouri  v.  Bayless,  35  Mo.  428.} 

3  Coll.  on  P.  B.  3,  c.  1,  §  1,  p.  263;  Id.  B.  3,  c.  2,  p.  322,  and  note, 
2d  ed. ;  Church  v.  Sparrow,  5  Wend.  223 ;  U.  S.  Bank  v.  Binney,  5  Mason, 
176 ;  s.  c.  5  Pet.  529 ;  Gow  on  P.  c.  4,  §  2,  p.  146,  147,  3d  ed. ;  Id.  §  3, 
p.  282-284;  ante,  §  105. 

^  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  323,  2d  ed. ;  Id.  p.  275;  Ex  parte 
Brown,  cited  1  Atk.  225 ;  Denton  v.  Rodie,  3  Camp.  493 ;  South  Carolina 
Bank  V.  Case,  8  B.  &  C.  427  ;  Ex  parte  Bolitho,  Buck,  100. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  257 

or  business,  except  that  of  stage-coach  proprietors,  in 
which  the  firm  have  been  held  not  liable  for  repairs 
made,  or  goods  supplied,  by  the  order  of  one  partner 
for  the  use  of  the  concern.'  In  general,  such  proprie- 
tors are  held  bound,  like  all  other  partners."  But 
under  some  special  circumstances,  the  credit  has  been 
held  to  be  exclusively  given  to  the  partner  ordering 
the  repairs  or  supplies.  Thus,  where  several  persons 
furnished  with  horses,  which  were  their  several  prop- 
erty, the  several  stages  of  a  coach,  and  in  the  general 
business  and  profits  all  the  proprietors  were  partners, 
and  shared  the  profits,  it  was  held,  that  the  proprie- 
tors were  not  all  jointly  liable  for  goods  furnished  to 
one  partner  for  the  use  of  his  horses,  drawing  the 
coach  along  his  part  of  the  road  ;  and  that  the  goods 
must  be  deemed  furnished  upon  the  exclusive  credit  of 
that  partner.^ 

§  142.  The  general  rule  is,  as  we  have  seen,  that  if  a 
bill  or  note  is  drawn  or  indorsed  in  the  name  of  one 
partner  only,  not  being  the  firm  name,  it  will  not  be  a 
contract  binding  on  the  firm,  but  on  himself  only,  even 
although  it  may  be  a  transaction  for  the  use  or  benefit 
of  the  firm.'*  But,  nevertheless,  cases  might  arise,  where 
the  partnership  might  be  held  liable,  as  the  drawers  or 
indorsers   of  the  note   or  bill,  notwithstanding   it  was 

'  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  329,  330,  2d  ed. 

«  Ibid. ;  Arthur  v.  Dale,  cited  Coll.  on  P.  B.  3,  c.  2,  §  3,  p.  330,  2d  ed. 

^  Barton  v.  Hanson,  2  Taunt.  49  ;  s.  c.  2  Camp.  97  ;  Iliard  v.  Bigg,  Man- 
ning's Nisi  Prius,  Index,  220;  Gow  on  P.  c.  4,  §  1,  p.  149,  150,  3d  ed. 

^  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  277,  2d  ed. ;  Id.  B.  3,  c.  2,  §  3,  p.  331- 
347  ;  Jaques  v.  Marquand,  6  CoAven,  497  ;  Smith  v.  Craven,  1  Cr.  &  J.  500, 
507  ;  ante,  §  136  ;  Trueman  v.  Loder,  11  Ad.  &  E.  589  ;  Faith  v.  Richmond, 
11  Ad.  &  E.  3.39;  ante,  §  102;  {Nicholson  v.  Ricketts,  2  E.  &  E.  497; 
Farmers'  Bank  v.  Bayless,  35  Mo.  428 ;  and  see  the  eases  on  the  negotiable 
paper  of  partnerships  well  collected  in  Bvlcs  on  Bills,  43-53.  Lind.  on  P. 
274-282.} 

17 


258  PARTNERSHIP.  [CHAP.  Till. 

made  or  indorsed  only  in  the  name  of  one  partner.^ 
But,  then,  in  such  cases,  in  order  to  bind  the  firm  it 
must  appear,  that  the  other  partners  had  constantly 
treated  such  note  or  bill,  so  made  and  indorsed,  as  the 
note,  or  bill,  or  indorsement  of  the  firm  in  the  adopted 
name  of  the  partner,  as  a  firm  name,^;ro  hac  vice;  or  at 
least,  as  the  note,  or  bill,  or  indorsement  made  by  the 
firm  by  procuration  of  the  partner,  so  that  the  holder 
would  be  at  liberty  to  write  over  the  partner's  name 
the  name  of  the  firm  by  procuration  of  the  partner  (A. 
and  B.  by  procuration  of  B.).^  But,  whether  this  would 
be  so,  or  not,  it  has  been  held,  that  if  one  partner  makes 
use  of  an  assumed  firm  name,  not  the  real  name  of  the 
firm,  and  signs  it  by  procuration  of  the  assumed  firm, 
and  the  other  partners  knew  his  habit  of  so  doing,  and 
adopted  the  note,  or  bill,  or  indorsement,  as  that  of  the 
firm,  the  partners  will  be  held  to  have  adopted  the  new 
firm  name,  ^:)ro  hac  vice,  and  will  be  bound  by  the  con- 
tract.^ 

^  [Palmer  v.  Stephens,  1  Denio,  471.] 

^  South  Carolina  Bank  v.  Case,  8  B.  &  C.  427;  Ex  jyarte  Bolitho, 
Buck,  100;  {1  Am.  Lead.  Gas.  448,  4th  ed.  See  Ostrom  v.  Jacobs,  9 
Met.  454. } 

*  Williamson  v.  Johnson,  1  B.  &  C.  146  ;  Coll.  on  P.  B.  3,  c.  1,  §  2,  p.  276, 
277,  2d  ed. ;  Id.  B.  3,  c.  2,  §  2,  p.  319-324 ;  [/«  re  Warren,  Daveis,  320,  325 ; 
Newton  V.  Boodle,  3  C.  B.  795  ;  post,  §  202  ;  {Faith  v.  Richmond,  11  Ad.  &E. 
339 ;  Kirk  v.  Blurton,  9  M.  &  W.  284  ;  Wilde  v.  Keep,  6  C.  &  P.  235  ;  Smith's 
Merc.  Law,  81,  3d  Am.  ed.  See  Tilford  r.  Ramsey,  37  Mo.  563,  567. }  This 
liability  of  a  partnership,  notwithstanding  the  names  of  individuals  only  were 
used,  is  illustrated  in  the  following  case.  Where  the  proprietors  of  a  line  of 
canal  boats,  by  articles  between  themselves  agreed  that  the  business  of  the 
concern  at  Rochester  should  be  conducted  by  J.  A.,  one  of  the  proprietors,  in 
his  own  name,  and  that  at  Albany  it  should  be  conducted  by  W.  M.,  an 
agent,  in  his  name,  but  in  behalf  of  and  upon  the  responsibility  of  the 
defendants,  who  were  two  of  the  proprietors  ;  that  no  copartnership  name 
should  be  used,  and  no  paper  made,  accepted,  or  indorsed  in  the  name,  or 
on  account  of  the  copartnership ;  and  that  each  party  should  raise  his  share 
of  the  money  needed  by  the  concern  upon  his  own  responsibility,  and  the 
other  parties  were  not  to  be  liable  therefor,  but  all  the  parties  were  to 


CHAP.  YIII.]         LIABILITIES    AND    EXEMPTIONS.  259 

§  1-43.  The  doctrine  has  even  been  pressed  further ; 
and  it  has  been  held,  that  a  note  or  other  security  may 
be  so  signed,  as  at  once  to  make  the  partner  signing  it 
separately  liable,  and  also  the  firm  liable  thereon.  Thus, 
where  A.  (one  of  the  partners  in  the  firm  of  A.,  B.,  and 
C.)  made  a  promissory  note  in  these  words  :  "  Sixty 
days  after  .date,  I  promise  to  pay  D.,  E.,  or  order,"  &c., 
and  signed  the  note  "For  A.,  B.,  &  C.  —  A.;"  it  was 
held,  that  the  firm  was  liable  thereon,  and  also  that  he 
was  separately  liable ;  so  that,  in  effect,  it  was  treated 
as  a  joint  and  several  security,  a  joint  security  of  the 
firm,  and  a  several  one  of  the  partners  signing  it.^     This 

share  equally  in  the  profits ;  it  was  held,  that  a  bill  by  J.  A.  in  his  own 
name,  to  raise  money  for  the  business  of  the  concern,  drawn  upon  and 
accepted  by  W.  M.,  in  his  name,  bound  all  the  proprietors,  at  once  as 
drawers  and  acceptors.  Bank  of  Rochester  v.  Monteath,  1  Denio,  402 ; 
Palmer  v.  Stephens,  1  Denio,  471.] 

1  Lord  Galway  v.  Matthew,  1  Camp.  403 ;  Hall  v.  Smith,  1  B.  &  C.  407  ; 
[Staats  V.  Howlett,  4  Denio,  559.]  See  Story  on  Ag.  §  154,  275,  276  ;  Coll. 
on  P.  B.  3,  c.  1,  §  2,  p.  277,  2d  ed.  —  In  the  case  of  Lord  Galway,  1  Camp. 
403,  the  firm  were  held  liable.  In  the  case  of  Hall  r.  Smith,  1  B.  &  C.  407, 
which  was  a  note  of  this  sort  payable  to  bearer,  and  was  signed  A.,  B.,  and 
C.  by  A.,  the  suit  was  against  A.  only;  and  he  was  held  separately  liable. 
Mr.  Justice  Bayley  on  this  occasion  said:  "In  pronouncing  judgment  for 
the  plaintiff,  we  shaU  not  give  to  the  note  any  different  effect  from  that 
which  it  appears  upon  the  face  of  it  to  have.  The  words  used  are  '  I  prom- 
ise to  pay,'  and  it  is  signed  by  the  defendant.  What  then  is  the  import  of 
those  words  ?  Surely,  that  W.  Smith  promises.  It  is  true,  that  he  promises 
for  himself  and  others,  but  he  alone  promises.  Now,  there  are  many  cases, 
where  a  party,  entering  into  a  contract  in  his  own  name  on  behalf  of  others, 
may  be  sued,  or  those,  for  whom  he  contracts,  may  be  sued,  and  e  cotiverso, 
an  agent  may  sue,  or  the  parties  beneficially  interested  may  sue.  If  any 
hardship  arise  from  this  construction,  it  might  have  been  avoided  by  intro- 
ducing the  pronoun  '  we '  instead  of  '  I ; '  and  on  the  other  hand,  a  great 
difficulty  may  be  imposed  upon  the  plaintiff,  if  he  be  compelled  to  sue  all ; 
for  then  he  would  be  bound  to  prove  the  partnership  of  all  the  parties, 
whereas  in  this  action  it  is  sufficient  to  prove  the  handwriting  of  the  defend- 
ant. The  cases  of  March  v.  Ward,  and  Clark  v.  Blackstock,  import,  that 
the  word  'I'  creates  a  several  promise  by  each  party  that  signs,  and  here 
a  fortiori  that  must  be  the  effect  of  it,  for  the  party  sued  is  the  only  person, 
who  actually  made  the  promise.  The  plaintiff  is  therefore  entitled  to  re- 
cover."   { Hall  v.  Smith,  has  been  overruled  by  Ex  parte  Buckley,  14  M.  &  W. 


260  PARTNERSHIP.  [CHAP.  VIII. 

construction  of  the  instrument  certainly  goes  to  th^ 
very  verge  of  the  law ;  and  perhaps  may  be  thought 
to  deserve  further  consideration. 

§  144.  Cases  of  a  different  character  may  occur, 
where  the  question,  whether  exclusive  credit  has  been 
given  to  one  partner,  or  joint  contractor,  may  admit  of 
much  discussion  and  difficulty,  founded  upon,  the  pecu- 
liar circumstances  thereof.  Thus,  in  case  one  member 
of  a  club  should  order  goods  for  the  use  and  benefit  of 
the  club,  all  the  members  of  the  club,  who  concurred 
in  the  order,  or  subsequently  ratified  it,  might  be  liable 
for  the  amount  thereof,  although  the  member,  who 
ordered  the  goods,  should  be  made  debtor  in  the  trades- 
man's books,  unless  it  clearly  appeared,  that  the  trades- 
man meant  to  give  exclusive  credit  to  that  member 
only  ;  for  such  entry  in  the  books  would  not  of  itself  be 
decisive  of  an  intent  to  give  such  exclusive  credit.^ 

469  ;  s.  c.  1  Ph.  562.  See  also  In  re  Clarke,  De  G.  153,  reversing  Ex  parte 
Christie,  3  Mont.  D.  & De  G.  736  ;  Owen  v.  Van  Uster,  10 C.  B.  318  ;  Maclae 
V.  Sutherland,  3  E.  &  B.  1 ;  Snow  v.  Howard,  35  Barb.  56,  35  Law  Mag.  298.  | 
'  Delauney  v.  Strickland,  2  Stark.  416 ;  Flemyng  v.  Hector,  2  M.  &  W. 
172;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  31,  2d  ed. ;'  {Caldicott  v.  Griffiths,  8 
Exch.  898  ;  Todd  v.  Emly,  8  M.  &  W.  505.  Though  the  members  of  a 
club  are  not  liable  to  third  parties  from  the  mere  fact  of  association,  they 
may  be  liable  for  the  acts  of  agents  whom  they  have  authorized.  Cockerell 
V.  Aucompte,  2  C.  B.  n.  s.  440;  Burls  v.  Smith,  7  Bing.  705;  Lind. 
on  P.  55.}  In  the  case  of  Flemyng  v.  Hector,  Lord  Abinger  said:  "I 
had  thought,  but  without  much  consideration,  at  the  Assizes,  that  these 
sort  of  institutions  were  of  such  a  nature,  as  to  come  under  the  same  view 
as  a  partnersliip,  and  that  the  same  incidents  might  be  extended  to  them ; 
that,  where  there  were  a  body  of  gentlemen,  forming  a  club,  and  meeting 
together  for  one  common  object,  what  one  did  in  respect  of  the  society 
bound  the  others,  if  he  had  been  requested  and  had  consented  to  act  for 
them.  Several  cases  have  been  cited  in  the  course  of  the  argument,  which 
do  not  apply,  with  the  exception  of  one  of  them,  to  societies  of  this  nature. 
Trading  associations  stand  on  a  very  different  footing.  Where  persons 
engage  in  a  connnunity  of  profit  and  loss  as  partners,  one  partner  has  the 
right  of  property  for  tlie  Avhole.  So,  any  of  the  partners  has  a  right,  in 
any  ordinary  transactions,  unless  the  contrary  be  clearly  shown,  to  bind  the 
partnership  by  a  credit ;  he  might  accept  a  bill  of  exchange  in  the  name  of 


CHAP.   VIII.]         LIABILITIES    AND    EXEMPTIONS.  261 

§  145.    Neither   does    it   necessarily  follow,  because 
two  persons,  who  are  not  partners,  have  joined  together 

the  firm,  and  as  between  the  firm  and  strangers  the  partnership  would  be 
bound,  although  there  might  be  an  understanding  in  the  firm  that  he  was 
not  to  accept.  It  appears  to  me,  that  this  case  must  stand  upon  the  ground, 
on  which  the  defendant  put  it,  as  a  case  between  principal  and  agent ;  and 
I  am  the  more  inclined  to  look  at  it  in  that  light,  by  an  observation,  made 
by  Mr.  Piatt,  in  the  course  of  the  argument  yesterday,  on  the  subject  of 
bills  of  exchange.  I  apprehend,  that  one  of  the  members  of  this  club 
could  not  bind  another  by  accepting  a  bill  of  exchange,  acting  as  a  commit- 
tee man,  even  where  there  might  be  an  apparent  necessity  to  accept,  as  in 
the  case  of  a  purchase  of  a  pipe  of  wine :  the  party  might  draw  a  bill,  but 
I  do  not  think  he  could  accept  the  bill  to  bind  the  members  of  the  club.  It 
is,  therefore,  a  question  here,  how  far  the  conniiittee,  who  are  to  conduct 
the  affairs  of  this  club  as  agents,  are  authorized  to  enter  into  such  con- 
tracts, as  that,  upon  which  the  plaintiffs  now  seek  to  bind  the  members 
of  the  club  at  large ;  and  that  depends  on  the  constitution  of  the  club, 
which  is  to  be  found  in  its  own  rules ;  and  upon  two  of  the  cases,  those  that 
were  tried  before  me  at  Guilford,  looking  at  these  general  rules,  it  certainly 
does  strike  me,  that  it  is  impossible  to  interpret  them,  so  as  to  give  the  com- 
mittee the  power  of  dealing  on  credit,  even  for  the  purpose  of  the  club.  It 
appears  by  the  rules,  that  every  member  is  to  pay  his  subscription  of  ten 
guineas  as  entrance  money,  before  he  can  become  a  member,  and  a  yearly 
subscription  of  five  guineas ;  so,  that  by  the  provisions  of  the  club,  there  is 
to  be  a  fund  in  hand  in  order  to  bear  the  expenses.  But  then,  again,  every 
member,  who  makes  use  of  the  club,  who  either  eats  or  drinks  there,  or  takes 
any  sort  of  refreshment,  is  to  pay  ready  money.  That  shows  again,  that  the 
club  was  not  disposed,  and  not  intended,  to  have  any  transactions  on  credit, 
even  with  its  own  members ;  and  it  also  shows,  that  care  was  taken  to  pro- 
vide ready  money  to  meet  every  expense ;  so  that,  if  a  party,  or  a  gentle- 
man of  the  club,  were  to  order  any  particular  thing,  that  the  club  did  not 
contain,  he  is  to  pay  for  it  instanter ;  so  that  no  occasion  was  expected  to  be 
necessary  for  the  committee's  pledging  the  credit  of  the  club,  or  even  their 
own.  Under  these  circumstances,  as  the  rules  of  the  club,  which  are  in 
writing,  must  be  taken  to  form  the  constitution  of  the  club,  and  are  to  be 
construed  as  matters  of  law,  I  do  not  see  what  there  was  to  go  to  the  jury ; 
I  do  not  see  any  thing  in  these  rules,  of  which  the  jury  are  to  be  the  judges. 
The  words  are,  '  to  manage  the  aflfairs  of  the  club ; '  the  question  then  is, 
what  the  affairs  of  the  club  are.  They  are  to  have  in  their  hands  a  subscrip- 
tion, and  they  are  to  take  care,  that  every  member  pays  it  before  he  comes 
into  the  club,  and  pays  for  every  thing  he  has  in  the  club.  It  therefore  ap- 
pears that  the  members  in  general  intended  to  provide  a  fund  for  the  com- 
mittee to  call  upon.  I  cannot  infer,  that  they  intended  the  conunittee  to 
deal  upon  credit,  and  unless  you  infer  that  that  was  the  intention,  how  are 
the  defendants  bound  ?  " 


262  PARTNERSHIP.  [CHAP.  VIII. 

to  make  a  purchase  for  a  joint  shipment,  that  they  will 
be  jointly  liable  to  the  vendor  for  the  purchase-money ; 
for  if  the  purchase  has  been  made  imder  circumstances 
which  demonstrate  that  the  vendor  gave  an  exclusive 
credit  to  each  of  them  for  a  moiety  (as  by  drawing  a 
separate  bill  on  each  for  a  moiety),  then  each  will  be 
solely  and  separately  liable  only  for  his  own  share. ^ 
And  the  same  rule  may  be  justly  applicable  to  cases 
of  partnership,  where  such  a  division  of  the  credit  is 
authorized  and  acted  upon  by  the  vendor,  with  a  clear  un- 
derstanding that  it  is  to  be  an  exclusive  credit,  pro  tanto. 
§  146.  The  case  of  a  debt,  contracted  prior  to  the 
existence  of  a  partnership,  has  also  sometimes  been 
treated  as  a  case  where  exclusive  credit  is  given  to  the 
contracting  party,  and  not  to  the  firm,  although  they 
ultimately  receive  the  benefit  thereof.^  But  it  may  be 
resolved  into  the  more  general  principle,  that  a  contract 
can  be  obligatory  only  upon  those  who  are  parties  to 
it,  or  derive  a  benefit  from  it  at  the  time  of  its  incep- 
tion.^ In  short,  the  joint  interest  or  joint  liability 
must  be  contemporaneous  with  the  formation  of  the 
contract  itself,  in  order  to  superinduce  the  correspond- 
ing liability  to  perform  it ;  and  if  there  be  no  partner- 
ship then  in  existence,  to  be  bound,  or  none  which  is  a 
party  or  privy  to  the  contract,  it  cannot  be  deemed 
their  contract ;  but  solely  that  of  those  who  contracted, 
and  were  capable  of  contracting  it  at  the  time.     0th er- 

'  Gibson  v.  Lupton,  9  Bing.  297.     { See  Sims  v.  Willing,  8  S.  «fe  Ft.  103. } 

"  See  Ketchum  v.  Durke,  1  Hoffin.  538. 

3  Gow  on  P.  c.  4,  §  1,  p.  150-153,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  3,  §  1,  p. 
348-368,  2d  ed. ;  Saville  v.  Robertson,  4  T.  R.  720;  Ketchum  v.  Durkee, 
1  Hofim.  538;  {Lind.  on  P.  23-30,  311-314.}  Where  no  other  time  is 
fixed  for  the  commencement  of  a  partnership  in  an  agreement  between  the 
parties,  it  is  taken  to  have  commenced  on  the  date  of  the  agreement,  as  the 
presumed  intention  of  the  parties.  Williams  v.  Jones,  5  B.  &  C.  108. 
{See  Battley  v.  Lewis,  1  Man.  &  G.  155,  and  §  194,  post.} 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  263 

wise,  the  law  would  introduce  the  extraordinary  anom- 
aly of  making  a  contract,  consummate  and  perfect 
between  all  the  original  parties,  expand  so  as  to  be  in 
fact  the  contract  of  other  parties,  who  had  not,  and 
perhaps  could  not,  at  the  time,  have  any  interest  in,  or 
privity,  or  connection  therewith.^ 

'  Go-w  on  P.  c.  4,  §  1,  p.  150-152,  3d  ed.  —  Mr.  Gow  has  well  stated  the 
principle,  and  illustrated  it  by  the  cause  of  Saville  v.  Robertson,  4  T.  R. 
720.  Mr.  Gow  says,  p.  151,  152,  "  A  joint  contract,  however,  entered  in- 
to by  one  or  more  individuals,  is  binding  only  upon  those  who  have  a  joint 
interest  in  it  at  the  time  of  its  inception  ;  for  no  subsequent  act  by  any  per- 
son, who  may  aftei-wards  become  a  partner,  not  even  an  acknowledgment 
that  he  is  liable,  will  entail  upon  that  person  the  obligation  of  fulfilling  such 
a  contract,  if  it  clearly  appear,  that  a  partnership  did  not  exist  at  the  time 
the  contract  was  made.  The  joint  interest  must  be  contemporaneous  with 
the  formation  of  the  contract  itself,  to  superinduce  the  corresponding  liabili- 
ty to  perform  it.  If  it  were  otherwise,  the  law  would,  in  fact,  create  a  sup- 
posed contract,  when  the  real  contract  between  the  parties  was  consummated, 
before  the  joint  interest  and  consequent  joint  risk  was  in  existence.  Thus, 
where  several  persons  agreed  upon  a  maritime  adventure,  and  to  provide  a 
cargo  of  goods,  which  should,  in  the  judgment  of  the  majority,  be  proper 
for  the  voyage ;  and  permission  was  given  to  the  supercargo  (who  was  to 
have  a  proportionate  profit,  and  bear  an  equal  loss  with  the  respective  ad- 
venturers) to  ship,  on  the  joint  account,  as  many  goods  as  he  might  think 
fit ;  such  goods  being  first  approved  by  a  majority  of  the  persons  concerned 
in  the  adventure,  as  proper  for  the  voyage;  and  it  was  afterwards  agi-eed, 
that  each  party  was  to  hold  no  other  share  or  proportion  in  the  adventui*e, 
than  the  amount  of  what  each  separately  ordered  and  shipped ;  and  that  the 
orders  given  for  the  cargo  and  outfit  of  the  ship  were  to  be  separately  paid, 
and  that  one  was  not  to  be  bound  for  any  goods  or  stores  ordered  or  shipped 
by  the  other ;  and  that  the  supercargo  should  have  free  liberty  to  ship  what 
goods  were  suitable  to  the  voyage,  over  and  above  the  ship  and  outfit,  leav- 
ing room  for  those  ordered  by  the  adventurers  ;  and  that  the  ship  should  be 
made  over  in  trust  for  the  general  concern  ;  it  was  held, that  if  the  supercar- 
go afterwards  purchased  goods,  as  part  of  the  cargo,  and  the  ship  sailed 
with  the  goods  so  purchased,  he  alone  was  liable  for  them,  and  not  his  co- 
adventurers  jointly  with  him.  The  reason  on  which  this  determination  pro- 
ceeded, seems  to  have  been,  that,  after  the  purchase  of  the  goods  made  by 
the  several  adventurers,  there  was  still,  before  they  became  joint  property, 
a  further  act  to  be  done,  which  was  the  putting  them  on  board  the  sliip,  in 
which  they  had  a  common  concern  for  the  joint  adventure,  and  until  that 
fui'ther  act  was  done,  the  goods  purchased  by  each  remained  tlie  sc})arate 
property  of  the  purchaser.  The  partnership  in  the  goods  did  not  arise 
until  their  admixture  in  ihe  common  adventure."     Again  he  adds  (p.  153)  : 


264  PART>'ERSHIP.  [chap.   YIII. 

§  14:7.  This  doctrine  may  easily  be  illustrated  by 
a  few  cases.  Thus,  if  two  persons  should  separately 
purchase  goods  on  their  own  separate  accounts,  and 
afterwards  should  agree  to  unite  their  interests  therein, 
in  one  joint  commercial  adventure  for  their  joint  and 
mutual  profit,  this  would  create  a  partnership  in  the 
goods  for  that  adventure.  But  it  would  not  make 
them  liable  as  partners  to  the  vendors  of  the  goods  ; 
for  they  then  had  no  joint  interest  in  the  purchase.^ 
The  same  rule  would  apply  to  a  case  where  one  mer- 
chant should  purchase  goods  on  his  own  sole  account, 
and  afterwards  should  ship  them  upon  a  joint  adven- 
ture for  joint  profits  with  other  persons,  whom  he  had 
subsequently  admitted  as  sub-purchasers,  or  to  whom 
he  had  subsequently  sold  an  undivided  interest  in  the 
goods  ;  for  in  such  a  case  the  original  credit  was  exclu- 
sively given  to  himself;  and  the  other  parties  could  in 
no  just  legal  sense  be  deemed  parties  or  privies  to  the 
contract  of  purchase.^     It  would   ordinarily  be  other- 

"Itis  not,  however,  sufficient  to  constitute  a  joint  liability  for  the  capital 
brought  into  the  trade,  that  there  is  to  be  a  subsequent  participation  in 
the  profit  derived  from  it.  In  such  a  case,  the  right  to  participation  can 
only  take  its  origin  from  the  time  of  the  introduction  of  the  capital;  and,  al- 
though communion  of  profit  is  a  strong  circumstance  to  explain  a  contract 
in  itself  doubtful,  and  to  show,  as  the  legal  presumption  is,  that  a  pai-tuer- 
ship  existed  at  the  time  amongst  the  participants ;  yet,  where  the  nature  of 
the  contract  clearly  appears,  it  cannot  have  such  a  retrospect  as  to  alter  it, 
and  to  substitute  the  responsibility  of  several  for  that  of  an  individual  con- 
tractor. Therefore,  if  several  persons  agree  to  form  a  partnership,  and  that 
each  shall  contribute  a  certain  share  of  the  capital,  and  any  of  the  persons 
borrow  or  purchase  the  share,  which  is  by  him  afterwards  brought  into  the 
common  stock,  the  liability  for  payment  to  the  lender  or  vendor  is  not  joint, 
but  personal." 

i  Gow  on  P.  c.  4,  §  1,  p.  151-153,  3d  ed.  :  Saville  r.  Robertson,  4  T.  R. 
720  ;  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  348-358,  2d  ed.;  Id.  p.  365,  366  ;  Young 
V.  Hunter,  4  Taunt.  582  ;  Gouthwaite  v.  Duckworth,  12  East,  421 ;  {Duncan 
V.  Lewis,  1  Duvall,  183.} 

-  Gow  on  P.  c.  4.  §  1,  p.  151-153.  3d  ed.  ;  Young  v.  Hunter,  4  Taunt. 
582;  Greenslade  v.  Dower,  7  B.  &   C.   635;  Coll.  on  P.  B.  3,  c.  3,  §  1,  p. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  265 

,1 

wise,  however,  if  the  joint  adventure  were  agreed 
upon  before  the  purchase,  and  the  purchase  were  to  be 
made  for  all  the  persons  concerned  therein  in  the  name 
of  one.^ 

356-358,  2ded. ;  Id.  p.  365  ;  Coope  v.  Eyre,  1  H.  Bl.  37  ;  Gardiner  v.  Childs,  8 
C.  &  P.  345;  Gouthwaite  v.  Duckworth,  12  East,  421 ;  {Davis  v.  Evans,  39 
Vt.  182.} 

'  Gow  on  P.  c.  4,  §  1,  p.  151-153,  2d  ed. ;  Gouthwaite  r.  Duckworth, 
12  East,  421,  4-'4  ;  Waugh  v.  Carver,  2  IL  Bl.  235,  246  ;  Gardiner  v.  Childs, 
8  C.  &  P.  345  ;  Smiths.  Craven,  1  Cr.  &  J.  500  ;  Post  v.  Kimberly,  9  Johns. 
470;  Felichy  w.  Hamilton,  1  Wash.  C.  C.491;  Coll.  on  P.  B.  3,c.  3,  §  l,p.  349- 
357. — In  the  text  the  qualifying  word  ''ordinarily"  is  inserted  with  refer- 
ence to  a  suggestion  of  Mr.  Justice  Gibbs  in  Young  v.  Hunter,  4  Taunt.  582, 
583,  where  he  is  reported  to  have  said:  "  I  am  by  no  means  of  opinion,  that 
there  may  not  be  a  case,  where  two  houses  shall  be  interested  in  goods  from 
the  beginning  of  the  purchase,  yet  not  be  both  liable  to  the  vendor ;  as  if  the 
parties  agree  amongst  themselves,  that  one  house  shall  purchase  the  goods,  and 
let  the  other  into  an  interest  in  them,  that  other  being  unknown  to  the  ven- 
dor ;  in  such  a  case  the  vendor  could  not  recover  against  him,  although  such 
other  person  would  have  the  benefit  of  the  goods.  In  Gouthwaite  r.  Duck- 
worth, 12  East,  421,  425,  Lord  Ellenborough  said:  "  It  comes  to  the  question, 
whether,  contemporary  with  the  purchase  of  the  goods,  there  did  not  exist  a 
joint  interest  between  these  defendants.  The  goods  were  to  be  purchased,  as 
Duckworth  states  in  his  examination,  for  the  adventure  ;  that  was  the  agree- 
ment. Then  what  was  the  adventure  ?  Did  it  not  commence  with  the  pur- 
chase of  these  goods  for  the  purpose  agreed  upon,  in  the  loss  and  profits  of 
which  the  defendants  were  to  share  ?  The  case  of  Saville  v.  Robertson  does 
indeed  approach  very  near  to  this.  But  the  distinction  between  the  cases  is, 
that  there  each  party  brought  his  separate  parcel  of  goods,  Avhich  were  after- 
wards to  be  mixed  in  the  common  adventure  on  board  the  ship,  and  till  that 
admixture  the  partnership  in  the  goods  did  not  arise.  But  here  the  goods  in 
question  were  purchased,  in  pursuance  of  the  agreement  for  the  adventure, 
of  which  it  has  been  before  settled,  that  Duckworth  was  to  have  a  moiety. 
There  seems  also  to  have  been  some  contrivance  in  this  case  to  keep  out  of 
general  view  the  interest  Avhich  Duckworth  had  in  the  goods  ;  the  other  two 
defendants  were  sent  into  the  market  to  purchase  the  goods,  in  which  he  was 
to  have  a  moiety ;  and  though  they  were  not  authorized,  he  says,  to  pur- 
chase on  the  joint  account  of  the  three  ;  yet,  if  all  agree  to  share  in  goods 
to  be  purchased,  and  in  consequence  of  that  agreement  one  of  them  go  in- 
to the  market  and  make  the  purchase,  it  is  the  same,  for  this  purpose,  as  if 
all  the  names  had  been  announced  to  the  seller,  and  therefore  ail  are  lia- 
ble for  the  value  of  them."  Mr.  Justice  Bayley  added  :  "  In  Saville  v. 
Robertson,  after  the  purchase  of  the  goods  made  by  the  several  adventurers, 
there  was  still  a  further  act  to  be  done,  which  was  the  putting  them  on  board 


266  PARTNERSHIP.  [cHAP.  VIII. 

§  148.    The  same   rule  will   apply   to    cases,  where 
there  is  a  separate  loan  of  money  to  one   of  several 

the  ship,  in  which  they  had  a  common  concern,  for  the  joint  adventure  ;  and 
until  that  further  act  was  done,  the  goods  purchased  by  each  remained  the 
separate  property  of  each.  But  here,  as  soon  as  the  goods  were  purchased, 
the  interest  of  the  three  attached  in  them  at  the  same  instant  by  virtue  of 
the  previous  agreement."  See  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  356-358,  2d 
ed. ;  Gardiner  v.  Childs,  8  C.  &  P.  345,  and  Smith  v.  Craven,  1  Cr.  &  J. 
500,  where  the  subject  was  much  considered.  In  this  last  case,  A.,  B.,  and 
C,  not  being  general  partners,  entered  into  a  joint  speculation  for  the 
purchase  and  imjjortation  of  corn,  and  each  was  to  contribute  a  third.  A. 
paid  his  share ;  and  the  bankers  of  B.  advanced  money  to  B.  on  his  individ- 
ual credit,  which  was  applied  to  the  payment  of  bills  drawn  by  B.  in  the 
course  of  the  said  speculation.  It  was  held,  that  A.  was  not  liable  to  pay 
the  bankers  for  the  advance ;  since  it  was  manifest,  that  it  was  raised  on 
his  individual  credit.  On  this  occasion  Bayley,  J.,  said:  "If  I  supply  my 
agent  with  money,  which  he  misapplies,  and  raises  money  elsewhere,  can 
the  person,  from  whom  he  obtains  the  money,  sue  me  for  the  amount?  If 
this  had  been  a  claim  by  the  seller  of  the  corn,  no  doubt  he  would  have  been 
entitled  to  proceed  against  all  the  parties,  and  might  have  called  upon  them 
all  for  payment.  It  is  not  a  claim  by  the  seller,  but  by  the  person,  who,  as 
between  the  parties  themselves,  is  the  mere  hand,  by  which  the  money  is 
advanced.  Wharton  having  given  collateral  security,  the  plaintiffs,  as  his 
agents  and  on  his  credit,  not  knowing  any  thing  of  the  other  parties,  pay 
the  money,  and  pay  it  in  discharge  of  that,  which  is  the  individual  debt 
of  their  principal,  and  of  him  alone.  As  agents  they  had  no  notice  that  they 
made  the  payment,  except  on  the  individual  behalf  of  Wharton  ;  he  only 
was  trusted,  and  the  advances  Avere  made  on  his  credit  alone ;  the  plaintiffs 
were  not  deluded  by  the  prospect  of  a  partnership  security,  and  the  claim 
must  be  restricted  to  Wharton  alone.  See  what  a  situation  the  defendant 
Craven  would  be  placed  in,  were  it  otherwise.  He  was  justified  in  sup- 
posing, that  Wharton's  share  was  raised  out  of  his  own  funds.  He  finds, 
that  all  the  bills  are  honored,  when  they  become  due,  with  funds,  which  he 
would  naturally  conclude  were  really  the  funds  of  Wharton ;  and  to  my 
mind,  it  would  be  most  unjust,  if,  after  a  lapse  of  time.  Craven,  having 
settled  the  full  amount  of  what,  as  between  himself  and  Wharton,  he  was 
bound  to  pay,  a  third  person  were  allowed  to  come  forward  and  say,  '  I 
advanced  the  money  on  the  credit  of  Wharton  only,  but  I  find,  that  it  was 
applied  in  payment  of  your  liabilities,  and  therefore  I  look  to  you.'  A  party 
is  not  liable  as  a  partner,  except  he  give  to  his  partner  express  or  implied 
authority  to  pledge  his  credit  in  the  transaction,  out  of  which  the  claim 
arises.  Now,  what  authority  does  Craven  appear  to  have  given  to  Wharton 
to  borrow  this  money  from  the  plaintiffs  ?  It  is  not  sufficient  to  say,  that 
Craven  was  relieved  from  a  liability ;  for  your  payment  of  my  debt  does 
not  make  mo  your  debtor,  unless  the  payment  be  made  at  my  request.    The 


CHAP.  VIII.]        LIABILITIES    AND    EXEMPTIONS.  267 

joint  adventurers,  for  the  purpose  of  founding  a  part- 
nership or  joint  adventure ;  the  firm,  when  formed, 
will  not  be  liable  for  the  advance  ;  for  the  case  is  not 
distinguishable  from  one,  where  several  persons  are  to 
contribute  their  separate  proportions  of  money  towards 
a  common  fund  for  joint  purposes,  and  each  is  to 
borrow,  and  does  borrow,  his  own  share  upon  his  own 
separate  account  and  credit.^  In  short,  in  all  cases  of 
this  sort,  in  order  to  bind  the  firm,  the  intended  part- 
ner must  either  have  had  an  original  authority  to 
purchase  goods,  or  borrow  money  upon  the  joint 
account,  and  have  exercised  that  authority  by  a  pur- 
chase or  loan  on  their  account,  and  not  on  his  own 
exclusive  credit,  or  the  transaction  must  have  been 
subsequently  ratified  and  adopted  by  the  firm,  as  one 
for  which  they  were  originally  liable,  or  for  which  they 
now  elect  to  give  their  joint  security.^ 

§  149.  These  cases  seem  sufficiently  clear  upon  prin- 
ciple. But  others  may  arise,  where  the  application  of 
it  may  involve  more  complexity  of  circumstances,  and 
of  course  more  embarrassment  in  enunciating  it.  Thus, 
where  A.  and  B.,  stationers,  ordered  certain  paper- 
makers  to  supply  paper  to  C.  and  D.,  printers,  for  the 
purpose  of  printing  certain  specified  works ;  and  it 
turned  out  afterwards  in  proof,  that  C.  and  D.  were 
interested  as  partners  in  the  publication  of  those  works, 
the  question  arose,  whether  C.  and  D.  w^ere  liable  to 
the  paper-makers  for  the  paper  supplied.     The  solution 

partnership  was  not  liable,  unless  Wharton  had  an  authority  from  them  to  bor- 
row ;  and  no  such  authority,  express  or  implied,  exists  in  the  present  case." 

'  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  357-360,  2d  ed. ;  Saville  i'.  Robertson,  4 
T.  R.  720;  Greenslade  v.  Dower,  7  B.  &  C.  635;  Wilson  v.  Whitehead,  10 
M.  &  W.  503;   {Donnally  v.  Ryan,  41  Penn.  St.  306.} 

2  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  357,  359,  360,  2d  ed. ;  Saville  v.  Robert- 
son, 4  T.  R.  720;  Gouthwaite  v.  Duckworth,  12  East,  421  ;  Browne  v.  Gib- 
bins,  5  Bro.  P.  C.  by  Tomlins,  491 ;  Gow  on  P.  c.  4,  p.  150-153,  3d  ed. 


268  PARTNERSHIP.  [CHAP.  VIII. 

of  that  question  depended  upon  another,  and  that  was ; 
when  the  partnership  in  the  pubUcation  of  those  works 
commenced,  whether  before  or  after  the  paper  was 
ordered.  If  before,  then  all  the  partners  were  liable, 
and  C.  and  D.  among  them  ;  if  after,  then  A.  and  B. 
only  were  liable.  And  to  arrive  at  a  just  conclusion 
on  the  subject,  it  might  be  material  to  consider, 
whether  the  ordering  of  the  goods  Avas  the  exclusive 
act  of  A.  and  B.,  and  intended  to  be  upon  their  own 
exclusive  credit ;  or  was  to  be  on  that  of  the  joint 
concern,  with  the  approbation  of  all  who  were  to  par- 
ticipate in  the  publications.^  So,  where  A.,  B.,  and  C. 
verbally  agreed  that  they  should  bring  out  and  be 
jointly  interested  in  a  periodical  publication.  A.  was 
to  be  the  publisher,  and  to  make  and  receive  general 
payments  ;  B.  was  to  be  the  editor ;  and  C.  to  be  the 
printer ;  and  after  payment  of  all  expenses  they  were 
to  share  the  profits  of  the  work  equally  ;  C.  was  to 
furnish  the  paper  and  charge  it  to  the  account  at  cost 
prices  ;  and  no  profits  were  ever  made,  nor  any 
accounts  settled  ;  the  question  arose,  whether  a  third 
person,  who  furnished  the  paper  to  A.  for  the  purpose 
of  being  used  by  him  in  printing  the  periodical,  could 
maintain  an  action  therefor  against  A.,  B.,  and  C,  or 
was  limited  to  an  action  against  C.  only.  The  court 
held  that  A.,  B.,  and  C.  were  not  jointly  liable  therefor, 
but  C.  only.^ 

§  150.  So,  in  other  cases  of  goods  supplied,  or  work 
and  labor  done,  or  services  performed  for  persons  who 
are  about  engaging  in  a  joint  undertaking,  and  are 
taking  preliminary  steps  for  establishing  the  same,  it 
is  often  a  matter  of  no  small  nicety  to  ascertain  who 

»  Gardiner  v.  Cliilds,  8  C.  &  P.  345;  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  356, 
357,  2d  ed. 

2  Wilson  V.  Whitehead,  10  M.  &  W.  503. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  269 

of  the  parties  are  liable  therefor.^  In  contemplation 
of  law,  the  joint  liabilities  will  of  course  commence 
only  from  the  time  when  the  parties  have  agreed  to 
act  together  for  the  common  purpose,  and  that  precise 
time   is  sometimes  difficult   to   ascertain.^     There  is   a 

1  Coll.  on  P.  B.  3,  c.  3,  §  2,  p.  365,  2d  ed. ;  2  Bell,  Comm.  B.  7,  c.  3, 
p.  649-G52,  5th  ed.  ;  Young  v.  Hunter,  4  Taunt.  582 ;  Bourne  v.  Freeth,  9 
B.  &  C.  632 ;  Braithwaite  v.  Skofield,  9  B.  &  C.  401  ;  Howell  r.  Brodie,  6 
Bing.  N.  C.  44. 

■  2  [See  Atkins  v.  Hunt,  14  X.  H.  205,  206.  —  Gilchrist,  J.,  here  observed  : 
"  There  is  of  course  an  essential  difference  between  a  mere  proposition  to 
form  a  partnership,  audits  actual  constitution.  Persons  may  take  a  deep 
interest  in  the  objects  to  be  accomplished  by  the  company ;  may  make 
donations  to  aid  its  progress ;  or  may  sign  their  names  to  subscription 
papers  for  the  same  end,  without  being  liable  for  debts  which  other  persons 
may  contract  in  the  prosecution  of  the  same  purpose.  But  a  difficult  ques- 
tion often  arises,  as  to  where  the  proposition  to  make  the  contract  ends, 
and  the  contract  itself  begins.  In  Bourne  v.  Freeth,  9  B.  &  C.  632,  a 
prospectus  was  issued,  stating  the  conditions  upon  which  the  company  was 
formed ;  that  the  concern  was  to  be  divided  into  twenty  share?,  to  be  under 
the  management  of  a  committee,  and  ten  per  cent  of  the  subscriptions  to  be 
paid  in  by  a  certain  date.  It  was  held  that  this  prospectus  imported  only 
that  a  company  was  to  be  formed,  and  not  that  it  was  actually  formed,  and 
that  the  signature  to  the  prospectus  did  not  indicate  to  any  person  who 
should  read  it  that  the  signer  had  become  a  member  of  a  company  already 
formed.  So  in  a  case  where  all  the  acts  proved  and  relied  on  were  equally 
consistent  with  the  supposition  of  an  intention  on  the  part  of  the  defendant 
to  become  a  partner  in  a  trade  or  business  to  be  afterwards  carried  on,  pro- 
vided certain  things  were  done,  as  with  that  of  an  existing  partnership,  it 
was  held  that  he  was  not  a  partner.  Dickinson  v.  Valpy,  10  B.  &  C.  128, 
per  Parke,  J.  And  where  a  prospectus  for  a  company  was  issued,  to  be 
conducted  pursuant  to  the  terms  of  a  deed  to  be  drawn  up,  it  was  held  that 
an  application  for  shares,  and  payment  of  the  first  deposit,  did  not  constitute 
one  a  partner  who  had  not  otherwise  interfered  in  the  concern.  Fox  v. 
Clifton,  6  Bing.  776.  It  was  an  important  element  in  that  decision,  that 
the  deed  was  not  executed  by  the  defendant  who  Avas  sought  to  be  charged 
as  a  partner.  In  Howell  v.  Brodie,  6  Bing.  N.  C.  44,  the  defendant,  from 
1829  until  1833  advanced  various  sums,  with  a  view  to  a  partnership  in  a 
market  about  to  be  erected ;  knew  that  the  money  was  applied  towards  the 
erection,  and  was  consulted  in  every  stage.  In  October,  1833,  it  was  settled 
by  a  written  agreement  that  he  should  have  a  seventh  share  of  it;  but  it 
was  held  that  he  was  not  liable  as  a  partner  until  October,  1833,  although 
profits  had  been  made  but  not  accounted  for  to  him  before  that  time.  Lord 
C.  J.  Tindal  mentions  the  fact  that  no  account  of  profits  was  rendered  pre- 


270  PARTNERSHIP.  [CHAP.  VIII. 

gradual  progress  even  in  the  formation  of  schemes  of 
this  nature ;  and  preliminary  acts  are  sometimes  done, 
and  orders  given  by  several  persons,  before  they  have 
absolutely  fixed  upon  being  concerned  in  the  joint 
undertaking ;  and  yet  it  rests  in  negotiation,  whether 
they  shall,   or   shall    not,  become   partners.^      In  such 

vious  to  October,  1833,  as  being  in  favor  of  the  defendant."]  {Lind.  on 
P.  23-25 ;  Gabriel  v.  EviU,  9  M.  &  W.  297  ;  Be  Hall,  15  Ir.  Ch.  287. 
Osborne  v.  Jullion,  3  Drew.  596 ;  Davis  v.  Evans,  39  Vt.  182.  See  Jef- 
ferj's  V.  Smith,  3  Russ.  158.} 

1  Questions  of  this  sort  often  arise  in  cases  of  unincorporated  joint-stock 
companies,  in  which  every  member  is  liable  in  solido  for  the  debts  con- 
tracted on  account  of  the  partnership,  as  every  member  is  in  ordinary 
commercial  partnerships.  In  joint-stock  companies  many  preliminary  acts 
are  done  towards  the  establishment  of  the  company ;  and  it  often  becomes 
a  matter  of  nicety  to  ascertain,  when  a  person  is  actually  a  member  and 
partner,  or  not.  The  general  doctrine  is  well  summed  up  by  Mr.  Collyer 
(Coll.  on  P.  B.  5,  c.  1,  §  2,  p.  735-743).  He  says:  "In  joint-stock 
companies,  more  than  in  any  other  kind  of  partnership,  a  variety  of  acts 
are  done  before  the  partnership  is  actually  commenced.  Notices  are 
published,  prospectuses  are  distributed,  meetings  are  held,  officers  are 
chosen,  deposits  are  paid,  and  scrip  receipts  are  given  long  before  the 
business  Is  commenced,  or  the  deed  of  settlement  is  executed.  Indeed, 
many  of  these  acts  are  necessarily  done  before  even  the  full  complement 
of  the  intended  shareholders  is  made  up.  Hence,  although  the  prime 
movers  and  agitators  of  the  scheme  will  undoubtedly  be  liable  in  respect 
of  the  contracts,  into  which  they  enter  for  the  purpose  of  launching  the 
company  ;  yet  they  cannot  by  such  proceedings  bind  those  who  merely 
answer  their  invitation ;  those  for  instance,  who  name  themselves  sub- 
scribers, and  even  pay  deposits,  and  do  other  acts  showing  an  intention  of 
becoming  partners,  but  who,  by  neglecting  to  observe  the  rules,  or  to 
comply  with  the  demands  of  the  society,  never  become  entitled  to  share 
the  profits.  The  contract  of  partnership,  as  regards  these  passive  sub- 
scribers, is  executory  only,  and  may  be  abandoned,  if  the  terms  of  the 
partnership  are  not  reasonably  fulfilled  by  the  projectors.  Under  such 
circumstances,  they  never  have  become  actual  partners  in  the  concern, 
and,  consequently,  have  never  rendered  themselves  liable  for  its  debts. 
In  the  language  of  a  learned  judge :  '  If  there  is  a  contract  to  carry  on 
business  by  way  of  present  partnership  between  a  certain  definite  number 
of  persons,  and  the  terms  of  that  contract  are  unconditional,  or  complete, 
then  the  partners  give  to  each  other  an  implied  authority  to  bind  the  rest 
to  a  certain  extent.  But  if  a  person  agree  to  become  a  partner  at  a  future 
time  with  others,  provided  other  persons  agree  to  do  the  same,  and  advance 
stipulated  portions  of  capital,  or  provided  any  other  previous  conditions 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  271 

cases  the  question  resolves  itself  ultimately  rather  into 
a  question  of  fact  than  of  law ;  and  until  the  partnership 
is  definitely  fixed  and  agreed  on,  those  only  are  liable, 
who  have  acted  and  ordered  the  materials,  or  work,  or 
labor,  or  services.^ 

§  151.  Upon  the  like  ground,  where,  previous  to  the 
formation  of  a  company,  a  prospectus,  signed  by  the 
defendant,  was  issued,  indicating  that  it  was  in  contem- 
plation to  form  the  company  ;  and  it  appeared,  that 
the  defendant  solicited  others  to  become  share-holders, 
and  was  present  at  a  meeting  of  the  subscribers,  when 
it  was  proposed  to  take  certain  premises  to  carry  on 
the  business  of  the  concern,  which  were  afterwards 
taken  ;  but  he  never  paid  his  subscription ;  it  was  held, 
that  the  defendant  was  not  chargeable,  as  a  partner,  for 
goods  supplied  to  the  company ;  for  he  did  not  hold 
himself  out  to  the  world,  as  a  partner  in  a  company 
already  formed,  but  to  one,  which  was  to  be,  or  might 

are  performed,  he  gives  no  authority  at  all  to  any  other  individual,  until  all 
those  contracts  are  performed.  If  any  of  the  other  intended  partners  in 
the  mean  time  enter  into  contracts.  It  seems  to  me  to  be  clear,  that  he  is 
not  bound  by  them,  on  the  simple  ground  that  he  has  never  authorized 
them.' "  See  also  Fox  v.  Clifton,  6  Bing.  776  ;  s.  c.  9  Bing.  115  ;  Harvey  v. 
Kay,  9  B.  &  C.  356;  Bourne  v.  Freeth,  9  B.  &  C.  632,  638;  Dickinson  v. 
Valpy,  10  B.  &  C.  128,  142;  Doubleday  v.  Muskett,  7  Bing.  110,  118; 
Pitchford  V.  Davis,  5  M.  &  W.  2 ;  Howell  v.  Brodie,  6  Bing.  N.  C.  44. 

'  Coll.  on  P.  B.  3,  c.  3,  §  1,  p.  348-350,  2d  ed. ;  Id.  365,  366  ;  Id.  B.  5,  c. 
1,  §  2,  p.  735-743;  Howell  v.  Brodie,  6  Bing.  X.  C.  44;  Gouthwaite 
V.  Duckworth,  12  East,  421 ;  Young  v.  Hunter,  4  Taunt.  582 ;  2  Bell, 
Comm.  B.  7,  c.  3,  p.  649-652,  5th  ed.  [Thus  where  certain  per- 
sons, proposing  to  form  a  company,  applied  to  the  defendant  to  become 
president,  to  which  he  assented,  and  permitted  himself  to  be  publicly 
named  as  such ;  but  the  company  was  never  formed,  though  meetings  pre- 
liminary to  its  formation  were  had,  at  one  of  Avhich  the  defendant  presided ; 
it  was  held  that  the  jury  might,  if  they  thought  fit,  infer  that  the  defendant 
held  himself  out  as  contracting  for  work  to  be  done  in  respect  of  such  pre- 
liminary meetings,  though  the  order  for  such  work  was  not  directly  given 
by  the  defendant ;  and  that  the  defendant,  if  he  so  held  himself  out,  was 
liable  for  the  work  performed.  Lake  v.  Duke  of  Argyll,  6  Q.  B.  477 ; 
Wood  V.  Duke  of  Argyll,  6  Mann.  &  G.  928.] 


272  PARTNERSHIP.  [cHAP.  VIII. 

thereafter  be  formed.^  It  would  have  been  otherwise, 
if  he  had  held  himself  out  as  a  partner  in  a  company 
already  formed ;  ^  or  had  contributed  to  its  funds,  and 
had  been  present  at  a  meeting  of  the  company,  and  a 
party  to  a  resolution  to  purchase  the  goods.^     On  the 

1  Bourne  r.  Frecth,  9  B.  &  C.  G32 ;  Dickinson  i'.  Valpy,  10  B.  &  C. 
128.  See  Forrester  v.  Bell,  10  Ir.  Law,  ooo ;  Fox  v.  Clifton,  6 
Bing.  776;  {Lind.  on  P.  25-30.  See  Reynell  v.  Lewis,  15  M.  &  W. 
517  ;  Hutton  v.  Thompson,  3  H.  L.  Cas.  161  ;  Briglit  v.  Hutton,  lb. 
341,  368.}  In  Fox  v.  Clifton,  Lord  Chief  Justice  Tindal  said:  "Upon 
this  first  question,  therefore,  whether  a  partnership  was  actually  formed, 
we  think,  if  the  right  to  participate  in  the  profits  of  a  joint  concern  is 
to  be  taken,  as  undoubtedly  it  ought  to  be,  as  a  test  of  a  partnership, 
these  defendants  were  not  entitled  at  any  time  to  demand  a  share  of  profits, 
if  profits  had  been  made ;  inasmuch  as  they  had  never  fulfilled  the  condi- 
tions, upon  which  they  subscribed.  We  think  the  matter  proceeded  no  fur- 
ther, than  that  the  defendants  had  oflfered  to  become  partners  in  a  projected 
concern,  and  that  the  concern  proved  abortive  before  the  period,  at  which 
the  partnership  was  to  commence :  and,  therefore,  with  re^^pect  to  the 
agency  of  the  directors,  which  is  the  legal  consequence  of  a  partnership  com- 
pletely formed,  we  think  the  directors  proceeded  to  act  before  they  had  au- 
thority from  these  defendants  ;  for  they  began  to  act  in  the  name  of  the 
whole,  before  little  more  than  half  the  capital  was  subscribed  for,  or  half  the 
shares  were  allotted.  The  persons,  therefore,  who  contracted  with  the  di- 
rectors, must  rest  upon  the  security  of  the  directors,  who  made  such  con- 
tract, and  of  those  subscribers,  who  by  executing  the  deed  have  declared 
themselves  partners,  and  of  any,  who  have  by  their  subsequent  conduct  rec- 
ognized and  adopted  the  acts  and  contracts  of  the  directors.  But  they 
have  not  the  security  of  the  present  defendants,  who  are  not  proved  by  the 
evidence  to  stand  in  any  one  of  such  predicaments.  It  is  unnecessary  to 
advert  to  any  of  the  cases,  which  have  been  referred  to,  each  of  which  must 
I'est  upon  its  own  peculiar  circumstances ;  except  that  with  re.>;pect  to  Per- 
ring  V.  Hone,  decided  in  this  court,  we  think  it  right  to  observe,  that  the 
great  point,  whether  there  was  a  partnership  or  not,  does  not  appear  to  have 
been  made  the  prominent  subject  of  argument,  but  to  have  been  rather  as- 
sumed than  disputed ;  for  the  advertisement  or  prospectus  was  not  brought 
to  the  attention  of  the  court,  nor  is  there  any  argument  upon  the  terms  of 
it.  It  is  not  incompatible  with  that  determination,  that  the  court  might 
have  hold  the  proof  of  partnership  inconqjlete,  if  the  same  materials  had 
been  brought  before  them,  which  are  presented  to  us." 

2  Ibid. ;  Braithwaite  v.  Skofield,  9  B.  &  C.  401 ;  Fox  v.  Clifton,  6  Bing. 
776 ;  Howell  v.  Brodie,  6  Bing.  N.  C.  44. 

»  Ibid.;  {Tredwen  v.  Bourne,  6  M.  &  W.  461;  Peel  v.  Thomas,  15 
C.  B.  714.} 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  273 

other  hand,  if  a  party  supposes  himself  by  mistake  to 
liave  an  interest  in  a  company  ah'eady  formed,  and  he 
has  not ;  if  he  does  not  hold  himself  out  as  a  partner, 
and  no  credit  is  given  to  him,  the  contracts  of  the  com- 
pany will  not  bind  him,  although  he  should  afterwards, 
acting  under  the  mistake,  declare  himself  to  have  an 
interest  therein.^ 

§  152.  From  what  has  been  already  stated,  it  is  ap- 
parent, that  an  incoming  partner  (that  is,  a  new 
partner  coming  into  an  existing  firm)  will  not  be  liable 
in  respect  to  debts,  contracted  by  the  firm  previously 
to  his  entering  it.^  But  although  this  is  the  clearly 
established  doctrine,  yet  it  does  not  follow,  that  an 
incoming  partner  may  not  become  liable  for  such  debts, 
by  expressly  assuming  them  upon  a  proper  considera- 
tion, or  otherwise  dealing  with  the  creditor  in  such  a 
manner  as  to  create  an  implied  obligation  and  duty  to 
pay  the  same  in  common  with  the  old  firm.  The  pre- 
sumption of  law,  indeed,  is  against  any  such  liability ; 
but  the  presumption,  like  many  others,  may  be  re- 
moved by  due  and  satisfactory  proofs  of  the  contrary 
intention  and  agreement.^  Thus,  for  example,  if  the 
balance  due  from  the  old  firm  be  with  the  consent  of 
the  creditor,  and  all  of  the  new  firm  carried  to  the 
debit  of  the  new  firm,  the  latter  deriving  a  benefit 
therefrom,  as  a  credit  or  deposit,  it  is  very  clear,  that 

^  Vice  V.  Anson,  7  B.  «fe  C.  409.  [Explained  in  Owen  v.  Van 
Uster,  10  C.  B.  318,  1  Eng.  L.  &  Eq.  396.]  {Xewton  v.  Belcher, 
12,  Q.  B.  921.} 

*  Coll.  on  P.  B.  3,  c.  3,  §  2,  p.  361,  2d  ed. ;  Sbirreff  v.  WUks 
1  East,  48;  Williams  v.  Jones,  5  B.  &  C.  108;  Vere  v.  Ashby,  10  B 
&  C.  288;  [A}Tault  v.  Chamberlin,  26  Barb.  83];  {Lind.  on  P 
314-318.} 

'  Ibid. ;  Catt  v.  Howard,  3  Stark.  3;  Ex  paiie  Jackson,  1  Ves.  Jr.  131 
Kirwan  v.   Kirwan,  2  Cr.  &  M.  617 ;  Helsby  v.  Mears,  5  B.  &  C.  504 
[Beale  v.  Mouls,  10  Q.  B.  976] ;    {Rolfe  v.  Flower,  Law  Rep.  1  P.  C.  27 ; 
s.  c.  3  Moore  P.  C.  N.  s.  365 ;  Smead  v.  Lacey,  Disney,  239. } 

18 


274  PARTNERSHIP.  [cHAP.  VIII. 

the  new  firm  will  be  bound  thereby  and  therefor,  as 
their  own  debt.^  A  fortiori,  the  same  rule  will  apply, 
where  it  is  an  express  stipulation  of  the  partnership 
between  the  old  firm  and  the  incoming  partner,  that 
the  new  firm  shall  assume  all  the  outstanding  debts 
of  the  firm,  and  shall  pay  the  same,  and  the  creditor 
shall  assent  thereto  and  take  the  new  fixm,  as  his 
debtors.^ 

§  153.  Indeed,  it  may  be  generally  stated,  that,  in 
all  cases  of  this  nature,  the  primary  consideration  is, 
not  so  much  to  ascertain  between  what  parties  the  orig- 
inal contract  was  actually  made,  as  it  is  to  ascertain 
whether  there  has  subsequently  been,  with  the  consent 
of  all  the  parties,  any  change  or  extinguishment  of 
that  contract.  Where  it  is  established  by  satisfactory 
evidence,  that,  upon  the  accession  of  a  new  partner,  a 
new  promise  has  been  made  by  the  entire  new  firm,  in 
respect  of  the  old  debt,  with  the  consent  of  the  old 
partners,  as  well  as  of  the  creditor,  it  will  amount  to  a 
novation  of  the  debt,  as  it  is  called  in  the  Roman  law 
(novatio  dehiti),  and  the  new  partner  will  be  chargeable 
with  the  debt.  But  such  an  adoption  or  ratification  of 
the  new  promise  by  the  new  partner  must  be  clearly 
shown,  otherwise  it  will  not  be  obligatory  upon  him  ; 
and  it  cannot  be  inferred  from  the  mere  act  of  joinmg 
in  the  partnership,  without  other  circumstances  in  aid 
of  the  inference.^ 

§  154:.  Hitherto  we  have  been  principally  consider- 
ing cases,  where  either   an    exclusive  credit  has  been 

>  Coll.  on  P.  B.  3,  c.  3,  §  2,  p.  361-365,  2d  ed. ;  Ex  jmrte  Peele,  6  Yes. 
602. 

*  Ibid.;  {Ex  parte 'Wlnimove.,  3  Deac.  365.} 

3  Coll.  ou  P.  B.  3,  c.  3,  §  2,  p.  364,  365,  2d  ed. ;  Vere  v.  Ashby,  10  B. 

6  C.  288.     See  also  Lloyd  v.  Asbby,  2  B.  «&  Ad.   23 ;  Hoby  v.  Roebuck, 

7  Taunt.  157:  Ketchum  v.  Durkee,  HeflF,  538;  {Lind.  on  P.  317; 
Stemburg  v.  Callanan,  1-4  Iowa,  251.} 


CHAP.  YIII.]         LIABILITIES    AND    EXEMPTIONS.  275 

given  to  one  partner  in  the  partnership  business,  or 
where  the  transaction  could  not,  from  its  nature  and 
character,  or  its  period  of  commencement  or  origin,  be 
deemed  to  bind  the  partnership.  But  it  is  quite  pos- 
sible for  third  persons  to  enter  into  a  contract  with  one 
partner,  under  an  impression  that  the  particular  con- 
tract is  made  with  and  binding  on  the  firm,  when  in 
point  of  law  it  has  no  such  obligation.  (1.)  Thus,  in 
the  first  place  (as  we  have  seen),^  if  a  person  should 
lend  and  advance  money  to  a  firm  at  the  request  of 
one  partner,  and  take  his  separate  note  or  bill,  or  other 
security,  for  the  amount,  not  intending  thereby  to  give 
an  exclusive  credit  to  such  partner,  it  is  very  clear, 
that  he  cannot  sue  the  partnership  on  such  note  or  bill, 
or  other  security,  whatever  might  be  his  remedy  against 
the  fu'm  for  the  money  lent  and  advanced.^  (2.)  In 
the  next  place,  if  a  third  person  should  contract  with 
one  partner  in  a  matter  beyond,  or  unconnected  with 
the  partnership  business,  the  firm  will  not  be  liable  to 
him  upon  such  contract,  although  he  may  have  im- 
plicitly trusted  to  the  credit  of  the  firm,  and  not  to  the 
individual  partner  alone.^  (3.)  In  the  next  place,  a 
third  person  may,  upon  receiving  a  consideration,  assent 
to  such  private  arrangements  Qf  a  firm,  as  will  deprive 
him  in  point  of  law  of  any  remedy  against  the  firm, 
or  a  part  of  them,  although  he  did  not  so  intend.'*  (■!.) 
And  in  the  next  place  (as  we  have  seen),^  the  custom 
of  a  particular  trade  may  essentially  affect  the  liability 

1  Ante,  §  136,  137,  140,  142. 

2  Coll.  ou  P.  B.  3,  c.  2,  §  2,  p.  315-323,  2d  ed.;  Siffkin  v.  Walker,  2 
Camp.  308  ;  Emly  v.  Lye,  15  East,  7  ;  Denton  v.  Rodie,  3  Camp.  493  ;  [Watt 
V.  Kirby,  15  111.  200.] 

*  Coll.  on  P.B.  3,  c.  2,  §  2,  p.  31G,  324-326  ;  Ex  parte  Agace,  2  Cox,  312. 
4  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  316,  326-329,  2d  ed. ;  Bolton  i\  Puliei-,  1 
B.  &  P.  539. 
^  Ante,  §  141. 


276  PARTNERSHIP.  [cHAP.  VIII. 

of  the  firm  to  a  third  person  upon  a  contract,  made 
with  one  of  the  partners,  if  that  person  has  full  notice 
of  the  custom,  and  is  therefore  bound  by  it,  whatever 
might  have  been  his  own  private  interpretation  there- 
of, as  to  its  being  an  obligation  binding  on  the  firm.-^ 

§  155.  The  liability  of  the  firm  to  third  persons  may 
thus,  in  the  very  origin  or  progress  of  the  transactions 
of  one  partner,  or  other  person,  assuming  to  act  in  be- 
half of  the  firm,  not  only  never  arise,  or  it  may  be 
varied,  limited,  or  qualified  ;  but  even  when  the  liability 
has  clearly  attached,  and  become  absolute  and  binding, 
subsequent  transactions  between  such  third  persons  and 
one  of  the  partners  may  work  an  extinguishment  of 
such  liability,  either  Avholly  or  partially.^  Thus,  if  a 
partnership  were  originally  liable  to  a  creditor  for  a 
debt,  and  he  should  afterwards  accept  a  security  of  one 
partner,  at  all  events,  if  it  should  be  a  security  of  a 
higher  or  negotiable  nature,  for  the  whole  debt,  as  a 
satisfaction  thereof,  wholly  or  in  part,  it  will  operate 
as  an  extinguishment  of  the  debt  of  the  partnership.^ 

'  Coll.  on  P.  B.  3,  c.  2,  §  2,  p.  316,  329-331,  2d  ed. ;  Barton  v.  Hanson,  2 
Taunt.  49 ;  Hiard  v.  Bigg,  Manning's  Nisi  Prius,  Dig.  Index,  220 ;  Gow  on 
P.  c.  4,  §  l,p.  149,  150,  3d  ed. 

^  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  376-383  ;  Id.  p.  385-389,  2d  ed. ;  Gow  on  P. 
c.  3,  §1,  p.  129,  3d  ed.;  Newmarcli  v.  Clay,  14  East,  239;  2  Bell,  Comm. 
B.  7, c.  2,  p.  638,  639,5th  ed.;    ante,  §  146,  150.     {On  releases,  see  §  168.} 

3  Gow  on  P.  c.  4,  §  1,  p.  155-157,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  3,  §  3, 
p.  385-389,  2d  ed. ;  Keed  v.  White,  5  Esp.  122  ;  Evans  v.  Drumraond,  4  Esp. 
89,  92;  Newmarch  v.  Clay,  14  East,  239  ;  [Stephens  v.  Thompson,  28  Vt.  77]  ; 
Thompson  ?;.  Percival,  5  B.  &  Ad.  925.  —  It  is  laid  down  in  Gow  on  P.  c.4, 
§  1,  p.  155-157,  3d  ed.,  that  the  security  should  be  of  a  higher  nature  than  the 
original  debt,  in  order  to  extinguish  the  partnership  debt.  But  that  doctrine 
has  since  been  overturned.  The  very  question  was  before  the  court  in  Thomp- 
son V.  Percival,  5  B.  &  Ad.  925.  On  that  occasion  Lord  Denman,  in  deliver- 
ing the  opinion  of  the  court,  said :  "  It  appears  to  us,  that  the  facts  proved 
raised  a  question  for  the  jury,  whether  it  was  agreed  between  the  plaintiffs 
and  James,  that  the  former  should  accept  the  latter  as  their  sole  debtor,  and 
should  take  the  bill  of  exchange  accepted  by  him  alone,  by  way  of  satisfac- 
tion for  the  debt  due  from  both.     If  it  was  so  agreed,  we  think,  that  the 


CHAP.  Vril.]         LIABILITIES    AND    EXEMPTIONS.  277 

Upon  the  like   ground,  if  the   creditor   should  receive 
the  separate  security  of  each  partner,  for  his  own  share 

agreement  and  receipt  of  the  bill  -would  be  a  good  answer  on  the  part  of 
Charles  Pereival  to  this  demand,  by  way  of  accord  and  satisfaction.  It  is  not 
necessary  to  determine,  whether  the  assent  of  Charles  to  this  agreement  was 
necessary,  in  order  to  give  it  such  an  operation  ;  because  if  it  was,  there  is 
evidence  of  a  delegation  by  Charles  to  James  to  make  such  an  agreement ; 
for  James  had  the  partnership  effects  left  in  his  hands,  and  was  to  pay  all  the 
partnership  debts.  It  cannot  be  doubted,  but  that,  if  a  chattel  of  any  kind 
had  been,  by  the  agreement  of  the  plaintiffs,  and  both  the  defendants,  given 
and  accepted  in  satisfaction  of  the  debt,  it  would  have  been  a  good  discharge. 
It  is  not  required,  that  the  chattel  should  be  of  equal  value  ;  for  the  party  re- 
ceiving it  is  always  taken  to  be  the  best  judge  of  that  in  matters  of  uncertain 
value.  Andrew  v.  Boughey,  Dyer,  75,  a.  Nor  can  it  be  questioned,  but 
that  the  bill  of  exchange  of  third  persons,  given  and  accepted  in  satisfaction  of 
the  debt,  would  be  a  good  discharge.  But  it  is  contended,  that  the  accept- 
ance of  a  bill  of  exchange  by  one  of  two  debtors  cannot  be  a  good  satisfac- 
tion, because  the  creditor  gets  nothing  which  he  had  not  before.  The  written 
security,  however,  which  was  negotiable,  and  transferable,  is  of  itself  some- 
thing different  from  that  which  he  had  before  ;  and  many  cases  may  be  con- 
ceived, in  which  the  sole  liability  of  one  of  two  debtors  may  be  more  benefi- 
cial than  the  joint  liability  of  two,  either  In  respect  of  the  solvency  of  the 
parties,  or  the  convenience  of  the  remedy,  as  in  cases  of  bankruptcy  or  sui*- 
vlvorship,  or  In  various  other  ways;  and  whether  It  was  actually  more 
beneficial  in  each  particular  case,  cannot  be  made  the  subject  of  Inquiry. 
The  cases  of  Lodge  v.  Dicas,  3  B.  &  Aid.  611,  and  David  v.  Ellice,  5  B.  &  C. 
196,  are  said  to  be  against  this  view  of  the  law.  [Lodge  v.  Dicas,  may  now 
be  considered  as  overruled.  Lyth  v.  Ault,  7  Exch.  669,  11  Eng.  Law  &  Eq. 
580.  See  Wildes  v.  Fessenden,  4  Met.  12  ;  Harris  v.  Lindsay,  4  Wash.  C.  C. 
271.]  In  the  former,  however,  no  new  negotiable  security  was  given,  nor 
does  the  difference  between  the  joint  liability  of  two,  and  the  sejmrate  lia- 
bility of  one,  appear  to  have  been  brought  under  the  consideration  of  the 
court.  In  the  latter,  no  bill  of  exchange  was  given,  and  that  decision, 
on  consideration.  Is  not  altogether  satisfactory  to  us.  We  cannot  but 
think,  that  there  was  abundant  evidence  in  that  case  to  go  to  a  jury  (and 
upon  which  the  court  might  have  decided),  of  the  payment  of  the  old 
debt  by  IngHs,  Ellice  &  Co.  to  the  plaintiff,  and  a  new  loan  to  the  new  firm  ; 
which  might  have  been  as  well  effected  by  a  transfer  of  account  by  mutual 
consent,  as  by  actual  payment  of  money.  The  cases  of  Evans  v.  Drummond, 
4  Esp.  89,  and  Reed  v.  White,  5  Esp.  122,  are  authorities  the  other  way.  In 
the  former,  Lord  Kenyon  points  out  forcibly  the  altered  relation  of  the  par- 
ties by  the  substitution  of  the  bill  of  the  remaining  partner  for  tliat  of  the 
firm  ;  and  it  is  difficult  to  see  on  what  ground  he  decided  the  case,  unless  upon 
this,  viz.,  that  such  substitution  under  an  agreement  oi)erated  as  a  satisfaction, 
as  far  as  regarded  the  retiring  partners;  and  in  Heed  i\  AVhite,  Lord  Ellen- 


2 78  PARTNERSHIP.  [CHAP.  Till. 

of  the  debt,  in  satisfaction  thereof,  all  joint  liability  of 
the  partnership  for  the  debt  wonld  henceforth  be  gone/ 
The  doctrine  is  eqnallv  true  in  the  converse  case,  where 
a  partnership  is  a  creditor,  and  the  separate  and  distinct 
security  of  the  debtor  is  taken  to  each  partner  severally 
for  his  share  of  the  debt.- 

§  156.  This  question  most  generally  occurs  in  cases 
of  a  retiring  partner,  where  the  creditor,  knowing  of  his 
retirement,  subsequently  gives  credit  to  the  remaining 

borough  acted  lapon  that  authority,  and  so  directed  a  special  jury  of  merchants, 
who  entirely  agi-eed  with  him.  These  cases  were  afterwards  brought  to  the  no- 
tice of  Lord  Ellenborough,  who  expressed  his  approbation  of  them,  in  Bedford  v. 
Deakin,  2  Stark.  178.  That  case,  however  (which  was  also  before  the  court, 
in  2  B.  &  Aid.  210),  was  distinguished  from  them,  because  the  creditor  there 
expressly  reserved  the  liabiUty  of  the  original  debtors.  If,  therefore,  the 
plaintiffs  in  this  case  did  expressly  agree  to  take,  and  did  take  the  separate 
bill  of  exchange  of  James  in  satisfaction  of  the  joint  debt,  we  are  of  opinion 
that  his  doing  so  amounted  to  a  discharge  of  Charles,"  See  s.  p.  Earwan  v. 
Kirwan,  2  Cr.  &  M.  617 ;  Hai-t  v.  Alexander,  2  M.  &  W.  484  ;  Harris  v.  [Far- 
well,  15  Beav.  31,15  Eng.  L.  &  Eq.  70 ;  Benson  v.  Hadfield,  4  Hare,  32]  ; 
Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  385-398,  2d  ed.  {A  bond  given  by  one  partner 
for  a  partnership  debt  extinguishes  the  original  debt,  unless  it  be  shown  to 
have  been  intended  only  as  a  collateral  security.  See  cases  collected  in 
1  Sm.  Lead.  Cas.  571,  [459],  6th  Am.  ed.  So  judgment  against  one  part- 
ner merges  a*firm  debt.  1  Sm.  Lead.  Cas.  6th  Am.  ed.,  ubi  supra ;  Lind. 
on  P.  368-370;  Ex  parte  Higgins,  3  De  6.  &  J.  33.  Equity  will  some- 
times interfere  to  give  relief  against  the  partnership  after  a  bond  has  been 
given  by  one  of  the  partners.  See  Smith  v.  Black,  9  S.  &  R.  142,  McNaugh- 
ten  «.  Partridge,  11  Ohio,  223;  Xiday  v.  Harvey,  9  Gratt  454.  Taking 
the  securit}-  of  one  partner  for  a  firm  security  of  no  higher  nature  does  not  of 
itself  extinguish  the  latter  in  the  absence  of  some  express  or  implied  agree- 
ment. Byles  on  Bills,  369  :  Bottomley  r.  Nuttall,  5  C.  B.  x.  s.  122  ;  Waydell 
V.  Luer,  3  Denio,  410  ;  Hill  r.  Voorhies,  22  Penn.  St.  68  ;  Potter  r.  McCoy, 
26  Penn.  St  458  ;  1  Sm.  Lead.  Cas.  566.  [453],  6th  Am.  ed. ;  Lyth  v.  Ault, 
American  note,  7  Exch.  675.  Whether  this  would  be  the  case  in  those  States, 
such  as  Massachusetts  and  Vermont,  where  the  giving  of  a  note  is  prima  facie 
pavment  is  a  qucere  suggested  by  Professor  Parsons.  Parsons  on  P.  111.  See 
Stephen  v.  Thompson,  28  Yt.  7  7,  where  a  receipt  from  one  partner  "  to  bal- 
ance account  "  was  held  prima  facie  a  discharge  of  the  partnership. } 

1  Gow  on  P.  c.  3,  §  1.  p.  129,  130,  3d  ed. ;  (Garret  v.  Taylor,  1  Esp.  X.  P. 
117  ;  Kirkham  v.  Newstead,  1  Esp.  X.  P.  117  ;  Coll.  on  P.  B.  3,  c.  5,  §  1,  p. 
467,  2d  ed. ;  AVats.  on  P.  c.  8,  p.  420,  2d  ed. 

=  Ibid. 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  279 

partners,  or  to  the  new  firm,  and  enters  into  new  and 
separate  contracts  with  the  latter,  touching  his  debt,  or 
allows  his  property  to  remain  under  their  control  and 
management,  as,  for  example,  by  way  of  new  deposit, 
or  by  carrying  the  balance  to  the  debit  of  the  new  firm, 
or  by  deferring  payment  of  balances  upon  receiving 
additional  interest,  or  by  receiving  a  separate  security 
therefor,  or  upon  other  considerations.  In  such  cases 
the  general  conclusion  is,  that  exclusive  credit  is  in- 
tended to  be  given  to  the  new  firm ;  and  if  so,  then  the 
retiring  partner  is  discharged.^  But  the  mere  striking 
of  the  balance,  and  carrying  the  same  to  a  new  account, 
opened  with  the  new  firm,  will  not  alone  extinguish  the 
original  debt  against  the  old  firm,  unless  accompanied 
by  other  circumstances,  which  establish,  that  a  new  and 
exclusive  credit  is  given  to  the  new  firm." 

8  157.  In  cases  of  this  sort,  where  there  are  runnino^ 
accounts  between  the  firm  and  third  persons,  and  one 
of  the  partners  retires,  the  question,  as  to  the  appropri- 
ation of  payments,  subsequently  made  by  the  partners 
remaining  in  the  firm,  often  arises,  and  especially  in  re- 

'  Evans  v.  Drummond,  4  Esp.  89 ;  Reed  v.  White,  5  Esp.  122 ;  Oakley 
V.  Pasheller,  10  BHgb,  n.  s.  548  ;  s.  c.  4  CI.  &  Fin.  207  ;  Hart  v.  Alexander, 
2  M.  &  W.  484 ;  Thompson  v.  Percival,  5  B.  &  Ad.  925 ;  Devaynes  v. 
Noble,  1  Mer.  530 ;  [Farrar  v.  Deliinne,  1  C.  &  K.  580]  ;  2  BeU,  Comm.  B. 
7,  c.  2,  p.  638,  639,  5th  ed. ;  Gow  on  P.  c.  5,  §  2,  p.  244,  245,  3d  ed. ;  Coll. 
onP.  B.  3,  c.  3,  §  3,  p.  376-398,  2ded.  {See  Lind.  on  P.  353-367.}  The 
cases  of  David  v.  Ellice,  5  B.  &  C.  196,  and  Lodge  v.  Dicas,  3  B.  &  Aid. 
611,  are  the  other  way.  But  their  authority  seems  shaken,  if  not  entirely 
overturned,  in  the  more  recent  decisions,  and  especially  in  the  cases  of 
Thompson  v.  Percival,  5  B.  «fc  Ad.  925,  and  Hart  v.  Alexander,  2  M.  &  W. 
484 ;  [Harris  r.  Farwell,  15  Beav.  31,  15  Eng.  L.  &  Eq.  70 ;  Lyth  v.  Ault,  7 
Exch.  669,  11  Eng.  L.  &  Eq.  580.]  See  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  383- 
398,  2d  ed. ;  Id.  B.  3,  c.  3,  §  2,  p.  326,  327,  where  all  the  authorities  are 
collected  and  commented  on.  See  also  Gow  on  P.  c.  4,  §  1,  p.  155-159, 
3ded. 

^  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  391,  392,  2d  ed. ;  David  c.  Ellice,  5  B. 
&  C.  196;  Lodge  v.  Dicas,  3  B.  &  Aid.  611;  Hart  c.  Alexander,  2  M. 
&  W.  484. 


280  PARTNERSHIP.  [cHAP.  VIII. 

lation  to  banking  transactions.  As  to  this  the  doctrine 
has  been  generally  laid  do\yn,  that  where  divers  debts 
are  due  from  a  person,  and  he  pays  money  to  his  cred- 
itor, the  debtor  may,  if  he  pleases,  appropriate  the  pay- 
ment to  the  discharge  of  any  one  or  other  of  those 
debts.  If  he  does  not  appropriate  it,  the  creditor  may 
make  an  appropriation.  But  if  there  is  no  appropri- 
ation by  either  party,  and  there  is  an  account  current 
between  them  (as  is  the  case  between  banker  and  cus- 
tomer), the  law  makes  an  appropriation  according  to 
the  order  of  the  items  of  the  account,  the  iirst  item  on 
the  debit  side  of  the  account  being  discharged  or  re- 
duced by  the  first  item  on  the  credit  side.^  To  apply 
these  principles  to  cases  of  retiring  partners :  "Where 
there  is  a  cash  account  current  between  a  firm  and  a 
customer,  and  the  account  is  in  favor  of  the  latter,  a 
retiring  partner  will  be  liable  for  the  balance  of  this 
account  at  the  time  of  his  retirement.  But  if  the  ac- 
count be  continued,  the  balance,  for  w^hich  the  retiring 
partner  is  liable,  will  be  diminished  by  every  payment, 
which  is  made  by  the  new  firm,  supposing  such  pay- 
ment not  to  be  appropriated  to  the  discharge  of  any 
specific  item ;  because  in  such  case,  it  is  the  first  item 
on  the  debit  side  of  the  account,  which  is  discharged  or 
reduced  by  the  first  item  on  the  credit  side." 

1  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  376-383,  2d  ed. ;  Davavnes  v.  ISToble, 
Clayton's  Case,  1  Mer.  572.  See  Copland  v.  Toulrain,  1  West,  H.  L.  164; 
s.  c.  7  CI.  &  Fin.  349;  {Xewmarch  v.  Clay,  14  East,  239;  Brooke  v. 
Enderby,  2  Brod.  &  B.  70;  Smith  v.  Wigley,  3  Moore  &  Sc.  174;  Stern- 
dale  V.  Hankinson,  1  Sim.  393 ;  Bank  of  Scotland  v.  Christie,  8  CI.  &  Fin. 
214 ;  Allcott  V.  Strong,  9  Cush.  323 ;  Stanwood  v.  Owen,  14  Gray,  195 ; 
Logan  V.  Mason,  6  W.  &  S.  9.} 

2  Post,  §  253-256 ;  Ibid.  —  Mr.  Collyer  has  added  in  another  place 
(p.  321),  the  following  remarks  :  "To  render  an  appropriation  of  payment  by 
the  act  of  the  party  valid,  it  must  be  made  at  the  time  of  payment,  if  made 
by  the  payor,  and  within  a  reasonable  time  after  pa}TQent,  if  made  by  the 
payee.     Sir  William  Grant  was  inclined  to  hold,  according  to  the  principles 


CHAP.  VIII.]  LIABILITIES    AND    EXEMPTIONS.  281 

§  158.    It  frequently  happens,  that  upon  the  retire- 
ment of  one  partner,  the  remaining  partners  undertake 

of  the  civil  law,  that  the  appropriation,  even  if  made  by  the  payee,  must  be 
made  at  the  time  of  payment.     But  cases  might  be  stated,  vehere  such  a  rule, 
if  strictly  adhered  to,  would  be  productive  of  injustice  ;  and  it  is  manifestly 
at  variance  with  the  decisions  on  this  subject  in  the  courts  of  common  law. 
On  the  other  hand,  those  courts  have  been  inclined  to  favor  the  creditor  too 
much,  and  have  in  many  cases  '  extended   the   proposition  —  that  if  the 
debtor  does  not  apply  the  payment,  the  creditor  may  make  the  application 
to  what  debt  he  pleases  —  much  beyond  its   original  meaning,   so  as  in 
general  to  authorize  the  creditor  to  make  his  election  when  he  thinks  fit.' 
In  a  recent  case,  however,  the  court  of  King's  Bench  came  to  a  very  just 
decision  on  this  important  subject.     Thus,  in  Simson  v.  Ingham,  an  action 
on  a  bond  was  brought  by  Bruce  &  Co.,  bankers,  against  the  heirs  and 
devisees  of  Benjamin  Ingham.    The  bond  was  given  by  Ingham  and  another, 
bankers,  at  Huddersfield,   to  the  plaintiiJs,  their  London   correspondents, 
conditioned  for  remitting  money  to  provide  for  bills,  and  for  the  repayment 
of  such  sums  as  Bruce  &  Co.  might  advance  on  account  of  persons  consti- 
tuting the  Huddersfield  Bank.    The  damages  were  assessed  by  an  arbitrator 
at  £13,845,  subject  to  the  opinion  of  the  court,  upon  the  following  facts : 
The  house  of  Bruce  &  Co.  were  in  the  habit  of  sending  to  the  Hudders- 
field Bank  monthly  statements  of  their  accounts.    Benjamin  Ingham  died  in 
September,  1811.     The  last  statement  sent  previously  to  his  death  was  for 
the  month  of  August.     The  balance  of  that  account  was  greatly  in  favor  of 
Bruce  &  Co.     No  alteration  in  the  account  was  made  in  the  books  of  Bruce 
&  Co.   immediately  on  the  death  of  Benjamin  Ingham;    but,  during  the 
residue  of  that  month  and  a  part  of  October,  the  remittances  made  by  the 
Huddersfield  Bank,  and  the  payments  made  for  them  by  Bruce  &  Co.,  were 
entered  in  continuation   of  the  former   account.      Before,   however,   any 
account  was  transmitted  to  the  Huddersfield  Bank,  subsequent  to  that  for 
August,   Bruce    &   Co.,   in   consequence    of  a   communication   with   their 
solicitor,  opened  a  new  account,  and  in  that  inserted  all  the  remittances  and 
payments  made  subsequent  to  the  death  of  Benjamin  ;   and  in  November, 
they  transmitted  to  the  Huddersfield  Bank   statements  of  two   accounts. 
The  first  of  these  accounts  was  thus  entitled  :  —  '  Debtors,  Messrs.  B.  &  J. 
Ingham  &  Co.  (old  account),  in  account  with  Bruce  &  Co.,  creditors  ; '  and 
the  first  item  on  the  debit  side  was  the  balance  of  August.     The  second 
account  was  in  the  same  form,  but  entitled  '  new  account.'     This  account 
began  on  the  16th  September,  without  any  balance  brought  forward,  and 
contained  the  remittances  and  payments  made  during  that  month,  subsequent 
to  the  death  of  Benjamin,  and  also  those  made  in  the  month  of  October. 
From  this  time  the  old  and  new  accounts  were  kept  separate  in  the  books  of 
Bruce  &  Co.     The  Huddersfield  Bank  did  not  appear  to  have  ever  objected 
to  the  accounts  being  kept  separately  by  Bruce  &  Co.,  although  in  their  own 
books  they  only  kept  one  account.     The  arbitrator  was  of  opinion,  that. 


282  PARTNERSHIP.  [CHAP.  VIII. 

to  pay  the  debts  and  to  secure  the  credits  of  the  firm. 
This  is  a  mere  matter  of  private  arrangement  and 
agreement  between  the  partners ;  ^  and  can  in  no  re- 
spect be  admitte(i^  to  vary  the  rights  of  the  existing 
creditors  of  the  firm.^  But  in  all  cases  of  this  sort 
it  may  be  stated,  as  a  general  doctrine,  that  if  the 
arrangement  is  made  known  to  a  creditor,  and  he 
assents  to  it,  and  by  his  subsequent  act,  or  conduct,  or 
binding  contract,  he  agrees  to  consider  the  remaining 
partners  as  his  exclusive  debtors,  he  may  lose  all  right 
and  claim  against  the  retiring  partner,  especially  if  the 
retiring  partner  will  sustain  a  prejudice,  and  the  cred- 
itor will  receive  a  benefit  from  such  act,  conduct,  or 
contract.^  Some  illustrations  of  this  doctrine  have 
been  already  stated  in  the  cases  of  an  exclusive  credit 

under  these  circumstances,  the  balance  due  on  the  death  of  Benjamin  Ingham 
was  not  discharged  by  subsequent  payments  by  the  new  firm.  Accordingly, 
after  making  certain  allowances  for  dishonored  bills,  he  assessed  the  damages 
at  tlie  sum  above  aAvarded  ;  and  the  Court  of  King''s  Bench  held  the  award  to 
be  right.  In  the  preceding  case,  the  court  proceeded  on  the  principle,  that  the 
entries,  which  had  been  continued  in  the  creditor's  books  immediately  on  the 
death  of  Ingham,  not  having  been  communicated  to  the  debtors,  were  not 
conclusive  on  the  creditors,  and  consequently,  that  the  general  legal  appro- 
priation, of  which  such  entries  would  otherwise  have  been  evidence,  was 
incomplete.  It  is  clear  from  this,  as  also  from  the  express  opinions  of  the 
judges,  that  they  did  not  consider  it  necessary,  in  order  to  support  any 
alleged  appropriation  on  the  part  of  the  creditor,  that  he  should  prove  it  to 
have  been  made  at  the  time  of  payment.  On  the  other  hand,  if  payment  be 
made  to  the  creditor  of  any  sum  in  respect  of  an  account  current,  the  credi- 
tor making  no  appropriation  at  the  time  of  payment,  and  if,  after  such  pay- 
ment, the  debtor  and  creditor  continue  their  mutual  dealings,  or  do  any 
other  mutual  act  in  respect  of  the  same  account,  the  creditor  will  be  barred 
by  such  subsequent  transactions  from  establishing  an  appropriation  of  the 
payment." 

*  [And  if  the  new  firm  misapply  the  assets,  they  w^ill  be  liable  to  the  out- 
going partner  for  any  payments  by  him  of  the  old  debts.  Peyton  v.  Lewis, 
12  B.  Mon.  356.] 

2  Coll.  on  P.  B.  8,  c.  2,  §  2,  p.  327-329,  2d  ed.  ;  Id.  B.  3,  c.  3,  §  3,  p. 
383-400. 

3  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  383-398,  2d  ed. 


CHAr.  VIII,]         LIABILITIES    AND    EXEMPTIONS.  283 

given  to  the  new  firm.^  So,  if  the  creditor  should  give 
up  the  securities  of  the  old  firm,  and  take  those  of  the 
new  firm  in  lieu  thereof;  or  should  give  a  prolonged 
credit  to  the  new  firm  for  the  old  debt,  receiving  from 
the  latter,  in  consideration  thereof,  an  additional  inter- 
est, or  a  new  security ;  in  all  such  cases  the  retiring 
partner  would  be  held  discharged.^  But  the  mere  fact 
of  the  creditor's  taking  an  additional  security  from  the 
new  firm  without  surrendering  the  old,  or  of  his  re- 
ceiving interest  from  the  new^  firm,  without  varying 
from  that  due  on  the  old  debt ;  or  of  his  acquiescing  in 
delay,  without  contracting  upon  any  new  consideration 
to  prolong  the  credit,  will  not  absolve  the  retiring  part- 
ner from  his  original  responsibility.^ 

§  159.  In  this  connection,  it  seems  proper  to  inquire 
into  the  circumstances,  which  will  or  will  not  exonerate 

1  Ante,  §  152. 

*  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  383-398,  2d  ed. ;  Evans  v.  Drummond, 
4  Esp.  89  ;  Reed  v.  White,  5  Esp.  122 ;  Thompson  v.  Percival,  5  B.  &  Ad. 
92.5  ;  Oakley  t\  Pasheller,  lOBligh,  n.  s.  548  ;  s.  c.  4  CI.  &Fin.  207  ;  Goughv. 
Davies,  4  Price,  200 ;  Harris  v.  Lindsay,  4  Wash.  C.  C.  271 ;  Hart  v.  Alex- 
ander, 2  M.  &  W.  484.  [But  see  Yarnell  v.  Anderson,  14  Mo.  619]  ; 
{Winter  v.  Innes,  4  Myl.  &  C.  101;  Oakford  v.  Eur.  &  Am.  Steamship 
Co.,  1  Hemm.  &  M.  182.} 

3  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  383-398,  2d  ed. ;  Featherstone  v.  Hunt, 
1  B.  &  C.  113;  Bedford  v.  Deakin,  2  B.  &  Aid.  210;  Daniel  v.  Cross,  3 
Ves.  277 ;  Harris  v.  Lindsay,  4  Wash.  C.  C.  271 ;  Blew  v.  AVyatt,  5  C.  & 
P.  397;  Smith  v.  Rogers,  17  Johns.  340;  {Winter  v.  Innes,  4  Myl.  &  C. 
101.  But  in  Brown  v.  Gordon,  16  Beav.  302,  creditors  of  a  banking  firm 
were  held  to  have  accepted  surviving  partners  as  their  debtors  and  to 
have  discharged  the  estate  of  a  deceased  partner  by  a  delay  of  sixteen 
years.  See  Robinson  v.  Wilkinson,  3  Price,  538}  ;  [Harris  v.  Farwell,  15 
Beav.  31,  15  Eng.  L.  &  Eq.  70.  In  this  case  a  firm  consisted  of  three 
members.  One  of  them  died  in  1837,  and  a  new  partner  was  admitted.  A 
creditor  of  the  old  firm  received  interest  on  his  debt  from  the  new  firm 
until  1841,  when  they  became  bankrujit.  He  then  proved  his  claim  against 
the  new  firm,  swearing  they  were  indebted  to  ihim  for  money  received  to 
his  use.  The  separate  estate  of  the  deceased  partner  was  held  not  dis- 
charged thereby.]  All  these  cases  turn  upon  the  same  general  considera- 
tion ;  whether  there  has  been  a  new  and  exclusive  credit  given  to  the 
new  firm  inextinguishment  of  the  debt,  or  to  the  prejudice  of  the  firm. 


284  PARTNERSHIP.  [cHAP.  VIII. 

a  retiring  partner  from  future  liability  for  the  new 
debts  and  liabilities,  contracted  by  the  firm  with  third 
persons,  after  his  retirement.^  Of  course  the  retiring 
partner  is  not  by  his  retirement  exonerated  from  the 
prior  debts  and  liabilities  of  the  firra.^  In  the  first 
place,  then,  a  dormant  partner  is  not  liable  for  any 
debts  or  other  contracts  of  the  firm,  except  for  those 
which  are  contracted  during  the  period  that  he  remains 
a  dormant  partner.  Upon  his  retirement  his  liability 
ceases,  as  it  began,  de  jure,  only  with  his  accession  to 
the  firm.^  The  reason  is,  that  no  credit  is,  in  fact,  in 
any  such  case  given  to  the  dormant  partner.  His  lia- 
bility is  created  by  operation  of  law,  independent  of  his 
intention,  from  his  mere  participation  in  the  profits  of 
the  business  ;  and  therefore  it  ceases  by  operation  of 
law,  as  soon  as  such  participation  in  the  profit  ceases, 
whether  notice  of  his  retirement  be  given  or  not.'*  But 
this  doctrine  must  be  taken  with  its  appropriate  qualifi- 
cations ;  and  it  is  strictly  applicable  only,  where  the 
persons  dealing  with  the  firm  have  no  knowledge  what- 
soever, that  he  is  a  dormant  partner.  If  the  fact  of  his 
being  a  dormant  partner  be  unknown  to  all  the  credi- 
tors, no  notice  whatever  of  his  retirement  is  necessary ; 
if  it  be  known  to  a  few,  notice  to  those  few  is  neces- 

'  {SeeLind.  on  P.  327.} 

2  Gow  on  P.  c.  5,  §  2,  p.  240-251,  od  ed. ;  Coll.  on  P.  B.  3,  c.  3,  §  3, 
p.  369-372,  2d  ed.  [Thus,  if  goods  be  sent  to  a  firm  to  sell  on  commission, 
and  one  partner  retires  before  they  are  all  sold,  he  still  continues  liable  to 
the  consignor  for  the  receipts  of  sales  by  the  continuing  partner ;  since  the 
liability  attaches  on  receipt  of  the  goods  ;  Briggs  v.  Briggs,  15  N.  Y. 
471 ;  and  notice  to  the  consignor  of  the  fact  of  dissolution  would  not  ex- 
onerate the  retiring  partner.     Dean  v.  McFaul,  23  Mo.  76.] 

^  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  74,  2d  ed.  ;  Id.  B.  3,  c.  3,  §  3,  p.  370, 
371 ;  Gow  on  P.  c.  5,  §  2,  p.  251,  3d  ed. ;  3  Kent,  68. 

*  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  74,  2d  ed.:  Id.  B.  3,  c.  3,  §  3,  p.  370,  371  ; 
Gow  on  P.  0.  5,  §  2,  p.  251,  3d  ed.;  3  Kent,  68  ;  [Ayrault  v.  Chamberlin,  26 
Barb.  89];  {Warren  v.  Ball,  37  111.  76;  Chamberlain  v.  Dow,  10  Mich. 
319.{ 


CHAP.  YIII.]         LIABILITIES    AND    EXEMPTIONS.  285 

sary ;  because  they  may  fairly  be  presumed  to  have 
given  credit  to  the  firm  with  reference  to  their  knowl- 
edge of  the  dormant  partner.^ 

§  160..  In  the  next  place,  where  an  ostensible  or 
known  partner  retires  from  the  firm,  he  will  still 
remain  liable  for  all  the  debts  and  contracts  of  the 
firm,  as  to  all  persons,  who  have  previously  dealt  with 
the  firm,  and  have  no  notice  of  his  retirement.^  This 
is  a  just  result  of  the  principle,  that  where  one  of  two 
innocent  persons  must  suff"er  from  giving  a  credit,  he 
who  has  misled  the  confidence  of  the  other,  and  has 
been  the  cause  of  the  credit,  either  by  his  representa- 
tion, or  his  negligence,  or  his  fraud,  ought  to  suffer, 
instead  of  the  other.  And  where  a  person  notoriously 
holds  himself  out  as  a  partner,  all  the  world,  who  deal 
with  the  firm,  are  presumed  to  deal  with  it  upon  his 
credit,  as  well  as  upon  that  of  the  other  members  of 
the  firm- ;  and  his  omission  to  give  them  notice  of  his 
retirement  is  equivalent  to  a  continual  representation, 
that  he  still  remains  a  member  of  the  firm,  and  liable 
therefor.^     But,  as  to  persons  who  have  had  no  previ- 

*  Ibid. ;  Evans  v.  Drummond,  4  Esp.  89 ;  Newmarch  v.  Clay,  14  East, 
239;  Farrar  v.  Deflinne,  1  C.  &  K.  580;  {Carter  v.  Whalley,  1  B.  &  Ad. 
11;  Heath  v.  Sansom,  4  B.  &.  Ad.  172;  Grosvener  v.  Lloyd,  1  Met.  19; 
Edwards  v.  McFall,  5  La.  Ann.  167  ;  Cregler  v.  Durham,  9  Ind.  3  75;  Park 
V.  Wooten,  35  Ala.  242;  Lind.  on  P.  326;  1  Sm.  Lead.  Cas.  1186,  6th 
Am.  ed.  But  see  Goddard  v.  Pratt,  16  Pick.  412,428;  Deford  v.  Reynolds, 
36  Penn.  St.  325.  See  also  AVestern  Bank  of  Scotland  v.  Needell,  1  Fost. 
&  Fin.  461.} 

-  Coll.  on  P.  B.  3,  c.  3,  §  2,  p.  368-371,  2d  ed. ;  Gow  on  P.  c.  5,  §  2, 
p.  240-2.52,  3d  ed. ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  640,  641,  5th  ed. ;  [Clapp 
V.  Rogers,  2  Kern.  283;  Pope  v.  Risley,  23  Mo.  185.]  {On  Avhat  consti- 
tutes a  previous  dealing,  see  Lyon  i'.  Johnson,  28  Conn.  1 ;  Mechanics' 
Bank  v.  Livingston,  33  Barb.  458 ;  Bank  of  the  Commonwealth  v.  Mud- 
gett,  45  Barb.  663. } 

«  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  369-375,  2d  ed. ;  3  Kent,  66-68 ;  Gow  on 
P.  c.  0,  §  2,  p.  248-251,  3d  ed. ;  Id.  c.  4,  §  1,  p.  198;  Graham  v.  Hope, 
Peake,  154 ;  Gorham  v.  Thompson,  Peake,  42 ;  [AVardwell  r.  Ilaight,  2 
Barb.  549]  ;  Wats,  on  P.  c.  7,  p.  384,  385,  2d  ed. ;  [Davis  i\  Allen,  3 
Comst.  168]  ;  {Lind.  on  P.  329.} 


286  PARTNERSHIP.  [CHAP.  VITI. 

ous  dealings  with  the  firm,  and  no  knowledge  who  are 
or  have  been  partners  therein,  a  different  rnle  may 
prevail.  In  such  cases,  unless  the  ostensible  partner, 
who  has  retired,  suffers  his  name  still  to  appear,  as  one 
of  the  firm,  so  as  to  mislead  the  public  (as  by  its  being 
stated,  and  still  remaining  in  the  firm  name),  he  will 
not  be  liable  to  mere  strangers,  who  have  no  knowledge 
of  the  persons  who  compose  the  firm,  for  the  future 
debts  and  liabilities  of  the  firm,  notwithstanding  his 
omission  to  give  public  notice  of  his  retirement ;  for  it 
cannot  truly  be  said  in  such  cases,  that  any  credit  is 
given  to  the  retiring  partner  by  such  strangers.  Every 
new  creditor  or  new  customer  is-  bound  to  inquire,  who 
are  the  parties  really  interested  at  the  time  in  the  firm 
if  he  would  be  safe  in  his  credit  and  dealings  with 
them.  Unit squis que  debet  esse  gnarus  conditionis  ejus, 
cum  quo  contrahU}     A  fortiori,  if  public  notice  has 

1  2  Bell,  Coram.  B.  7,  p.  042,  5tli  ed. ;  Coll.  on  P.  B.-3,  c.  3,  §  2, 
p.  369-375,  2d  ed. ;  {Lind.  on  P.  329}  ;  Parkin  v.  Carmthers,  3  Esp.  248; 
3  Kent,  67,  68;  Williams  v.  Keats,  2  Stark.  290;  Brown  v.  Leonard,  2 
Chitty,  120 ;  Nevvsome  v.  Coles,  2  Camp.  617  ;  Dolman  v.  Orchard,  2  C.  & 
P.  104;  Tombeckbee  Bank  v.  Dumell,  5  Mason,  66;  Lansing  v.  Gaine,  2 
Johns.  300 ;  Ketcham  v.  Clark,  6  Johns.  144,  148  ;  Carter  v.  Whalley,  1  B.  & 
Ad.  11 ;  Le  Roy  v.  Johnson,  2  Pet.  186, 198,  200.  —  I  am  aware,  that  the  doc- 
trine is  sometimes  laid  down  more  broadly,  and  the  liability  is  made  to  at- 
tach, unless  the  partner  has  given  public  notice  of  the  dissolution.  Thus, 
in  Parkin  v.  Carmthers,  3  Esp.  248,  249,  Mr.  Justice  Le  Blanc  said : 
"The  principle  on  which  I  proceed  is  this:  —  That  there  was  a  partner- 
ship subsisting,  under  the  firm  of  Parkin,  Campbell,  &  Co.,  which  con- 
tinued after  the  retirement  of  John  Campbell.  The  rule  of  law  is  clear, 
that  where  there  is  a  partnership  of  any  number  of  persons,  if  any  change 
is  made  in  the  partnership,  and  no  notice  is  given,  any  person  dealing  with 
the  partnership,  either  before  or  after  such  change,  has  a  right  to  call 
upon  all  the  parties,  who  at  first  composed  the  firm."  In  summing  up  to 
the  jury,  his  I^ordship  laid  it  down  as  the  law  on  the  subject,  "  Tiiat  if  the 
plaintiff  advanced  the  money,  even  after  the  time  that  one  of  the  partners 
had  retired,  if  he  did  not  know  of  such  retirement,  he  had  a  right  to  sue 
all  who  before  constituted  the  partnership.  In  jioint  of  fact  in  this  case, 
John  Campbell  had  retired ;  but  still,  if  this  was  really  a  partnership,  and 
the  money  was  lent  to  the  persons  carrying  on  trade  under  that  firm,  all 
were  liable."     But  iu  this  case,  CampbelTs  name  was  in  tlie  name  of  thg 


CHAP.  YIII.]         LIABILITIES    AND    EXEMPTIONS.  287 

been  given  of  his  retirement,  the  retiring  partner  will 
not  be  liable  to  new  creditors    or    customers,  even    if 

firm.  See  also  Gow  on  P.  c.  5,  §  2,  p.  248,  249,  8d  ed. ;  Id.  p.  251- 
253;  2  Bell,  Comm.  B.  7,  e.  2,  p.  640-642,  oth  ed.  It  strikes  me, 
however,  that  the  text  contains  the  true  principle.  Where  a  partner- 
ship is  in  fact  dissolved  by  the  retirement  of  a  partner,  who  is  known,  but 
whose  name  is  not  in  the  firm,  it  does  not  seem  right  to  make  him  liable 
to  third  persons,  who  afterwards  trust  the  firm,  without  knowing  who 
compose  it  at  the  time,  or  of  the  jirevious  connection  of  the  retiring  partner. 
His  case  does  not,  under  such  circumstances,  seem  essentially  to  differ  from 
that  of  a  dormant  partner ;  for  such  third  persons  give  no  credit  to  him, 
and  he  receives  no  share  of  the  profits  derived  therefrom.  Mr.  Watson 
has  stated  the  true  princlpfe ;  that  "as  credit  is  given  to  the  whole  firm, 
justice  requires,  that  all  those,  who  belonged  to  it,  should  be  bound,  while 
it  is  supposed  to  exist."  But  to  whom  bound  ?  Certainly,  to  those  only, 
who  give  credit  to  the  firm,  believing,  that  the  original  partners,  whom  they 
knew,  still  continued  in  it.  The  case  of  Carter  v.  Whalley,  1  B.  &  Ad.  11, 
eeems  directly  in  2)oint,  in  support  of  the  doctrine  of  the  text.  There  the 
debt  was  contracted  after  the  retirement  of  one  partner,  and  no  public 
notice  had  been  given  thereof.  But  although  it  was  known  to  some  persons, 
that  he  was  a  partner,  yet  it  did  not  appear,  that  this  creditor  knew  it,  or 
believed  it,  or  gave  credit  to  the  partner.  Mr.  Justice  Parke,  on  that  occa- 
sion, said  :  "  The  plaintiff  was  bound  to  show  an  acceptance  by  four  parties  ; 
that  is,  that  Veysey,  who  did  accept  the  bill,  was  authorized  to  do  so 
by  the  three  others  named  in  the  declaration.  Saunders  had  given  no  direct 
authority ;  he  was  not  a  jiartner  at  the  time.  But  he  may  by  his  conduct 
have  represented  himself  as  one,  and  induced  the  plaintiff  to  give  him  credit 
as  such,  and  so  be  liable  to  the  plaintiff.  Such  would  have  been  the  case, 
if  he  had  done  business  with  the  plaintiff  before,  as  a  member  of  a  firm,  or 
had  so  publicly  appeared  as  a  partner,  as  to  satisfy  a  jury,  that  the  plaintiff 
must  have  believed  him  to  be  such ;  and  if  he  had  suffered  the  plaintlif  to 
continue  in  and  act  upon  that  belief,  by  omitting  to  give  notice  of  his 
having  ceased  to  be  a  partner,  after  he  really  had  ceased,  he  would  be 
responsible  for  the  consequences  of  his  original  representation,  uncontra- 
dicted by  a  subsequent  notice.  But  in  order  to  render  him  liable  on  this 
ground,  it  is  necessary,  that  he  should  have  been  known  as  a  member  of 
the  firm  to  the  plaintiffs,  either  by  direct  transactions,  or  public  notoriety. 
In  the  present  instance,  that  was  not  so.  The  name  of  the  company  gave 
no  information  as  to  the  parties  composing  it,  and  the  plaintiff  did  not  show 
that  Saunders  had  dealt  with  him  in  the  character  of  a  partner,  or  had  held 
himself  out  so  publicly  to  be  one,  as  that  the  plaintiff  must  have  known  it. 
Carter,  the  plaintiff,  lived  at  Birmingham  ;  it  should  have  appeared,  that 
there  had  been  such  a  dealing  at  that  place  by  Saunders,  or  that  his  con- 
nection with  the  company  had  been  so  generally  known  there,  tliat  a  knowl- 
edge of  it  by  Carter  must  have  been  pi'esumed.  There  having  been  no 
evidence  tor  the  jury  on  these  points,  I  think  the  nonsuit  was  right."  {In 
City  Bank  of  Brooklyn  v.  iNlcChesney,  20  N.  Y.  240,  a  retired  partner  was 


288  PARTNERSHIP.  [cHAP.  VIII. 

they  have  never  seen  such  notice,  or  had  any  knowledge 
or  hiformation  thereof ;  ^  smce  the  retirmg  partner  has 
done  all,  which  can  be  reasonably  required  to  give 
public  notice  of  his  withdrawal.^ 

§  161.  What  will  amount  to  due  and  sufficient  notice 
of  the  retirement  of  a  partner  is  a  question  of  fact,  often 
of  no  small  nicety  and  difficulty  ;  for  notice  needs  not 
be  express ;  but  it  may  be  constructive,  and  be  imphed 
from  circumstances.^     A  notice  in  one  of  the  public  and 

held  liable  to  a  subsequent  creditor  who  had  had  notice  of  the  prior  partner- 
ship, and  had  had  no  notice  of  the  dissolution,  though  he  had  had  no  prior 
dealings  with  the  firm.  There  had  been  in  this  case  no  notice  of  the  dissolu- 
tion published  in  the  newspapers.  See  Holdane  v.  Butterworth,  5  Bosw.  1 ; 
Pratt  V.  Page,  32  Yt.  13.} 

1  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  369-372,  2d  ed. ;  Parkin  v.  Carruthers,  3 
Esp.  248  ;  Gow  on  P.  c.  5,  §  2,  p.  248,  249,  3d  ed. ;  Newsome  v.  Coles,  2 
Camp.  617  ;  Godfrey  v.  Turnbull,  1  Esp.  371  ;  Wright  v.  Pulham,  2  Chitty, 
121  ;  s.  c.  sub  noni.  Wrightson  v.  Pullan,  1  Stark.  375. 

^  Ibid.  —  We  are  of  course  to  understand  this  doctrine  with  the  qualifi- 
cation, that  nothing  is  otherwise  done  by  the  retiring  partner  to  continue 
his  liability ;  such,  for  example,  as  by  authorizing  the  negotiable  securities  of 
the  old  firm  to  be  issued  and  negotiated  in  the  name  of  the  old  firm  ;  for  in 
such  case,  he  would  be  bound  by  such  indorsement.  Coll.  on  P.  B.  3,  c.  3, 
§  3,  p.  372-375,  2d  ed.  See  also  Abel  v.  Sutton,  3  Esp.  108;  Kilgour  v. 
Finlyson,  1  H.  Bl.  155;  Heath  v.  Sansom,  4  B.  &  Ad.  172.  {Burton  v. 
Issitt,  5  B.  &  Aid.  267  ;  Brown  v.  Leonard,  2  Chitty,  120;  Smith  i\  Winter, 
4  M.  &  W.  454  ;  Yale  v.  Eames,  1  Met.  486  ;  Waite  v.  Foster,  33  Me.  424  ; 
Richardson  r.  Moies,  31  Mo.  430.  See  §  322,  post. }  [The  rules  of  notice, 
proper  to  ordinary  trading  partnerships,  are  not  applicable  always  to 
companies  established  under  statutes.  For  instance  ;  A.,  B.,  C.,  and  D.,  who 
carried  on  business  under  the  firm  of  G.  P.  &  Co.,  in  1840  opened  an  ac- 
count with  a  banking  company,  established  under  the  7  Geo.  4,  c.  46,  and  1 
&  2  Yict.  c.  96.  In  1842,  A.  retired  from  the  firm;  but  this  fact  was  not 
advertised  in  the  London  Gazette ;  nor  was  any  change  made  in  the  pass- 
book. It  was  held,  that  the  mere  fact  of  D.,  one  of  the  firm  of  G.  P.  &  Co., 
being  also  a  director  of  the  banking  company  (but  having,  as  such,  no  share 
in  the  management  of  or  interference  in  the  banking  accounts)  did  not 
amount  to  notice  —  actual  or  constructive  —  to  the  bank  of  the  dissolution, 
so  as  to  discharge  A.  in  respect  of  a  debt  subsequently  accruing ;  a  banking 
company,  so  established,  differing  in  this  respect  from  an  ordinary  trading 
partnership.     Powles  v.  Page,  3  C.  B.  16.] 

2  {Lind.  on  P.  335  ;  Amidown  r.  Osgood,  24  Yt.  278  ;  Wait  v.  Brewster, 
31  Vt.  516  ;  American  Linen  Thread  Co.  v.  Wortendyke,  24  N.  Y.  550;  Wil- 
liamson V.  Fox,  38  Penn.  St.  214  ;  Clapp  i:  Upson,  12  Wis.  492.} 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  289 

regular  newspapers  of  the  city  or  county,  where  the 
partnership  business  was  carried  on,  is  the  usual  mode 
of  giving  the  information,  and  may,  in  ordinary  cases, 
be  quite  sufficient.  But  even  the  sufficiency  of  that 
notice  might  be  questioned  in  many  cases,  unless  it  is 
shown,  that  the  party  entitled  to  notice  is  in  the  habit 
of  reading  the  paper.^  Public  notice  given  in  some 
such  reasonable  way,  will  not  be  deemed  actual  and 
express  notice  ;  but  it  will  be  good  presumptive  evi- 
dence, and  sufficient  for  a  jury  to  conclude  all  persons, 
who  have  not  had  any  previous  dealings  with  the  firm. 
As  to  persons,  who  have  been  previously  in  the  habit  of 
dealing  with  the  firm,  it  is  requisite,  that  actual  notice 
should  be  brought  home  to  the  creditor,  or  at  least,  that 
the  credit  should  be  given  under  circumstances,  from 
which  actual  notice  may  be  inferred.^  If  the  facts  are 
all  found  or  ascertained,  the  reasonableness  of  notice 
may  be  a  question  of  law  for  the  Court.  But  gener- 
ally it  will  be  a  mixed  question  of  law  and  fact,  to  be 
submitted  to  a  jury  under  the  direction  of  the  Court, 
whether  notice  in  the  particular  case,  under  all  the  cir- 
cumstances, has  been  sufficient  to  justify  the  mference 
of  actual  or  constructive  knowledge  of  the  fact  of  the 
dissolution.  The  weight  of  authority  seems  now  to  be, 
that  notice  in  one  of  the  usual  advertising  gazettes  of 
the  place,  w^here  the  business  was  carried  on,  when 
published  in  a  fair  and  usual  manner,  is  of  itself  notice  ^ 
of  the  fact  to  all  persons,  who  have  not  been  previous 
dealers  with  the  partnership.^ 

1  [Pope  V.  Kisley,  23  Mo.  185.] 

2  [SeePager.  Brant  18111.  37.]  {Little  r.  Clarke,  3G  Penn.  St.  114  ;  Reilly 
V.  Smith,  16  La.  An.  31  ;  Scheiffelin  v.  Stevens,  1  Winst.  Law,  106.  Kirk- 
man  v.  Snodgrass,  3  Head.  370. } 

^  [But  see  Boyd  v.  McCann,  10  Md,  118.] 

*  3  Kent,  67,  68.  —  I  have  followed  almost  the  very  words  of  Mr.  Chancel- 
lor Kent,  in  his  excellent   Commentaries.     See  also,  on  the  same  subject, 

19 


290  PARTNERSHIP.  [cHAP.  VIII. 

§  162.  The  same  principles  apply  to  notice  in  the 
case  of  a  dissolution  of  the  partnership  by  the  acts  of 
the  parties,  as  ordinarily  apply  to  the  case  of  a  retiring 
partner.^  Until  due  notice  is  given  of  the  dissolution, 
each  partner  will  remain  liable  for  the  acts  and  contracts 
of  the  others  in  relation  to  the  partnership,  so  far  as 
they  respect  persons  who  have  previously  dealt  with  the 
firm,  or  have  known  the  names  of  the  partners,  or  have 
given  credit  thereto ;  although  not  to  mere  strangers, 
who  do  not  fall  under  the  like  predicament.^  But 
very  different  considerations  apply  in  the  case  of  a 
dissolution  of  the  partnership  by  mere  operation  of 
law,  as  by  the  death  of  a  partner  ;  for  in  such  a  case 
his  estate  is  not  bound  or  liable  for  any  subsequent 
debts  or  contracts,  entered  into  by  the  survivors  of  the 
firm.^  This  subject,  however,  Avill  more  properly  come 
under  review,  when  the  effects  of  a  dissolution  by  death 
come  under  consideration,  and  may  therefore  be  here 
dismissed  with  this  brief  notice. 

§  163.  There  is  another  case,  in  which  a  retiring 
partner  may,  notwithstanding  notice  of  his  withdrawal. 

Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  368-371,  2d  ed. ;  Gow  on  P.  c.  5,  §  2,  p.  248-251, 
3d  ed. ;  Wats,  on  P.  c.  7,  p.  384,  385,  2d  ed. ;  2  Bell,  Comm.  B.  7,  p.  640- 
643,  5th  ed. ;  { City  Bank  of  Brooklyn  v.  McChesney,  20  N.  Y.  240 ;  Hol- 
dane  v.  Butterworth,  5  Bosw.  1.} 

'  I  In  Troughton  v.  Hunter,  18  Beav.  470,  a  partnership  was  dissolved  by 
decree.  The  Gazette  would  not  insert  an  advertisement  of  the  dissolution 
unless  signed  by  both  partners.  One  partner  refused  to  sign.  He  was  or- 
dered by  the  court  to  do  so.} 

2  Ante,  §  128,  129,160;  Gow  on  P.c.  5,  §  2,  p.  248-251,  3d  ed. ;  Coll.  on  P. 
B.  3,c.  3,  §  3,  p.  368-375,  2d  ed. ;  Id.  B.  1,  c.  2,  §  3,  p.  75.  {A  partner- 
ship note  is  taken  out  of  the  operation  of  the  Statute  of  Limitations  by  a  part 
payment  thereof  made  by  one  partner  within  six  years,  although  the  firm  had 
then  been  dissolved  by  the  voluntary  act  of  the  partners,  if  the  holder  of  the  note 
had  previous  dealings  with  the  firm,  and  was  not  notified,  and  had  no  knowledge 
of  the  dissolution.  Sage  v.  Ensign,  2  All.  245  ;  Tappan».  Kimball,  10  Fost.  136.} 

2  3  Kent,  63 ;  Gow  on  P.  c.  5,  §  2,  p.  248,  note  ;  Id.  c,  5,  §  4,  p.  362,  3d 
ed. ;  Vulliamy  v.  Noble,  3  Mer,  593,  614  ;  3  Chitty  on  Comm.  and  Manuf.  c.  4, 
p,  250;   {§  336,  343.} 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  291 

be  responsible,  not  only  for  the  past  debts  of  the  old 
firm,  but  for  the  new  debts  contracted  by  the  new 
firm ;  and  that  is,  in  a  case  of  positive  or  constructive 
fraud.  This  may  take  place,  when,  upon  the  actual  in- 
solvency of  the  firm,  known  to  all  the  partners,  they 
permit  the  retiring  partner  to  withdraw  a  portion  of 
the  partnership  funds  out  of  the  reach  of  the  joint  cred- 
itors of  the  new  firm,  for  the  purpose  of  cheating  or 
defrauding  the  latter ;  for  in  such  a  case  the  fraud  viti- 
ates the  whole  transaction ;  and  the  retiring  partner 
will  be  held  liable  to  the  full  extent  of  all  the  funds 
so  fraudulently  withdrawn.^     But  the   mere  fact,  that 

1  Anderson  V.  Maltby,  2  Ves.  Jr.  244  ;  s.  c.  4  Bro.  Ch.  423  ;  Coll.  on  P. 
B.  3,  c.  3,  §  3,  p.  400-404,  2d  ed.  —  In  this  case  Lord  Loughborough  said  : 
"  The  case  resolves  itself  into  a  plain  question  whether  in  1784,  upon  the  first 
of  July,  the  defendant  was  bona  fide  a  creditor  of  the  other  two  then  about 
to  enter  into  a  new  partnership.  If  not,  if  all  this  transaction  is  to  be  void, 
under  the  color,  in  which  it  presents  itself  to  me,  it  is  an  imposition,  not  upon 
them  only,  because  they  were  consenting,  but  upon  the  creditors,  who  must 
deal  with  the  partnership  of  the  two  contrived  upon  a  certain  foresight  of 
bankruptcy  at  no  very  remote  period,  though  the  exact  time  was  not  certain, 
managed  between  persons  of  the  same  family,  by  which  the  creditors  of  the 
two  have  been  losers  exactly  to  the  amount  of  what  he  has  received.  The 
only  doubt  I  have  is,  whether  I  should  better  attain  the  justice  of  the  case,  by 
directing  an  account  of  all  transactions  between  Brough  and  George  Maltby 
from  the  commencement  of  their  partnership,  for  it  can  go  no  further  back, 
and  the  defendant,  with  an  inquiry  into  the  state  of  accounts  at  that  period 
between  them,  to  see,  whether  there  was  any  consideration  whatsoever,  upon 
which  he  could  be  a  creditor  ;  for  if  it  was  all  moonshine,  and  there  was  no 
property,  upon  which  any  account  could  be  made  out,  it  is  all  an  imposition 
to  create  a  false  credit  to  themselves,  and  to  give  him  the  name  of  a  creditor, 
when  in  fact  he  was  none,  and  a  mere  device  to  draw  the  money  of  other 
people  from  the  new  copartnership  into  his  pocket.  Whether  this  should  be  done 
in  the  Master's  office,  or  by  discussion  of  an  issue  at  law,  is  a  point,  upon  which 
1  doubt.  Consider  wliich  will  best  attain  justice.  As  to  the  last,  it  depends 
so  much  upon  writing  and  accounts,  that  it  will  hardly  come  within  the  pe- 
riod, in  which  a  trial  at  law  can  be  had  with  advantage.  I  do  not  think  it  a 
case,  in  which,  if  a  trial  can  be  had,  I  should  be  unwilling  to  have  the  assist- 
ance of  a  jury  to  decide  it.  But  I  would  not  let  it  go  to  an  action,  but  cer- 
tainly would  direct  an  issue ;  for  I  must  take  care  to  have  the  true  question 
tried  exactly  upon  the  merits  in  equity,  which  affect  the  real  justice  of  the 
case,  and  not  upon  the  points  not  relating  to  that,  which  would  be  made  in  an 


292  PARTNERSHIP.  [cHAP.  VIII. 

a  retiring  partner  knows  at  the  time  that  the  partner- 
ship is  insolvent,  will  not  of  itself  involve  him  in  any 
liabilities  for  the  new  firm,  or  vitiate  the  dissolution, 
if  it  was  without  any  intention  of  fraud,  and  entirely 
consistent  in  all  its  circumstances  with  good  faith. ^ 

§  164.  In  joint-stock  and  other  large  companies, 
which  are  not  incorporated,  but  are  a  simple,  although 
an  extensive  partnership,  their  liabilities  to  third  per- 
sons are  generally  governed  by  the  same  rules  and 
principles,  which  regulate  common  commercial  partner- 
ships.^ In  such  companies  the  fundamental  articles 
generally  divide  the  stock  into  shares,  and  make  them 
transferable  by  assignment  or  delivery  ;  and  the  whole 
business  is  conducted  by  a  select  board  of  trustees  or 
directors.  Without  undertaking  to  assert  in  what  cases 
such  companies  may  or  may  not  be  deemed  illegal,  and 
the  members  liable  to  be  treated  as  universally  respon- 
sible, upon  the  ground  of  usurping  and  attempting  to 
exercise  the  proper  functions  of  a  cor])oration.  which 
the  legislature  or  government  is  alone  competent  to 
establish ;  ^   it  may  well  deserve  inquiry,  how  far  any 

action.  I  agree  with  the  defendant,  that  if  any  of  these  payments  cannot  be 
recovered  at  law,  there  would  be  no  equity  for  it.  There  can  be  no  differ- 
ence between  a  court  of  law  and  of  equity  as  to  this.  The  true  question  for 
an  issue  would  be,  whether  the  partnership  was  indebted  to  the  retiring  part- 
ner on  account  of  his  share  in  the  partnership." 

1  Coll.  on  P.  B.  3,  c.  3,  §  3,  p.  400-402,  •2d  ed. :  Parker  v.  Ramsbottom,  3 
B.  &  C.  257;  Ex  parte  Peake,  1  Madd.  346  ;  Gow  on  P.  c.  5,  §  2,  p.  237, 
238,  3d  ed. 

2  3  Chitty  on  Comm.  and  Manuf.  c.  4,  p.  22G  ;  Coll.  on  P.  B.  5,  c.  1,  §  1, 
p.  721-734,  2d  ed.  ;  2  Bell,  Comm.  B.  7,  c.  2,  §  2,  p.  627-630.  [But  see 
Powles  V.  Page,  3  C.  B.  16.  In  Irvine  v.  Forbes,  11  Barb.  587,  it  was  held, 
that  the  members  of  a  telegraph  company,  formed  as  a  private  association, 
were  not  partners,  but  tenants  in  common,  and  that  the  majority  had  no  pow- 
er to  bind  the  minority,  except  by  agreement.]  {See  Parsons  on  P.  c.  18  ; 
Lind.  on  P.  3.} 

«  Coll.  on  P.  B.  5,  c.  2,  §  1,  p.  7:30-734,  2d  ed. ;  Joseph  v.  Pebrer,  3  B. 
&  C.  639  ;  Blundell  v.  AYinsor,  8  Sim.  601  ;  Walburn  r.  Ingilby,  1  Myl.  & 
K.  61,  76;  {Lind.  on  P.  145.} 


CHAP.  VIII.]         LIABILITIES    AND    EXEMPTIONS.  293 

stipulation  in  those  articles,  and  which  limit  the  respon- 
sibility of  the  members  to  the  mere  joint  funds,  or  to  a 
qualified  extent,  will  be  binding  upon  their  creditors, 
who  have  notice  of  such  a  stipulation,  and  contract 
their  debts  with  reference  thereto.  This  question, 
many  years  ago,  was  presented  to  the  Supreme  Court 
of  the  United  States ;  but  the  cause  went  off  without 
any  decision  upon  the  point.  It  seems  to  have  been 
thought,  that  such  a  stipulation  can  in  no  wise  operate 
as  a  limitation  of  the  general  liability  of  all  the  part- 
ners for  all  their  debts,  even  though  the  creditors  have 
full  notice  thereof.^  It  may,  however,  be  still  deemed 
an  open  question,  whether  creditors,  with  such  notice, 
can  proceed  against  the  members  upon  their  general 
responsibility,  as  partners,  where  they  have  expressly 
contracted  only  to  look  to  the  social  funds ;  and, 
whether,  if  they  have  notice  of  the  qualifying  stipula- 
tion, and  contract  with  reference  to  it,  it  may  not  be 
easy  to  assign  a  reason,  why  it  does  not  amount  to  an 

>  See  Blundell  v.  Winsor,  8  Sim.  601 ;  Walburn  v.  Ingllby,  1  ]\Iyl.  &  K. 
61,  76.  —  In  this  last  case  Lord  Broiigliam  said:  "The  clause  intimating 
that  each  subscriber  is  only  to  be  liable  to  the  extent  of  his  share,  is  not 
enough  to  make  the  association  illegal.  Such  a  regulation  is  wholly 
nugatory,  indeed,  as  between  the  company  and  strangers,  and  can  serve  no 
purpose  whatever,  unless  to  give  notice.  In  that  light  it  is  not  to  be  viewed 
as  criminal,  or  as  a  means  of  deception  ;  for  the  publicity  of  it  may  tend  to 
inform  such  as  deal  with  the  company,  and  a  proof  of  that  publicity  in  the 
neighborhood  of  parties  so  dealing  might  go  to  fix  them  with  notice.  For 
any  other  purpose,  for  the  purpose  of  restricting  the  liability  of  the  share- 
holders, it  would  plainly  be  of  no  avail ;  and  whosoever  became  a  subscriber 
upon  the  faith  of  the  restricting  clause,  or  of  the  limited  responsibility, 
which  that  holds  out,  would  have  himself  to  blame,  and  be  the  victim  of  his 
ignorance  of  the  known  law  of  the  land."  This  language  does  not  seem 
necessarily  addressed  to  a  case,  where  the  creditor  contracts  with  a  knowl- 
edge of  the  restrictive  clause  ;  but  may  be  satisfied  by  referring  it  to  cases, 
where  no  such  knowledge  exists.  The  Vice-Chancellor's  decision,  in  8  Sim. 
601,  is  susceptible  of  a  like  interpretation.  [See  Greenwood's  Case,  3 
De  G.  M.  &  G.  459,  23  Eng.  L.  &  Eq.  422 ;  Hallett  v.  Dowdall,  18  Q. 
B.  2,  9  Eng.  L.  &  Eq.  347  ;  Peel  v.  Thomas,  15  C.  B.  714;  29  Eng.  L.  & 
Eq.  276.] 


294  PARTNERSHIP.  [CHAP.  VIII. 

implied  agreement  to  be  bound  by  it,  as  much  as  if  it 
were  expressly  agreed  to.  There  is  certainly  nothing 
illegal  in  a  creditor's  agreeing" to  such  a  limited  respon- 
sibility, as  a  qualification  or  condition  of  his  contract; 
and  in  many  other  analogous  cases  contracts  of  this 
sort  are  deemed  perfectly  proper,  and  unexceptionable  ; 
as  for  example,  where  a  commission  merchant  agrees  to 
look  exclusively  to  the  goods  for  the  reimbursement  of 
his  advances ;  or  a  mortgagee  agrees  to  look  exclu- 
sively to  the  mortgaged  property  for  his  debt.  But 
a  qualified  agreement  of  this  nature  must  be  proved, 
and  is  never  presumed  without  some  reasonable  proof 
thereof. 

§  165.  The  law  of  Scotland  has  recognized  a  distinc- 
tion, grounded  on  these  considerations,  between  the 
nature,  character,  and  effect  of  such  joint  associations, 
and  those  of  mere  private  partnerships ;  confining  the 
responsibility  of  shareholders  in  such  companies  to  the 
extent  of  three  shares.  This  great  question  was  tried 
about  the  middle  of  the  last  century,  in  the  case  of  the 
Arran  Fishing  Company.  The  doctrine  established  in 
that  case  was  this :  That  there  is  a  clear  distinction  be- 
tween the  case  of  a  joint-stock  company,  and  that  of  a 
company  trading  without  relation  to  a  stock.  That  in 
the  former  case,  the  managers  are  liable  for  the  debt, 
which  they  contract,  while  each  partner  is  bound  to 
make  good  his  subscription.  That  there  is  no  ground 
of  further  responsibility  against  the  shareholders ;  nei- 
ther on  their  contract,  nor  on  any  ground  of  mandate, 
beyond  their  share  ;  the  very  meaning  of  confining  the 
trade  to  a  joint-stock  being,  that  each  shall  be  liable 
for  what  he  subscribes,  and  no  further.  That  in  ordi- 
nary partnerships,  there  is  a  universal  mandate  and  a 
joint  'pntpoi^itura^  by  which  each  partner  is  hisfitor  of 
the  whole  trade  to  an  unlimited  extent,  each  being  liable 


CHAP.  VIII.]        LIABILITIES    AND    EXEMPTIONS.  295 

in  solido  for  the  company  debts. ^  In  this  respect  the 
Scottish  law  seems  to  have  followed  the  general  doc- 
trine of  the  Roman  law,  that  in  all  partnerships  each 
of  the  partners  should  be  liable,  not  in  solido^  but  only 
for  his  own  share. ^  And  this  also  is  the  general  rule  of 
the  French  law  in  all  cases,  except  of  partnerships  for 
commercial  purposes,  where,  upon  grounds  of  public 
policy,  each  of  the  partners  is  held  liable  in  solido? 

§  166.  We  have  thus  far  considered  the  liabilities  and 
exemptions  of  partners  in  cases  arising  under  contracts ; 
and  the  inquiry  next  presented  is,  when,  and  under 
what  cu'cumstances,  partners  are  liable  for  torts,  done 
in  the  course  of  the  partnership  concerns,  or  by  any 
one  of  the  partners  under  color  thereof.  As  to  torts 
not  committed  in  the  course  of  the  partnership  busi- 
ness, it  is  very  clear,  that  the  partnership  is  not  liable 
therefor  in  its  social  character,  unless  indeed  they  are 
assented  to  or  adopted  as  the  act  of  the  partnership."* 
But  torts  may  arise  in  the  course  of  the  business  of  the 
partnership,  for  which  all  the  partners  will  be  liable, 
although  the  act  may  not  in  fact  have  been  assented  to 
by  all  the  partners.^  Thus,  for  example,  if  one  of  the 
partners  should  commit  a  fraud  in  the  course  of  the 
partnership  business,  all  the  partners  will  be  liable  there- 
for, although  they  have  not  all  concurred  in  the  act.^ 
So,  if  one  of  a  firm  of  commission  merchants  should  sell 

1  2  Bell,  Coram.  B.  7,  p.  627,  628,  5th  ed.        *  j)   45^  9,  n,  §  1,  o. 
3  Both,  de  Soc.  n.  96,  103,  104. 

*  {Taylor  v.  Jones,  42  N.  H.  25  ;  Cutter  v.  Fanning,  2  Iowa,  580.  See 
Stevens  v.  Faucet,  24  111.  483. } 

*  Coll.  on  F.  B.  3,  c.  1,  §  6,  p.  305-307,  2d  ed. ;  Gow  on  P.  e.  4,  §  1, 
p.  160,  161,  3d  ed.  ;  [Ex  parte  Eyre,  3  Mont.  D.  &  De  G.  12 ;  Stockton  v. 
Frey,  4  Gill,  406.] 

6  Coll.  onP.B.  3,  c.  1,  §  5,  p.  296,  297;  Id.  B.  3,  c.  1,  §  6,  p.  305-307, 
2d  ed. ;  Gow  on  P.  c.  4,  §  1,  p.  160,  161,  3d  ed.  See  Rapp  v.  Latham,  2  B. 
&  Aid.  795 ;  Stone  v.  Marsh,  6  B.  &  C.  551 5  Kilby  v.  Wilson,  Ry.  &  Moo. 
178;   {§108,  131,  168,  368.} 


296  PARTNERSHIP.  [CHAP.  Till. 

goods,  consigned  to  the  partnership,  fraudulently,  or  in 
violation  of  instructions,  all  the  partners  would  be  lia- 
ble for  the  conversion  in  an  action  of  trover.^  So,  if  one 
of  a  firm,  who  are  common  carriers,  should  unlawfully 
convert  the  goods  intrusted  to  the  firm  for  carriage,  or 
should  negligently  lose  or  injure  them,  all  the  partners 
would  or  might  be  held  liable  in  tort  therefor.^  The 
same  doctrine  would  apply  to  a  conversion  or  loss  by 
the  negligence  or  fraud  of  an  agent  of  the  firm.^  So, 
if  partners  own  a  ship,  and  by  the  negligence  of  the 
master,  goods,  shipped  on  board  on  freight,  are  neg- 
ligently injured  or  lost ;  or  another  ship  is  by  such 
negligence  injured  by  a  collision  with  her,  the  partners 
will  be  liable  for  the  loss.^  For  in  all  such  cases  the 
maxim  applies  :  Qui  facit  per  al'ium,  facit per  se  ;  and 
the  master  in  such  a  case  acts  not  only  personally,  but 
as  the  agent  or  prcepositus  of  the  entire  firm.^  The 
doctrine  has  been  carried  further ;  and  the  partnership 
has  been  held  liable  for  a  libel,  which  was  published 
and  sold  by  one  partner  in  the  course  of  the  business  of 
the  firm,  as,  for  example,  by  a  printer  or  bookseller, 
one  of  the  firm  in  that  business.^     The  same  rule  might 

^  Coll.  on  P.  B.  3,  c.  1,  §  6,  p.  305,  806,  2d  ed. ;  Nicoll  v.  Glennie,  1 
M.  &  S.  588;  {§  108,  168,  note;  Castle  v.  BuUard,  23  How.  172.  See 
Stevens  v.  Faucet,  24  HI.  483.} 

2  Gow  on  P.  c.  4,  §  1,  p.  160,  161,  3d  ed.  ;  Coll.  on  P.  B.  3,  c.  1,  §  1, 
p.  305,  306.  2ded. ;  Moreton  v.  Hardern,  4  B.  &  C.  223. 

3  Coll.  on  P.  B.  3,  c.  1,  §  5,  p.  296,  297,  2d  ed. ;  Id.  B.  3,  c.  1,  §  6, 
p.  305,  306  ;  Id.  B.  3,  c.  6,  §  5,  p.  505 ;  Id.  §  7,  p.  527  ;  {Linton  v.  Hurley, 
14  Gray,  191 ;  McKnight  v.  Ratcliff,  44  Penn.  St.  156.} 

"  Gow  on  P.  c.  4,  §  1,  p.  160,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  1,  §  6,  p.  305- 
307,  2d  ed. ;  Mitchell  v.  Tarbutt,  5  T.  R.  649 ;  Morley  v.  Gaisford,  2  H. 
Bl.  442 ;  Moreton  v.  Hardern,  4  B.  &  C.  223. 

»  Gow  on  P.  c.  4,  §  1,  p.  160,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  1,  §  6,  p.  305,  3d 
ed. ;  [Uoyd  i:  Bellis,  37  Eng.  L.  &  Eq.  545]  ;  Wats,  on  P.  c.  4,  p.  235,  2d  ed. 

«  Wats,  on  P.  c.  4,  p.  241,  2d  ed. ;  Rex  ?;.  Almon,  5  Burr.  2686  ;  Coll.  on 
P.  B.  3,  c.  1,  §  6,  p.  306,  2d  ed. ;  Gow  on  P.  c.  4,  §  1,  p.  161,  3d  ed. ;  Rex 
0.  Pearce,  Peake,  75  ;  Rex  v.  Topham,  4  T.  R.  1 26  ;  Rex  v.  Marsh,  2  B.  &  C. 
717,  723;  Attorney  General  v.  Stannyforth,  Bunb.  97. 


CHAP.  VITI.]         LIABILITIES    AND    EXEMPTIONS.  297 

apply  to  cases  of  written  slander,  as  by  declaring  a  rival 
merchant  a  bankrupt,  or  a  cheat,  if  written  in  the  name, 
and  as  the  act  of  the  firm.  So,  if  breaches  of  the  rev- 
enue laws  by  fraudulent  importations,  or  smuggling,  or 
entries  at  the  custom-house  are  committed  by  one  of 
the  firm  in  the  course  of  the  business  thereof,  all  the 
firm  would  be  liable  penally,  as  well  as  civillv,  there- 
for.i 

§  167.  But,  in  all  cases  of  this  sort,  although  the 
partners  are  jointly  liable  as  wrongdoers,  it  by  no 
means  follows,  that  they  must  all  be  sued.  On  the 
contrary,  as  the  law  treats  all  torts  as  several,  as  well 
as  joint,  the  party  injured  may,  at  his  election,  either 
sue  all  the  partners,  or  any  one  or  more  of  them  for 
the  tort ;  and  it  will  constitute  no  objection,  that  his 
partners  were  also  concerned  in  it.~  This  is  a  rule  by 
no  means  peculiar  to  partnerships  ;  but  it  extends  to 
all  cases  of  joint  torts  and  trespasses  at  the  common 
law,  whether  positive  or  constructive. 

§  168.  From  what  has  been  already  suggested,  it  is 
obvious,  that  a  tort  committed  by  one  partner,  or  by 
any  other  agent  of  the  partnership,  will  not  bind  the 
partnership,  unless  it  be  either  authorized  or  adopted 
by  the  firm,  or  be  within  the  proper  scope  and  business 
of  the  partnership.  And,  as  in  either  way,  partners 
may  thus  all  be  afiected  by  the  tort  of  one  partner,  so 
also  a  discharge  or  release  of  one,  on  account  of  the 
tort,  will  amount  to  a  discharge  or  release  of  all  the 
other  partners.  This,  again,  is  the  result  of  a  general 
rule  of  the  common  law,  applicable  to  all  cases  of  joint 

'  Coll.  on  P.  B.  3,  c.  1,  §  6,  p.  306-308,  2d  ed. ;  Gow  on  P.  c.  4,  §  1, 
p.  161,  3d  ed. ;  Attorney  General  v.  Burges,  Bunb.  223. 

2  Coll.  on  P.  B.  3,  c.  1,  §  6,  p.  306,  307,  2d  ed. ;  Id.  B.  3,  c.  6,  §  3,  p.  505  ; 
Id.  p.  527  ;  Gow  on  P.  c.  4,  §  1,  p.  160,  161,  3d  ed.  ;  Edmonson  v.  Davis,  4 
Esp.  14 ;  Attorney  General  v.  Burges,  Bunb.  223  ;  Wats,  on  P.  c.  4,  p.  235, 
2d  ed. ;  {White  v.  Smith,  12  Rich.  Law,  595.} 


298  PARTNERSHIP.  [CHAP.  VIII. 

torts    and   trespasses ;    and  has  been    recognized   from 
the  earliest  times.^ 

§  168  a.  In  respect  to  what  acts  of  one  partner  the 
others  will  and  ought  to  be  held  to  have  notice  of,  so  as 
to  bind  them  all  by  implied  consent  or  acquiescence,  it 
may  be  laid  down  as  a  general  rule,  for  the  protection 
of  those  who  deal  with  partners,  that  all  of  the  part- 
ners have  such  knowledge  and  notice  of  the  acts  of 
any  of  their  partners  relative  to  their  business,  as  in 
discharge  of  their  plain  duty  they  might  or  ought  to 
have  obtained." 

1  Co.  Litt.  232,  a :  Bac.  Abr.  Itdease  (G)  ;  Com.  Dig,  Release,  B.  4  ;  Id. 
Pleader,  S  M.  12  ;  Kiffin  v.  Willis,  4  Mod.  379.  {A  release  to  one  partner  is 
a  release  to  all,  whether  the  claim  released  arise  ex  contractu  or  ex  delicto. 
Cocks  V.  Nash,  9  Bing.  341  ;  Clieetham  v.  Ward,  1  B.  &  P.  630.  Secus  with 
a  covenant  not  to  sue.  Lind.  on  P.  351  ;  Couch  i\  Mills,  21  Wend.  424.'  If 
it  clearly  apjjears  from  the  terms  of  the  release  that  it  is  intended  to  enure 
only  to  the  benefit  of  the  releasee  it  will  not  discharge  the  other  partners. 
Solly  V.  Forbes,  2  Brod.  &  B.  38 ;  Price  v.  Barker,  4  E.  &  B.  760.  Hartley 
V.  Manton,  5  Q.  B.  247  ;  Roberts  v.  Strang,  38  Ala.  566.  See  also  Wig- 
gin  V.  Tudor,  23  Pick.  434,  444;  McAllester  v.  Sprague.  34  Me.  296.} 
[The  distinction  between  the  liability  of  the  firm,  and  of  an  individual 
partner  for  a  tortious  act,  committed  by  one  partner  on  pi-operty  in  the 
custody  of  the  firm,  is  illustrated  by  a  recent  English  decision.  Thus;  a 
customer  deposited  a  box  containing  various  securities  with  his  bankers  for 
safe  custody,  and  afterwards  granted  a  loan  of  a  portion  of  such  securities  to 
one  of  the  other  partners  in  the  banking-house,  for  his  own  jirivate  purposes, 
upon  his  depositing  in  the  box  certain  railway  shares,  to  secure  the  replacing 
of  the  securities.  This  partner  afterwards  for  his  own  purposes,  and  with- 
out the  knowledge  of  the  customer,  subtracted  the  railway  shares,  and  sub- 
stituted others  of  a  less  value.  It  was  held,  that,  as  the  proceeds  of  the 
railway  shares  were  not  applied  to  the  use  of  the  partnership,  the  banking 
firm  were  not  answerable  for  this  tortious  act  of  their  partner  for  his  own 
benefit,  nor  for  any  loss  occasioned  by  this  subtraction  of  the  shares,  on  the 
ground  of  negligence.  Ex  parte  Eyre,  3  Mont.  D.  &  De  G.  12.  See 
another  instance  in  Coomer  v.  Bromley,  5  De  G.  &  Sm.  532,  12  Eng.  L.  & 
Eq.  307,  where  Blair  v.  Bromley,  2  Ph.  354,  is  commented  upon,  and  distin- 
guished.]    {See  Bishop  v.  Countess  of  Jersey,  2  Drew.  143 ;  §  108,  note.} 

*  Sadler  v.  Lee,  6  Beav.  324. 


CHAP.  IX.]        RIGHTS  AND  DUTIES  OF  PARTNERS.  299 


CHAPTER   IX. 

RIGHTS,    DDTIES,    AND    OBLIGATIONS    OF    PARTNERS    BETWEEN 

THEMSELVES. 

{  §  169.  Partners  bound  to  exercise  good  faith,  diligence,  and  discretion. 

1 70.  Roman  law. 

171.  French  law. 

172.  Opinion  of  Cicero. 

173.  Duty  of  conforming  to  the  terms  of  the  partnership. 

174.  Partner  cannot  stipulate  for  his  private  advantage. 

1  75.  Nor  sell  or  buy  in  the  partnership)  business  for  his  own  advantage. 

176.  French  and  Roman  law. 

177,  178.  Carrying  on  a  business  adverse  to  the  partnership. 

179.  Case  of  newspapers. 

180.  Conflict  of  duties  where  one  is  executor  of  his  deceased  partner. 

181.  Duty  to  account  and  right  to  manage. 

182.  Extra  compensation  not  allowed;  allowance  of  interest  on  capital. 

183.  Reasonable  discretion  required. 

184.  Pothier  on  the  duties  and  rights  of  partners. 

185.  Partners  allowed  for  necessary  expenses,  but  not  for  extra  services. 

186.  Opinion  of  Voet. } 

§  169.  We  come,  in  the  next  place,  to  the  considera- 
tion of  the  rights,  duties,  and  obHgations  of  partners 
between  themselves.  And  here  it  may  be  stated,  that 
as  the  contract  itself  has  its  solid  foundation  in  the 
mutual  respect,  confidence,  and  belief  in  the  entire 
integrity  of  each  partner,  and  his  sincere  devotion  to 
the  business  and  true  interests  of  the  partnership ; 
good  faith,  reasonable  skill,  and  diligence,  and  the 
exercise  of  sound  judgment  and  discretion,  are  natu- 
rally, if  not  necessarily,  implied  from  the  very  nature 
and  character  of  the  relation  of  partnership.  In  this 
respect,  the  same  doctrine  applies,  which  ordinarily 
applies  to  the  cases  of  mandataries  or  agents  for  hire  ;  ^ 

>   Story  on  Ag.  §  182-189  ;  Story  on  Bailm.  §  421,  455. 


300  PARTNERSHIP.  [cHAP.  IX. 

and  to  other  cases  of  bailment  for  the  mutual  benefit 
of  both  parties.  Hence,  if  the  partnership  suffers  any 
loss  from  the  gross  negligence,  unskilfulness,  fraud,  or 
wanton  misconduct  of  any  partner  in  the  course  of  the 
partnership  business,  he  will  ordinarily  be  responsible 
over  to  the  other  partners  for  all  the  losses,  and  injuries, 
and  damages  sustained  thereby,  whether  directly,  or 
through  their  own  liability  to  third  persons.^  Of  course 
all  losses,  injuries,  and  damages  sustained  by  the  part- 
nership from  the  positive  breach  of  the  stipulations 
contained  in  the  articles  of  partnership,  on  the  part  of 
any  partner,  are  to  be  borne  exclusively  by  that  part- 
ner, and  he  must  respond  over  to  them  therefor. 

§  170.  This  is  the  dictate  of  common  sense  and 
justice  ;  and  it  has  been  expressly  affirmed  by  the 
Roman  law.  In  relation  to  third  persons,  that  law 
declares,  that  partners  are  liable,  not  only  for  fraud, 
but  for  negligence  as  well  as  fraud.  Thus,  in  one 
place,  after  enumerating  other  contracts,  it  is  said: 
Sed  ubi  utriusque  utilitas  vertitur,  ut  in  emj^to,  ut  in 
locato,  ut  in  dote,  ut  in  pignore,  ut  hi  societate,  et  dolus, 
et  culiKi  prcustatuT^  As  between  the  partners  them- 
selves, the  like  redress  was  also  given.  8i  quid  dolo 
nostro  socius  damni  ceperit,  a  nobis  rejjetat.^  Venit 
autem  in  hoc  judicium  j^ro  socio  honafides.'^  And  again: 
Utrum  ergo  tantmn  doluni,  an  etiam  cidpam  prcestare 
socium  oporteat,  quceritur  f  Celsus  ita  scripsit.  Socios 
inter  se  dolum  et  cidpam  prcestare  op)ortet.     Si  in  coe- 

'  Ibid.  {In  Lefever  v.  Underwood,  41  Penn.  St.  505,  a  partner  deposited 
partnership  money  in  a  bank  in  his  own  name.  The  bank  failed.  The  partner 
was  held  liable  to  his  copartners. } 

2  D.  13,  6,  5,  2;  Poth.  Pand.  13,  6,  n.  12;  Story  on  Ag.  §  182,  183; 
Poth.  Pand.  17,  2,  n.  27. 

3  D.  17,2,  59,  1 ;  Id.  17,  2,  52,  1  ;  Poth.  Pand.  17,  2,  n.  36  ;  Domat,  1,  8, 
4,  art.  3,  4,  7,  8. 

*  {D.  17,2,  52,  1.} 


CHAP.  IX.]        RIGHTS  AND  DUTIES  OF  PARTNERS.  301 

unda  societate  (inquit)  artem  operamve  pollicitus  est 
alter,  &c.,  nimirum  ibi  etiam  culpa  prcestanda  est. 
Quod  si  rei  communi  socius  jiocuit,  magis  adinittit,  cid- 
pam  quoque  venWe}  Again  :  Socius  socio  etiam  cidpoi 
nomine  tenetur,  id  est,  desidice  cdque  neglig entice.^ 
Again:  Si  qui  societatem  ad  emendum  coierint,  deinde 
res  alterius  dolo  vel  culpa  non  empta  sit,  pro  socio  esse 
actionem  coiistat.^  But  it  is  added :  Damna,  quce  im- 
prudentibus  accidimt,  hoc  est,  damna  fatalia,  socH  non 
cogentur  proistareJ^  And  the  general  principle,  which 
runs  through  the  whole  matter,  is  summed  up  in  the  fol- 
lowing expressive  words.  Culpa  aidem  non  ad  exactis- 
simam  diligentiam  dirigenda  est ;  sufficit  etenim  talem 
diligentiam  communihus  rebus  adhibere,  qualem  suis 
rebus  adhibere  solet ;  quia,  qui  parum  dUigentem  sibi 
socium  adquirit,  de  se  queri  debet.^  It  would,  perhaps, 
have  been  more  exact  to  say,  that  in  cases  of  partner- 
ship the  same  diligence  is  ordinarily  required  of  each 
partner,  as  reasonable  and  prudent  men  generally  em- 
ploy about  the  like  business ;  unless  the  circumstances 
of  the  particular  case  repel  such  a  conclusion.*^ 

§  171.  The  same  doctrine  runs  through  the  whole 
structure  of  the  French  law  on  the  same  subject.^ 
Pothier  even  presses  it  to  a  somewhat  further  extent, 
in  which  he  also  follows  the  Roman  law,  holding,  that  a 
partner  cannot  absolve  himself  from  losses,  occasioned 
by  his  fault  and  negligence  in  one  business,  by  placing, 

in  opposition    to   such    claim,  as    a   compensation,   the 

I 

1  D.  17,  2,52,  2;  Poth.  Pand.  17,  2,  n.  3G. 

2  D.  17,  2,  72;  Poth.  Pand.  17,  2,  n.  3G. 

3  D.  17,  2,  52,  11  ;  Poth.  Pand.  17,  2,  n.  36. 

••  D.  17,  2,  52,3;  Poth.  Pand.  17,  2,  n.  36  ;  Doniat,  1,  8,  4,  art.  3,  4. 
*  D.  17,  2,  72  ;  Poth.  Pand.  17,  2,  n.  36  ;  Domat,  1,  8,  4,  art.  2,  3,  7,  8. 

6  Story  on  Ag.§  182-185 ;  Story  on  BaUm.  §  11,13-15,18;  Id.  §  455  ; 
Jones  on  Bailna.  98 ;  Poth.  de  Soc.  n.  124. 

7  Poth.  de  Soc.  n.  124,  125. 


302  PARTNERSHIP.  [CHAP.  IX. 

profits,  which  he  has  brought  to  the  partnership  by  his 
industry  and  dihgence  in  other  business  of  the  firm. 
The  reason  he  afiirms  to  be.  that  the  partner,  who  thus 
exerts  his  industry  and  diligence,  does  no  more  than 
his  duty  thereto  ;  and  therefore  the  firm  is  not  indebted 
to  him  on  that  account.^  Non  oh  earn  rem  minus  ad 
periculum  socii  pertinet,  quod  negligentia  ejus  periisset, 
quod  in  ^9/er«s^2«e  aliis  industria  ejus  societas  aucta 
fuisset.  Et  ideo,  si  socius  qucedam  neglig enter  in  socie- 
tate  egisset,  in  2^^erisque  aiifem  societatem  auxisset,  non 
com2?ensaiur  comp)endium  cum  negligentia.^  The  doc- 
trine, thus  stated,  although  somewhat  strict  and  austere, 
may  perhaps  be  deemed  salutary  and  convenient,  as 
creating  a  deep  interest  in  partners  to  perform  all  their 
duties  with  fidelity  and  diligence.  It  does  not,  however, 
seem  to  have  been  held  applicable  to  a  series  of  con- 
nected acts,  all  of  which  form  a  part  of  the  same  entire 
business  transaction,  such,  for  example,  as  the  sale  of  a 
cargo  of  goods  by  one  partner,  who  manages  the  whole 
sale,  where,  although  there  may  be  some  negligence,  as 
to  the  sale  of  a  part,  by  which  some  loss  has  been  in- 
curred, yet  there  has  been  a  great  profit  upon  other 
parts ;  so  that  the  loss  is  much  more  than  compensated 
for  by  the  extra  rate  of  profits. 

§  172.  The  necessity  of  entire  good  faith,  and  of  the 
absence  of  fraud  on  the  part  of  partners  towards  each 
other,  is  inculcated  by  Cicero  in  terms  of  deep  import 
and  sound  morality.  In  rebus  minorihus  socium  fallere 
turpissimuni  est;  neque  injuria;  propter ea  quod  aux- 
ilium  sihi  se  ptutat  adjunxisse,  qui  cum  altero  rem  com,- 
municavit.  Ad  cujus  igitur  fidem  confugiet^  cum  per 
ejusfidem  loiditur,  cui  se  commiserit?     Atque  ea  sunt 

>   Poth.  (le  Soc.  n.  125. 

-  D.  17,  2,  25  ;  Id.  17,  2,  26;  Poth.  Pand.  17,  2,  n.  29  ;  Domat,  1,  8,  4, 
art.  8. 


CHAP.   IX.]        RIGHTS  AND  DUTIES  OF  PARTNERS.  303 

animadvertenda  peccafa  maxime,  cpice  difficiUiine  prcB- 
caventur.  Tecti  esse  ad  alienos  possumus ;  intimi  multa 
apertioi^a  videant  necesse  est.  Socium  vero  cavere  qui 
possu7nus  ?  Quern,  etiam  si  metuimus,  jus  officii  Icedi- 
mus.  Rede  igitur  majores  eum,  qui  socium  fefeUisset, 
in  virorum  honormn  numero  non  putarunt  haberi  opor- 
tere}  The  Roman  law  has  also  expressed  the  obligation 
of  good  faith  in  exceedingly  strong  language.  In 
societatis  contractibus  fides  exuberet.^  Good  faith  not 
only  requires,  that  every  partner  should  not  make  any 
false  representation  to  his  partners,  but  also  that  he 
should  abstain  from  all  concealments,  which  may  be  in- 
jimous  to  the  partnership  business.  If,  therefore,  any 
partner  is  guilty  of  any  such  concealment,  and  derives  a 
private  benefit  therefrom,  he  will  be  compelled  in  equity 
to  account  therefor  to  the  partnership.  Upon  the  like 
ground,  where  one  partner,  who  exclusively  superin- 
tended the  accounts  of  the  concern,  had  agreed  to  pur- 
chase the  share  of  his  copartners  in  the  business  for  a 
sum,  which  he  knew,  from  the  accounts  in  his  posses- 
sion, but  which  he  concealed  from  them,  to  be  for  an 
madequate  consideration,  the  bargain  was  set  aside  in 
equity,  as  a  constructive  fraud ;  for  he  could  not  in 
fairness  deal  with  the  other  partners  for  their  share  of 
the  profits  of  the  concern  without  putting  them  in 
possession  of  all  the  information,  which  he  himself  had 
with  respect  to  the  state  of  the  accounts  and  the  value 
of  the  concern.^ 

§  173.  One  of  the  most   obvious  duties  and  obliga- 

*  Cicero,  Pro  Roscio.  Amer.  c.  40,  cited  by  Puf'endorf,  B.  5,  c.  8,  §  4,  and 
by  Coll.  on  P.  B  2,  c.  2,  p.  117,  2d  ed. 

-  Cod.  Lib.  4,  37,  3;  Domat,  1,  8,  4,  art.  1,  2;  {Blisset  v.  Daniel,  10 
Hare,  493.} 

'  Maddeford  v.  Austwick,  1  Sim.  89  ;  { Perens  v.  Johnson,  3  Sm.  &  G. 
419;  Sexton  r.  Sexton,  9  Gratt.  204;  Hopkins  v.  Watt,  13  111.  298.  See 
Knight  V.  Marjoribanks,  11  Beav.  322;  s.  c.  2  Macn.  &  G.  10.} 


304  PARTNERSHIP.  [cHAP.  IX. 

tions  of  all  the  partners  is,  strictly  to  conform  themselves 
to  all  the  stipulations  contained  in  the  partnership  arti- 
cles ;  ^  and  also  to  keep  within  the  bounds  and  limitations 
of  the  rights,  powers,  authorities,  and  acts,  belonging 
and. appropriate  to  the  due  discharge  of  the  partnership 
trade  or  business.  Of  course,  every  known  deviation 
from,  and  every  excess  in  the  exercise  of  such  rights, 
powers,  authorities,  and  acts,  which  produce  any  loss  or 
injury  to  the  partnership,  are  to  that  extent  to  be  borne 
by  the  partner  who  causes  or  occasions  the  loss  or  in- 
jury, and  he  is  bound  to  indemnify  the  other  partners 
therefor.^     The  same  doctrine  is  recognized  by  Pothier, 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,i).  131-161,  2d  ed. 

^  The  doctrine  here  stated  is  sometimes  of  great  practical  importance  in 
the  settlement  of  partnership  accounts.  An  illustration  of  it  occurred  in 
the  case  of  Stoughton  v.  Lynch,  1  Johns.  Ch.  467,  as  to  funds,  which 
one  partner  had  withdrawn  from  the  partnership  contrary  to  the  articles. 
On  that  occasion,  Mr.  Chancellor  Kent  said :  "  The  articles  of  copartner- 
ship intended  to  preserve,  in  a  state  of  progressive  accumulation,  the 
funds  of  the  house  ;  and  the  clause,  upon  which  the  question  before  me 
has  arisen,  is  to  be  taken  strictly.  This  is  evidently  the  sense  and  spirit 
of  the  agreement.  It  is  expressly  stipulated,  that  the  capital  and  profits 
of  the  company  were  to  remain  in  the  house,  and  to  be  employed  for  the  ben- 
efit of  the  concern,  during  the  partnership,  with  this  special  exception,  that 
such  part  only  was  to  be  withdi'awn,  as  might  be  necessary  for  private  ex- 
penses. And  to  show  the  care,  with  which  the  parties  guarded  the  funds 
from  being  diverted  by  either  of  them,  it  was  further  stipulated,  that  neither 
of  them  was  to  do  business  at  New  York  on  their  private  account,  nor  lend 
any  of  the  capital  stock,  or  enter  into  acceptances ;  but  each  party  was  to 
do  his  best  to  promote  the  advantage  of  the  company.  Afler  reading  these 
articles,  it  is  impossible  not  to  view  most  of  the  charges,  which  the  defendant 
wishes  to  include  under  the  special  exception,  as  palpably  inadmissible.  To 
consider  plate,  musical  instruments,  carriages  and  horses,  and  the  whole  fur- 
niture of  a  house,  as  coming  within  the  permission  granted  to  the  parties  to 
withdraw  the  funds  of  the  house  only  when  necessary  for  private  expenses, 
is,  in  my  judgment,  an  unreasonable  and  extravagant  pretension.  The  object 
of  the  decretal  order,  of  last  July,  was,  not  to  exempt  from  interest  all  those 
moneys  withdrawn,  that  were  not  supjiosed  to  be  employed  in  land  specula- 
tions. I  then  observed,  that,  if  the  funds  so  withdrawn  had  been  employed 
in  trade,  the  party  would  have  had  to  account,  not  merely  for  interest,  but 
for  the  profits  of  that  trade  ;  and  we  find  authority  for  this  in  Brown  v.  Lit- 
ton, 1  P.  Wms.  140,  and  in  Crawshay  v.  Collins,  15  Ves.  218,  where  the  prin- 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  305 

as  existing  in  the  French  law  ;  ^  and  it  seems,  indeed,  so 
clearly  the  result  of  natural  justice  as  to  require  no 
particular  exposition.^ 

§  174.  But  there  are  many  implied  duties  and  obliga- 
tions of  an  equally  important,  although  not  perhaps 
always  of  so  obvious  a  nature.  Thus,  for  example,  it 
is  a  violation  of  good  faith,  for  any  partner,  in  conduct- 
ing the  partnership  business,  to  stipulate  clandestinely 
with  third  persons  for  any  private  and  selfish  advantage 

ciple  is  stated,  that  if  one  partner  trade  alone  on  a  joint  stock,  he  shall  divide 
the  profits.  The  least  that  I  could  do  in  this  case  was  to  make  him  pay  inter- 
est on  all  moneys  withdrawn  beyond  the  private  necessity  expressed  in  the 
contract.  The  interest  of  the  parties  as  joint  traders,  the  obvious  policy  and 
meaning  of  the  contract,  and  that  good  faith,  which  is  the  animating  principle 
in  all  mercantile  associations,  unitedly  concur  in  recommending  us  to  view  the 
claims  set  up  by  either  party,  under  the  exception,  with  a  jealous  and  scru- 
pulous eye.  Without  such  a  rule  of  construction,  a  partnership,  like  the  pres- 
ent, with  all  its  provisions  to  preserve  the  funds  of  the  house  untouched, 
might  soon  languish  under  the  carelessness,  or  dissipation,  or  discordant  and 
rival  views  of  either  of  the  contracting  parties.  The  parties,  then,  had  in 
view,  that  funds  were  to  be  withdrawn  only  when  necessary  for  private  ex- 
penses ;  and  when  at  any  time  withdrawn,  the  party  must  have  done  it  with 
a  view  to  that  necessity.  I'hat  must  have  been  the  purpose,  for  which  they 
were  withdrawn.  The  more  safe  and  regular  way  would  have  been,  to  have 
stated,  in  each  case,  the  object  of  the  apjjropriation,  so  that  each  party,  at  the 
end  of  every  year,  when  a  fair  balance  of  the  books,  according  to  the  articles, 
was  to  be  made,  signed,  and  approved,  might  have  known  and  judged  of  the 
requisite  appropriation.  But  it  would,  perhaps,  be  too  rigorous  to  require  the 
production  of  such  an  original  entry  to  justify  every  such  appropriation ; 
and  I  am  willing  even  to  presume,  that  a  fair  and  reasonable  sum,  drawn 
away  in  each  year,  was  necessary  for  the  private  expenses  of  each  individ- 
ual partner  during  that  year.  Beyond  this  presumption  I  cannot  go.  All 
the  European  expenses  of  the  defendant  are,  therefore,  to  be  laid  out  of  the 
case ;  because,  as  I  understand  from  the  suggestions  of  the  counsel  upon  the 
argument,  there  was  no  concurrent,  or  any  thing  like  contemporary,  appro- 
priations, or  drafts,  with  any  presumed  reference  to  those  expenses.  I  am  to 
presume,  then,  and  I  do  presume  and  believe,  that  the  defendant  never 
deemed  it  necessary,  at  the  time,  to  recur  to  the  permission  granted  under 
these  articles,  to  meet  and  defray  those  expenses.  The  idea  of  including  them 
under  this  article  was  an  afterthought,  arising  many  years  after  those  ex- 
penses had  been  borne  and  forgotten." 

>  Poth.  de  Soc.  n.  133. 

2  Poth.  Pand.  17,  2,  n.  36  ;  Domat,  1,  8,  4,  art.  3,4,  7. 

20 


306  PARTNERSHIP.  [cHAP.   IX. 

and  benefit  to  himself,  exclnsive  of  the  partnership  ;  for 
all  the  partnership  property  and  partnership  contracts 
should  be  managed  for  the  equal  benefit  of  all  partners, 
according  to  their  respective  interests  and  shares  there- 
in.^ If,  therefore,  any  one  partner  should  so  stipulate 
clandestinely  for  any  private  advantage  or  benefit  to 
himself,  to  the  disadvantage,  or  in  fraud  of  his  partners, 
he  will  in  equity  be  compelled  to  divide  such  gains  with 
them.^  '  The  same  principle  will  apply  to  clandestine 
bargains  for  his  o^^ll  private  advantage  and  benefit, 
made  in  contemplation  of  establishing  a  partnership 
with  other  persons,  and  as  a  premium  for  his  services 
therein.^  So,  if  a  purchase  is  made  on  the  partnership 
account  by  one  partner,  who  clandestinely  stipulates  and 
receives  any  reward  or  allowance  from  the  seller  for  his 
own  private  profit,  he  will  be  compelled  to  share  the 
same  with  his  partners."*  So,  where  one  partner  obtains 
the  renewal  of  a  partnership  lease  secretly  in  his  own 
name,  he  will  be  held  a  trustee  for  the  firm  in  the  re- 
newed lease.'' 

'  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  117-120,  2d  ed. ;  3  Kent,  51  ;  {Gardner  r. 
McCutclieon,  4  Beav.  534;  Lind.  on  P.  494.} 

^  Ibid. ;  Russell  r.  Austwick,  1  Sim.  52. 

3  Fawcett  v.  Whitehouse,  1  Russ.  &  M.  132,  148,  149;  Hiehens  r.  Con- 
greve,  4  Russ.  562.     { See  Beck  v.  Kantorowicz,  3  Kay  &  J.  230,} 

*  Carter  v.  Home,  1  Eq.  Cas.  Abr.  Account,  A.  pi.  13.  {But  see  Wheeler 
V.  Sage,  1  Wallace,  (u.  s.  s.  c.)  518.} 

*  Featherstonhaugh  v.  Fen  wick,  17  Yes.  298;  Hiehens  v.  Congreve,  1 
Russ.  &  M.  150,  note  B. ;  s.  C.  4  Russ.  562;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p. 
120,  121,  2d  ed.;  Dougherty  r.  Van  Nostrand,  1  Hoff.  68,  69,  70;  {Clegg 
V.  Fishwick,  1  Macn.  &  G.  294.  See  Clements  v.  Hall,  2  De  G.  &  J.  173, 
reversing  s.  c.  24  Beav.  333.}  [But  see  Anderson  v.  Lemon,  4  Sand.  552.] 
—  Lord  Eldon  in  Featherstonhaugh  v.  Fenwick,  1 7  Yes.  311,  said  :  "  It  is  clear, 
that  one  partner  cannot  treat  privately,  and  behind  the  backs  of  his  copart- 
ners, for  a  lease  of  the  jiremises,  where  the  joint  trade  is  carried  on,  for  his 
own  individual  benefit.  If  he  does  so  treat,  and  obtains  a  lease  in  his  own 
name,  it  is  a  trust  for  the  partnership ;  and  this  renewal  must  be  held  to  have 
been  so  obtained.  Consider,  what  an  unreasonable  advantage  one  partner 
would,  upon  a  different  principle,  obtain  over  the  rest.     In  this  respect,  there 


CHAP.   IX. J       RIGHTS    AND    DUTIES    OF    PARTNERS.  307 

^  115.  The  same  doctrine  is  applied  to  other  analo- 
gous cases.  In  all  purchases  and  sales,  made  on  account 
of  the  partnership,  every  partner  is  bound  to  act  ex- 
pressly for  the  benefit  of  the  partnership  ;  and,  there- 
fore, he  has  no  right,  and  cannot  consistently  with  his 

can  be  no  distinction,  whether  the  partnership  is  for  a  definite,  or  indefinite 
period.     If  one  partner  might  so  act  in  the  latter  case,  he  might   equally  in 
the  former.     Supposing  the   lease  and  the   partnership   to   have    different 
terms  of  duration,  he  might,  having  clandestinely  obtained  a  renewal  of  the 
lease*,  say  to  the  other  partners  :  '  The  premises,  on  which  we  carried  on  our 
trade,  have  become  mine  exclusively ;  and  I  am  entitled  to  demand  from 
you  whatever  terms  I  think  fit,  as  the  condition  for  permitting  you  to  carry 
on   the  trade   here.'     Is  it  possible  to  permit  one  partner  to  take  such  an 
advantage  ?     When  the  application  was  made  for  a  renewal,  no  notice   of 
dissolution  had  been  given ;  nor  had  the  plaintiff  notice  of  any  intention  of 
renewing  the  lease.     It  is  not  true,  as  has  been  represented,  that  the  im- 
pediment to  a  renewal  to  the  partnership  arose  solely  from  the  indisposition 
of  Mr.  Wilkinson  to  any  connection  with  the  plaintiff;  as,  before  any  ob- 
jection had  been  made  on  that  or  any  other  ground,  the  defendant  goes  Avith 
the  intention,  and  for  the  dire(;t  purpose,  of  obtaining  a  renewal  for  himself 
and  his  sou  exclusively.     He  makes  the  application  to  Murray ;    who  says, 
the  proposal  was  for  a  renewal  for  the  benefit  of  the  defendants ;  expressly 
excluding  the  plaintiff,  with  whom  it  was  represented,  that  George  Fenwick 
was  determined  to  have  no  further  connection  in  trade ;  and  though  it  may 
be  true,  that  Wilkinson  afterwards  said,  he  would  not  have  granted  a  lease 
to   the   defendants  jointly   with  the   plaintiff,  that  declaration  had   become 
quite  unnecessary,  by  the  resolution,  preAnously  expressed  by  the  defendant, 
not  to  take  a  lease  jointly  with  him.     This  clandestine  conduct  was  very 
unfair  towards  the  plaintiff.     The  defendants  had  not  intimated  to  him,  that 
they  would  not  have   any  further  connection  with  him,  and  that  they  in- 
tended to  appl)'  for  a  lease  on  their  own  account.     They  ought  first  to  have 
given  him  notice,  and  to  have  placed  him  on  equal  terms  with  them :  and 
then,  If  Mr.  Wilkinson  had  thought  proper  to  give  them  the  preference,  the 
case  might  admit  of  a  different  consideration.     Instead  of  that,  they  clandes- 
tinely  obtained  an   advantage,   which  would   enable   them   to  dissolve  the 
partnership  on  terms  very  unfavorable  to  the  plaintiff;  and  they  evidently 
had   that  object  in  view.     If  they  can   hold   this  lease,  and  the  partnership 
stock  is  not  brought  to  sale,  they  are  by  no  means  on  ecpial  terms.     The 
stock  cannot  be  of  equal  value   to  the  plaintiff,  who  was  to  carry  it  away, 
and  seek  some  place,  in  which  to  put  it,  as  to  the  defendants,  who  were  to 
continue  it  in  the  place  where  the  trade  was  already  established ;  and  if  the 
stock  was  sold,  the  same  circumstance  would  give  them  an  advantage  over 
other  bidders.    In  effect  they  would  have  secured  the  good-will  of  the  trade 
to  themselves,  in  exclusion  of  their  partner." 


308  PARTNERSHIP.  [cHAP.  IX. 

duty,  voluntarily  place  himself  in  a  situation,  in  which 
his  bias,  as  well  as  his  interest,  is  in  opposition  to  the 
interest  of  the  partnership.  Thus,  if  a  partner  buys 
goods  for  the  partnership  account,  and  makes  the  bar- 
gain by  a  barter  of  his  own  private  goods  on  his  own 
sole  account,  and  charges  the  partnership  with  the  full 
cash  value  and  price  of  the  goods,  as  if  they  were  bought 
for  cash  ;  it  will  be  a  constructive  fraud  upon  the  part- 
nership ;  and  he  will  be  compelled  in  equity  to  account 
for  any  private  profit  so  made  in  the  barter.^  The  same 
rule  will  apply  to  the  converse  case  of  a  sale  of  the  part- 
nership property  under  the  like  circumstances  ;  for  the 
general  doctrine  is,  that  there  is  an  implied  obligation 
between  partners,  that  they  are  to  use  the  partner- 
ship property  for  the  benefit  thereof,  and  not  other- 
wise.^ 

§  176.  This  wholesome  principle  of  justice  has  been 
adopted  in  many  other  cases,  where  peculiar  relations 

'  Burton  v.  Wookey,  G  Madd.  367  ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  122,  2d 
ed.  —  On  this  occasion  Sir  John  Leach  (the  Vice-Chancellor)  said  :  "  It  is  a 
maxim  of  the  courts  of  equity,  that  a  person,  who  stands  in  the  relation  of 
trust  or  confidence  to  another,  shall  not  be  permitted,  in  pursuit  of  his  pri- 
vate advantage,  to  place  himself  in  a  situation,  which  gives  him  a  bias  against 
the  due  discharge  of  that  trust  or  confidence.  The  defendant  here  stood  in 
relation  of  trust  or  confidence  towards  the  plaintiff,  which  made  it  his  duty  to 
purchase  the  lapis  calaminaris  at  the  lowest  possible  price  ;  when  in  the  place 
of  purchasing  the  lapis  calaminaris,  he  obtained  it  by  barter  for  his  own  shop 
goods,  he  had  a  bias  against  a  fair  discharge  of  his  duty  to  the  plaintiff.  The 
more  goods  he  gave  in  barter  for  the  article  jwrchased,  the  greater  was  the 
profit,  which  he  derived  from  the  dealing  in  store  goods  ;  and  as  this  profit  be- 
longed to  him  individually,  and  as  the  saving  by  a  low  price  of  the  article  pur- 
chased was  to  be  equally  divided  between  him  and  the  plaintiff,  he  had  plainly 
a  bias  against  the  due  discharge  of  his  trust  or  confidence  towards  the  plaintiff. 
I  must,  therefore,  decree  an  account  of  the  profit  made  by  the  defendant  in 
his  barter  of  goods,  and  must  declare,  that  the  plaintiff' is  entitled  to  an  equal 
division  of  that  profit  with  the  defendant."  6  i\Iaild.  36  7  ;  [  Bentlcy  v.  Craven, 
18  Beav.  75.} 

2  Crawshay  r.  Collins,  15  Ves.  218,  227.  {  See  Westcott  v.  Tyson,  38  Penn. 
St.  389.1 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  309 

exist  between  the  parties,  by  courts  of  equity.^  Pothier 
has  directly  apphed  it,  not  only  to  cases  of  bargains 
during  the  partnership,^  but  also  to  a  case,  where  a 
partner  contemplates  a  dissolution  solely  to  aid  his  own 
sinister  and  selfish  purposes.  In  order  (says  he)  to 
enable  a  partner  to  dissolve  a  partnership,  two  things 
must  concur;  (1.)  the  renunciation  of  the  partnership 
must  be  made  in  good  faith ;  (2.)  it  must  not  be  made  at 
an  unreasonable  time  (contre  fe???^;s).  Debet  esse  facta 
bona  fide  et  temjjestive.  The  renunciation  is  not  made  in 
good  faith,  when  the  partner  renounces  to  appropriate 
to  himself  alone  the  profits,  which  the  other  partners 
proposed  for  the  partnership,  when  it  was  formed.^  This 
is  the  very  doctrine  inculcated  by  courts  of  equity  under 
the  like  circumstances.^  It  is  also  the  doctrine  of  the 
Roman  law.  Si  societatem  ineamus  ad  aliquam  reim 
emendani ;  deinde  solus  volueris  earn  emere,  ideoque  re- 
nuntiaveris  societati,  ut  solus  emeres  ;  teneberis  quanti 
interest  mea.  Sed  si  ideo  renuntiaveiHs,  quia  emj^tio 
tibi  displicebat,  non  teneberis  quamvis  ego  enter o  ;  quia 
hie  nulla  fraus  est.^ 

§  177.  Upon  similar  grounds  it  is  the  implied  obliga- 
tion and  duty  of  every  partner,  not  to  engage  in  any 
other  business  or  speculation,  which  must  necessarily 
deprive  the  partnership  of  a  portion  of  the  skill,  indus- 
try, diligence,  or  capital,  which  he  is  bound  to  employ 
therein.'^  In  other  words,  he  is  not  at  liberty  to  deal 
on  his  own  private  account  in  any  matter  or  business, 
which  is  obviously  at  variance  with,  or  adverse  to,  the 

1  1  Story,  Eq.  Jur.  §  315,  316,  321 ;  Id.  §  221  ;  2  Story,  Eq.  Jar.  §  12G1, 
1265  ;  Stoughton  v.  Lynch,  1  Johns.  Ch.  4G7,  470. 

2  Poth.  de  Soc.  n.  59.  *  Poth.  de  Soc.  n.  150. 

*  Featherstonhaugh  w.  Fenwick,  17  Ves.  298. 

*  D.  17,  2,  65,  4;  Poth.  Pand.  17,  2,  n.  64;  Domat,  1,8,  4,  art.  5,  17. 
8  3  Kent,  51 ;  Burton  v.  Wookey,  6  Madd.  367. 


310  PARTNERSHIP.  [cHAP.  IX. 

business  or  interest  of  the  partnership.  The  object  of 
this  prohibitory  rule  is,  to  withdraw  from  each  partner 
the  temptation  to  bestow  more  attention,  and  to  exercise 
a  sharper  sagacity  in  respect  to  his  own  purchases  and 
sales  and  negotiations,  than  he  does  in  respect  to  the 
concerns  of  the  partnership,  in  the  same  or  in  a  con- 
flicting line  of  business.^  It  is,  therefore,  a  rule  founded 
in  the  soundest  policy.  Pothier  lays  down  the  same 
rule,  and  inculcates  it  in  emphatic  language,  insisting 
that  no  partner  has  a  right  to  prefer  his  own  particular 
interest  to  that  of  the  firm,  or  to  take  away  the  profits 
of  a  bargain  from  the  firm,  and  appropriate  them  to  his 
own  private  advantage.^  Boulay  Paty  is  equally  ex- 
pressive on  the  same  subject ;  and  he  applies  it,  as  well 
to  cases  of  masters  of  ships,  as  to  partners.^ 

§  178.  If,  therefore,  one  partner  should  clandestinely 
carry  on  another  trade,  or  the  same  trade  for  his  own 
private  advantage,  and  in  a  manner  injurious  to  the 
true  interests  of  the  partnership,  or  should  divert  the 
capital  or  funds  of  the  partnership  to  such  secret  and 
sinister  purposes,  he  will  be  compelled  in  equity  to  ac- 
count for  all  the  profits  made  thereby.'^  So,  if  one 
partner  should  purchase  articles  upon  his  own  private 
account  in  some  special  trade  and  business,  in  which 
the  partnership  was  engaged,  and  injuriously  to  the 
partnership,  as  for  example,  by  purchasing  lapis  ccdami- 
naris  of  neighboring  miners,  on  his  own  private  account, 
that  being  also  the  business  of  the  partnership,  he 
would  be  held  to  account  for  the  profits  made  thereby.^ 

'  3  Kent,  51.  "  Poth.  de  Soc.  n.  59. 

^  2  Boulay  Paty,  Droit  Comm.  §  19,  p.  94. 

*  Long  V.  Majestre,  1  Johns.  Ch.  305  ;  Glassington  v.  Thwaites,  1  Sim.  & 
St.  124,  133  ;  3  Kent,  51  ;  Burton  v.  Wookey,  6  Madd.  867  ;  Stoughton  v. 
Lynch,  1  Johns.  Ch.  4G7,  4  70;  {Lock  v.  Lynam,  4  Ir.  Ch.  188;  England  v. 
Curling,  8  Beav.  12!)  ;  Herrick  v.  Ames,  8  Bosw.  115.} 

'  Burton  y.  Wookey,  6  Madd.  367. 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  311 

Indeed  courts  of  equity  will  go  further  in  cases  of  this 
sort,  and  restrain  the  partner  by  injunction  from  carry- 
ing on  any  trade  or  business,  which  is  thus  inconsistent 
with  the  rights  and  interests  of  the  partnership  ;  for 
(as  has  been  well  remarked)  the  principles  of  courts 
of  equity  will  not  permit,  that  parties,  bound  to  each 
other,  by  an  express  or  implied  contract,  to  promote  an 
undertaking  for  the  common  benefit,  should  any  of 
them  engage  m  another  concern,  which  necessarily 
gives  them  a  direct  interest  adverse  to  that  under- 
taking.^ But  if  there  be  no  such  necessary  conflict 
or  incompatibility  of  interests,  the  mere  circumstance, 
that  the  partner  may  thereby  be  exposed  to  the  tempta- 
tion to  be  dishonest,  or  to  abuse  his  trust,  or  to  betray 
his  duty,  has  not  been  thought  sufficient  to  justify  courts 
of  equity  in  imposing  such  restraint  by  injunction.^ 

§  179.  The  principle  and  the  exception  may  readily 
be  illustrated  bv  the  case  of  two  rival  mornino:  news- 
papers,  and  two  evening  newspapers.  All  newspapers 
are,  to  some  extent,  rivals  ;  and  there  is  also  neces- 
sarily some  degree  of  rivalry  between  a  morning  and 
an  evening  paper,  especially  in  the  country.  The 
question  may,  therefore,  very  properly  arise  in  many 
cases,  whether  a  person,  engaged  as  a  partner  in  the 
management  of  a  morning  paper,  is  at  liberty  to  assist 
with  his  skill,  labor,  and  property,  the  publication  of 
an  evening  newspaper,  which  may  affect  the  interests 
of  the  former.  If  both  papers  are  published  in  the 
same  city,  for  the  Hke  general  circulation,  it  will  be 
difficult  to  escape  the  conclusion,  that  the  interest  in 
the  one  is  adverse  to  and  in  conflict  with  that  of  the 
other.  But,  if  one  is  published  in  another  city,  or  one 
is  designed  mainly  for  city  cumulation,  and  the   other 

1  Glassington  r.  Thwaites,  1  Sim.  &  St  124,  133. 

2  Ibid. 


312  PARTNERSHIP,  [cHAP.  IX. 

exclusively  for  country  circulation,  or  the  one  is  a  daily, 
and  the  other  a  weekly  paper,  the  same  conflict  and 
adversary  interests  may  not  arise  ;  and  the  nature  and 
objects  of  the  particular  papers,  as  well  as  the  habits 
and  usages  of  the  trade,  may  furnish  material  ingredi- 
ents for  a  distinction  between  the  cases. ^ 

'  Glassington  v.  Thwaites,  1  Sim.  &  St.  124,  131,  133.  —  On  this  occa- 
sion Sir  John  Leach  (the  Vice-Chancellor)  said  :  "  AH  newspapers  are  to 
some  extent  rivals.  The  competition  is  more  immediate  between  two 
morning  papers  and  two  evening  pa|)ers ;  but  there  is  necessarily  some 
degree  of  rivalry  between  a  morning  and  an  evening  pajier,  especially  in 
the  country.  It  might,  therefore,  have  been  made  a  question,  whether  it 
would  be  a  due  act  of  management  in  the  partnership  concern  of  a  morning 
paper,  to  assist  with  its  property  and  its  labor  the  publication  of  any  other 
newspaper,  so  as  to  enable  the  majority  of  the  partners  in  that  respect  to 
bind  the  minority.  But  the  question  does  not  arise ;  because  the  plaintiff 
himself  is  to  be  considered  as  a  party  to  the  practice,  before  his  copartners 
became  the  proprietors  of  the  evening  paper;  and  because  there  is  evi- 
dence, that  the  proprietors  of  other  morning  papers  have  adopted  the  same 
practice  with  respect  to  other  evening  papers,  so  as  to  form  a  sort  of  usage 
in  the  trade  to  this  effect.  And  it  is  to  be  considered,  that  the  annual  sum, 
paid  by  the  evening  jjaper  for  the  accommodation  afforded  to  it,  outweighs  the 
danger  of  inci'eased  competition.  The  true  question  here  is,  whether  it 
makes  any  difference,  that  the  other  proprietors  of  the  Herald  have  now  be- 
come the  proprietors  of  the  evening  paper ;  and  1  tliink  it  does  not  make  a 
material  difference.  It  is  true,  that  a  considerable  part  of  the  expense  of  a 
newspaper  is  occasioned  by  procuring  information ;  and  if  some  of  the  pro- 
prietors of  a  morning  paper  are  also  the  proprietors  of  an  evening  paper, 
they  may  have  a  stronger  interest  to  promote  the  success  of  the  evening 
paper  than  of  the  morning  paper,  and  a  strong  temptation  to  use  the  infor- 
mation obtained  at  the  expense  of  the  morning  paper  for  the  benefit  of  the 
evening  paper.  This  temptation  forms  a  powerful  objection  in  all  cases  to 
the  partner  in  the  concern  of  one  newspaper  being  permitted  to  be  a  partner 
in  the  concern  of  any  other  newspaper.  But  it  is  an  objection  founded  on 
the  principle  of  policy  and  discretion,  against  which  parties  may  protect 
themselves  by  their  contracts  ;  and  accordingly,  it  is  a  common  covenant  in 
such  partnership  articles,  that  no  partner  shall  be  the  proprietor  of  any  other 
newspaper.  In  the  present  case,  there  is  actually  a  covenant,  that  the  pro- 
prietors will  not  be  concerned  in  any  other  morning  paper,  which,  by  impli- 
cation, affords  the  conclusion,  that  it  was  the  intention  of  the  parties,  that 
they  might  engage  in  the  concern  of  any  evening  paper.  Where  there  is  no 
such  covenant  of  restraint,  it  is  clear,  that,  at  law,  a  partner  in  one  newspaper 
may  be  a  proprietor  in  any  other  ncAvspaper ;  and  in  this  case,  equity  must 
follow  law ;  and  it  cannot  be  intended,  that  the  parties  meant  to  impose  a 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  313 

§  180.  Cases  of  a  very  delicate  and  embarrassing 
nature  sometimes  arise  in  cases  of  partnership,  where 
one  partner  dies,  and  one  or  all  of  the  survivors  are 
appointed  his  executors,  and  the  partnership  is  con- 
tinued as  between  the  survivors.  Under  such  circum- 
stances, it  may  be  difficult  to  say,  that  there  may  not 
sometimes  arise  conflicting  duties  and  obligations  in 
their  diflerent  acts  and  characters,  as  partners  and  as 
executors.  Still  greater  embarrassments  may  occur, 
where  the  executors  also  sustain  the  character  of  guar- 
dians of  the  children  of  the  testator,  who  by  the  articles 
have  a  right  upon  arriving  at  their  majority  to  come 
into  the  firm.  It  has  been  well  remarked  by  a  learned 
writer,  that  it  is  clear,  that  surviving  partners  so  situ- 
ated, have  inconsistent  duties  to  perform.  It  is  true, 
that  the  difficulties  of  this  situation  are  not  so  obvious, 
where  the  parties  claiming  under  the  testator  are  all 
sui  juris,  as  where  some  of  them  are  infants.  But 
even  in  the  former  case,  the  surviving  partner  cannot, 
without  the  full  knowledge  and  consent  of  these  parties, 
make  his  situation  of  executor  a  means  of  advantage  to 
his  copartnership  ;  and  in  the  latter  case,  the  difficulties, 

restraint,  which  they  might  have  expressed,  and  have  not  expressed,  and 
where  it  is  plain  their  attention  was  directed  to  the  subject.  The  princi- 
ples of  courts  of  equity  would  not  permit,  that  parties  bound  to  each 
other  by  express  or  implied  contract  to  promote  an  undertaking  for  the 
common  benefit,  should  any  of  them  engage  in  another  concern,  which 
necessarily  gave  them  a  direct  interest  adverse  to  that  undertaking.  But 
the  argument  here  is,  not  that  the  defendants,  by  becoming  the  proprie- 
tors of  the  evening  paper,  place  themselves  in  a  situation,  in  which  they 
are  necessarily  required  to  betray  their  duty  to  the  morning  paper  ;  but 
that,  if  their  interest  be  greater  in  the  evening  paper  than  the  morning 
paper,  they  are  exposed  to  a  temptation  to  be  dishonest  and  to  betray  their 
duty  to  the  morning  pa])er.  If  they  act  honestly,  it  is  immaterial  to  the 
morning  paper,  whether  the  defendants  are  or  not  the  proprietors  of  the 
evening  paper.  And  for  this  reason  it  is,  that  it  makes  no  difference  in 
the  present  case,  that  the  defendants  have  become  the  proprietors  of  the 
evening  paper." 


314  PARTNERSHIP.  [cHAP.  IX. 

in  the  absence  of  specific  contract,  seem  to  be  insuper- 
able, unless  the  whole  partnership  concern  be  wound 
up,  or  recourse  be  had  to  a  court  of  equity.^ 

§  181.  In  the  next  place,  there  is  an  implied  obliga- 
tion and  duty  upon  all  the  partners,  as  a  matter  of 
good  faith,  to  which  they  are  mutually  pledged  to  each 
other,  that  the  business  of  the  partnership  shall  be 
conducted  in  such  a  manner,  as  that  each  of  the  part- 
ners may  be  enabled  to  see,  that  it  is  carrying  on  for 

'  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  123,  2d  ed. ;  Id.  B.  2,  c.  3,  §  4,  p.  210,  211. 
—  The  case  of  Wedderburn  v.  Wedderburn,  2  Keen,  722 ;  s.  c.  4  Myl.  &  C. 
41,  demonstrates  the  truth  of  these  remarks.  In  that  case  the  accounts  of 
successive  partnerships  and  retirements  of  partners,  after  the  death  of  the 
first  partner  (the  testator),  were  overhauled  in  equity,  after  a  lapse  of  thirty 
years  from  the  testator's  death.  The  decretal  order  in  that  case  contains 
the  form  of  the  proper  order  to  be  made  in  such  cases,  and  may  serve  as  a 
valuable  precedent.  2  Keen,  752,  753.  This  case  was  affirmed  upon  the 
appeal  by  Lord  Cottenham,  who  then  used  the  following  language :  "I 
have  had  many  occasions  to  consider,  and  have  frequently  expressed  my 
sense  of  the  difficulties,  which  the  court  has  to  encounter  in  administering 
equity  according  to  its  acknowledged  principles  in  cases  of  this  description. 
So  many  decisions  have  established  the  right  of  parties  to  participate  in  the 
profits  of  trade,  carried  on  under  circumstances  similar  to  the  present,  that 
no  question  can  be  raised  as  to  the  duty  of  the  court  in  decreeing  such 
relief,  when  a  proper  case  arises  for  it ;  but  it  is  obvious,  that  very  great 
difficulties  exist  in  enforcing  this  right.  Great  expense,  great  delay,  and 
great  hardship  upon  the  defendants  frequently  attend  the  prosecution  of 
decrees  for  this  purpose,  and  the  apparent  benefit  decreed  to  the  plaintiff  is 
frequently  much  diminished,  if  not  lost,  in  the  attempt  to  enforce  it.  For 
these  reasons  it  appears  to  me,  that  these  are  cases,  in  which,  above  all 
others,  it  is  for  the  interest  of  all  parties  to  settle  the  matters  in  contest 
between  them  by  private  arrangement  and  compromise  ;  and  I  earnestly 
recommend  to  the  parties  to  take  this  into  their  serious  consideration.  I 
have  no  doubt  but  that  a  settlement  might  be  effected,  which  would  secure 
to  the  plaintiffs  more  than  they  can  possibly  obtain  from  the  most  successful 
prosecution  of  the  decree,  and  which  would,  at  the  same  time,  protect  the 
defendants  against  much  of  the  expense,  inconvenience,  and  hardship,  to 
which  they  must  be  exposed  if  it  be  adversely  prosecuted.  This,  however, 
is  entirely  for  their  private  consideration.  ]\Iy  duty  is  only  to  dispose  of 
the  matters  litigated  upon  this  appeal,  which,  for  the  reasons  I  have  before 
given,  I  now  do  by  dismissing  the  appeal  with  costs."  4  Myl.  &  C.  55. 
{Millar  v.  Craig,  6  Beav.  433;  Stocken  v.  Dawson,  6  Beav.  371;  Town- 
end  V.  Townend,  1  GiflP.  201.} 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  315 

their  mutual  advantage,  and  not  injuriously  to  the 
common  interest.^  It  seems,  therefore,  the  proper  duty 
of  each  partner  to  keep  precise  accounts  of  all  his  own 
transactions  for  the  firm,  and  to  have  them  always 
ready  for  inspection  and  explanation."  And  if  one 
partner  receives  any  moneys  for  the  partnership,  he 
ought  at  once  to  enter  the  receipt  thereof  in  the  books 
of  the  firm,  so  that  the  same  may  be  open  to  the  in- 
spection of  all  the  partners.^  This,  indeed,  is  one  of 
the  ordinary  stipulations  of  partnership  articles  ;  but  it 
is  a  mere  affirmance  of  the  general  doctrine  of  the  law.^ 
It  follows  from  these  considerations,  that  one  partner 
cannot  exclude  another  from  a  personal  interposition, 
and  an  equal  management  in  the  concerns  of  the  part- 
nership. The  powers  of  all  are  in  this  respect  co-ordi- 
nate and  co-extensive,  whether  the  partnership  be  in 
full  operation,  or  be  subsisting  only  for  the  purpose  of 
winding  up  the  affairs  thereof.^  There  may  be  excep- 
tions and  limitations  growing  out  of  the  particular 
articles  or  other  incidents  of  the  partnership,  as  where 
one  partner  has  sole  authority  to  act  in  the  manage- 
ment of  the  concern ;  or  where  one  partner  is  the  sole 
owner  of  the  property,  and  the  other  partners  are  only 
to  share  the  profits. '^  The  Roman  law  inculcated  a 
similar  doctrine ;  and  if  one  partner  was  prevented  by 
the   others  from  an  equal  participation  in   any  of  the 


'  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  126,  2d  ed. ;  Peacock  v.  Peacock,  16 
Ves.  49,  51 ;  3  Chitty  on  Comm.  &  Manuf.  c.  4,  p.  236. 

2  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  121,  126,  2d  ed. ;  Id.  B.  2,  c.  2,  §  2, 
p.  142  ;  Rowe  v.  Wood,  2  Jac.  &  W.  553,  558  ;  Ex  parte  Yonge,  3  Ves.  &  B. 
31,  36 ;   {Lind. on  P.  659-666.} 

3  Goodman  v.  AVhitcomb,  1  Jac.  &  W.  589,  593. 

*  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  142,  2d  ed. 

*  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  126,  2d  ed. ;  Rowe  v.  Woods,  2  Jac.  & 
W.  553,  558. 

«  Ibid. 


316  PARTNERSHIP.  [CHAP.  IX. 

partnership  property,  he  might,  even  during  the  con- 
tinuance thereof,  maintain  an  action  pro  socio} 

§  182.  In  the  next  place,  as  there  is  an  implied  obli- 
gation in  every  partner  to  exercise  due  dihgence  and 
skill,  and  to  devote  his  services  and  labors  for  the  pro- 
motion of  the  common  benefit  of  the  concern,  it  hence 
follows,  that  he  must  do  it  without  any  reward  or  com- 
pensation, unless,  indeed,  it  be  expressly  stipulated  for 
between  the  partners,  as  it  well  may  be  under  peculiar 
circumstances.^  The  reason  is,  that  each  partner,  in 
taking  care  of  the  joint  property,  is  in  fact  taking  care 
of  his  own  interest,  and  is  performing  his  own  duties 
and  obligations,  implied  in,  and  constituting  a  part  of, 
the  consideration  for  the  others  to  engage  in  the  part- 
nership ;  and  the  law  never  undertakes  to  measure  and 
settle  between  the  partners  the  relative  value  of  their 
various  and  unequal  services  bestowed  on  the  joint  busi- 
ness, for  the  obvious  reason,  that  it  is  impossible  to  see, 
how  far  in  the  original  estimate  of  the  parties,  when 
the  connection  was  formed,  the  relative  experience, 
skill,  ability,  or  even  the  known  character  and  reputa- 
tion of  each,  entered  as  ingredients  into  the  adjustment 
of  the  terms  thereof.^ 

1  D.  17,  2,  52,  13;  Poth.  Pand.  17,  2,  n.  33. 

^  Thornton  v.  Proctor,  1  Anst.  94 ;  Franklin  v.  Robinson,  1  Johns.  Ch. 
157,  165;  Bradford  v.  Kimberly,  3  Johns.  Ch.  431,  434;  Cakhvell  w. 
Leiber,  7  Paige,  483;  Burden  v.  Burden,  1  Ves.  &  B.  170;  Lee  v.  Lash- 
brooke,  8  Dana,  214;  Whittle  v.  M'Farlane,  1  Knapp,  311,  315;  [Lewis  v. 
MofTett,  11  111.  392  ;  Lyman  v.  Lyman,  2  Paine,  C.  C.  11 ;  King  v.  Hamilton, 
16  111.  190;  Coursen  v.  Hamlin,  2  Duer,  513;  {Hutcheson  v.  Smith,  5  Ir. 
Eq.  117  ;  Lind.  on  P.  636.  But  see  Levi  v.  Karrick,  13  Iowa,  344.}  And 
on  the  same  principle  a  surviving  partner  has  been  held  not  entitled  to 
compensation  for  services  in  winding  up  the  affairs  of  the  firm.  Beatty  v. 
Wray,  19  Penn.  St.  516];  {Stocken  v.  Dawson,  6  Beav.  371;  Brown  v. 
McFarland,  41  Penn.  St.  129  ;  Piper  v.  Smith,  1  Head,  93.  But  see  Feather- 
stonhaugh  v.  Turner,  25  Beav.  382,  392.} 

^  [Interest  on  advances  of  capital  by  one  of  the  partners  to  the  firm, 
will  be  allowed,  where  there  is  any  agreement  or  understanding  to  that 


CHAP.   IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  317 

§  183.  Nor  is  good  faith  alone  required  in  all  part- 
nership acts  ;  but  also  the  exercise  of  a  sound  and  rea- 
sonable discretion  by  each  partner,  for  the  mutual  ben- 
efit and  interest  of  the  concern.  It  is,  therefore,  the 
duty  of  each  partner  to  avoid  transgressing  or  abusing 
in  any  way  the  ordinary  privileges  of  a  partner  in  the 
management  of  the  concern ;  as,  for  example,  by  pro- 
fuse, or  wanton,  or  unnecessary  expenditures  in  the 
partnership  business,  or  by  rash  and  imprudent  specu- 
lations, or  by  negligent  or  extravagant  sacrifices  of  the 
partnership  property.^  Even  where  a  right  is  reserved 
to  one  partner  to  assign  his  share  to  another,  who  shall 
thereby  be    entitled   to    admission   as    a   partner,  good 

effect.  Coll.  on  P.  (Perkins's  ed.)  B.  2,  c.  3,  §  338,  note,  p.  309  ;  Winsor  v. 
Savage,  9  Met.  346 ;  Hodges  v.  Parker,  17  Vt.  242 ;  Millaudon  v.  Sylves- 
tre,  8  La.  (Curry),  262;  Reynolds  v.  Mardis,  17  Ala.  32;  {Pond  v. 
Clark,  24  Conn.  370;  Lind.  on  P.  649.}  But  it  has  been  distinctly 
declared  by  an  American  court  that,  in  the  absence  of  any  such  evidence, 
neither  of  the  partners  will  be  entitled  to  intei-est  on  advances  before  a 
general  settlement  or  dissolution.  Lee  v.  Lashbrooke,  8  Dana,  214;  Jones 
V.  Jones,  1  Ired.  Eq.  332 ;  Honore  v.  Colmesnil,  7  Dana,  199 ;  Waggoner 
w.'Gray,  2  Hen.  &  Mun.  603;  Dexter  v.  Arnold,  3  Mason,  284;  Desha  v. 
Smith,  20  Ala.  747.  An  eminent  English  judge  has  intimated  a  contrary 
opinion.  According  to  him,  the  law  is  not  clear,  that,  where  partners  are 
equally  laborious  aiid  equally  attentive  to  the  business,  interest  should  not 
be  allowed  on  any  excess  of  capital,  and  the  parties  thus  be  put  on  equal 
terms  in  that  respect.  "Can  one  believe,"  he  says,  commenting  on  the 
facts  of  a  case  in  judgment,  "  that  the  party,  to  whom  the  whole  capital 
belonged,  renounced  his  advantage  in  that  respect,  and  continuing  to  take 
an  equally  laborious  part  in  the  transaction  of  the  business,  should  bring  in 
his  whole  income,  both  partnership  and  private,  and  yet  intend  to  reserve 
no  advantage  of  that  income  upon  the  settlement  of  accounts  l)etween  him- 
self and  copartner.''  I  must  say,  I  have  a  great  difFiculty  in  coming  to  such 
a  conclusion  as  that."  Millar  v.  Craig,  6  Beav.  433 ;  Hodges  v.  Parker, 
17  Vt.  242 ;  Stoughton  v.  Lynch,  1  Johnson,  Ch.  467  ;  Simpson  v.  Feltz,  1 
McCord,  Ch.  213;  Ex  parte  Chippendale,  4  De  G.  M.  &  G.  19,  s.  c.  sub 
nam.  In  re  German  Mining  Co.  19  Eng.  L.  &  Eq.  591 ;  Beacham  i'.  Eck- 
ford,  2  Sand.  Ch.  116.  See  post,  §  349,  note];  {Morris  v.  Allen,  1  Mc- 
Carter,  44.  See  Wood  v.  Scoles,  Law  Rep.  1  Ch.  369 ;  W\atncy  v.  Wells, 
Law  Rep.  2  Ch.  2r)0 ;  Hill  v.  King,  9  Jur.  n.  s.  527.} 
>  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  127,  2d  ed. 


318  PARTNERSHIP.  [CHAP.  IX. 

faith  would  seem  to  require,  that  the  assignment  should 
be  to  a  person  of  competent  skill  and  honesty,  and  not 
to  a  mere  insolvent,  or  to  a  known  profligate  ;  for  this 
would  seem  to  be  an  abuse,  and  not  a  fair  exercise  of 
the  right  of  assignment.^ 

§  18 J:.  Pothier,  in  discussing  the  subject  of  the  rights, 
duties,  and  obligations  of  partners,  in  respect  to  each 
other,  has  laid  down  a  number  of  general  rules,  as 
guides  and  principles.  First.  That  each  partner  may 
use  the  property,  belonging  to  the  partnership,  accord- 
ing to  its  proper  use  and  destination,  and  not  otherwise, 
reciprocally  allowing  to  his  other  partners  the  like  use 
and  privilege."  Second.  That  each  partner  has  a  right 
to  compel  the  other  partners  to  bear  then  share  of  the 
expenses,  which  are  necessary  for  the  preservation  of 
the  common  property.^  Third.  No  partner  has  a  right 
to  make  any  material  change  or  innovation  upon  the 
common,  permanent,  or  fixed  property,  or  inheritable 
estate  of  the  fii-m,  even  though  it  may  be  beneficial  to 
the  firm,  without  the  consent  of  his  partners ;  for  this 
is  deemed  an  authority  not  delegated  by  the  firm,  and 

>  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  129,  130,  2d  ed. ;  2  Bell,  Comm.  B.  7, 
p.  620,  5th  ed.  —  In  the  case  of  JefFerys  v.  Smith,  3  Russ.  158,  168,  Sir 
John  Copley  (Master  of  the  Rolls)  seemed  to  think,  that  the  insolvency  of 
the  assignee  constituted  no  just  objection.  On  that  occasion  he  said:  "It 
is  said,  that  the  assignment  was  colorable ;  that  is,  that  it  was  made  for  the 
sake  of  securing  the  assignor  from  future  liability.  Suppose  he  made  it 
with  that  view,  he  had  a  right  so  to  pi'Otect  himself  from  future  liability.  It 
is  alleged,  that  the  assignee  was  not  a  responsible  person.  Let  it  be  so ; 
Guppy,  for  the  purpose  of  securing  himself,  had  a  right  to  assign  to  a 
person  not  responsible.  The  only  ground  of  objection  would  be,  that, 
though  there  was  an  assignment  in  form,  there  was  an  understanding 
between  the  parties,  that  the  assignee  should  be  a  trustee  for  the  assignor. 
Here  there  is  no  pretence  for  such  a  supposition.  I  must  hold,  therefore, 
that,  at  all  events,  the  assignment,  coupled  with  the  notice,  freed  Guppy 
from  future  liability."  But  ought  not  a  court  of  equity  to  interfere,  where 
an  assignment  is  made  to  a  notoriously  incompetent  person,  or  to  one  of 
bad  and  dissolute  habits?     See  2  Bell,  Comm.  B.  7,  p.  620,  5th  ed. 

*  Both,  de  Soc.  n.  8i,  85.  ^  ^^^Yi.  de  Soc.  n.  86. 


CHAP.   IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  319 

which  any  one  may  prohibit  from  being  done.^  Fourth. 
No  partner  can  alienate  or  bind  the  property  of  the 
firm,  except  to  the  extent  of  his  own  interest  therein.^ 
These  rules  may  not  be  unreasonable  in  themselves  ; 
but  it  cannot  be  affirmed,  that  all  of  them  have  a  just 
foundation  in  our  law.  On  the  contrary,  as  we  have 
seen,  some  of  them  are  repudiated.^  Pothier  afterwards 
adds  some  other  obligations  of  partners  inter  sese ;  as 
for  example,  that  each  partner  is  bound  to  account  to 
the  others  for  all  that  he  owes  to  the  firm,  deducting 
what  is  due  to  him  by  the  firm.'*  So,  also,  each  partner 
is  bound  to  account  to  the  extent  of  the  share,  which 
he  has  in  the  partnership,  for  whatever  is  due  to  his 
other  partners  by  the  firm,  deducting  whatever  those 
partners  owe  to  the  firm.^  These  rules  seem  little 
more  than  an  expansion  of  the  principles  of  the  Roman 
law  on  the  same  subject.^ 

§  185.  This  is  but  a  very  summary  view  of  the  lead- 
ing rights,  duties,  and  obligations  of  partners  inter  sese, 
implied  by  law ;  and  indeed  a  full  enumeration  of  them, 
with  reference  to  the  cu'cumstances  of  each  particular 
kind  of  partnership,  would  be  found  at  once  tediously 
minute,  and  of  little  value,  even  if  it  were  practicable. 
The  rights,  duties,  and  obligations  of  partners  inter  sese 
must  necessarily  be  expanded  or  restrained,  to  meet  the 
exigencies  of  their  peculiar  trade  and  business ;  and 
general  rules  can  do  little  more  than  to  point  out  the 
ordinary  course  in  common  transactions.  We  shall 
have  occasion  hereafter  to  consider  the  rights,  duties, 
and  obligations,  expressed  in,  and  arising  under  articles 

1  Poth.  de   Soc.  n.  87,  88. 

2  Poth.  de  Soc.  n.  89.  '  Ante,  §  95. 

*  Poth.  de  Soc.  n.  108-123.  *  Poth.  de  Soc.  n.   108,  n.  12G-132. 

«  Poth.  Pand.  17,  2,  n.  26-29  ;  Id.  n.  33  ;  Id.  n.  36.  See  also  Domat, 
8,  8,  4,  art.  7,  10-16. 


320  PARTNERSHIP.  [cHAP.  IX. 

of  partnership,  and  the  interpretation  thereof.  But,  in 
concluding  this  part  of  the  subject,  it  may  be  remarked, 
that  partners  are  entitled  inter  sese  to  be  allowed  all 
charges,  losses,  and  expenditures,  which  they  have  prop- 
erly, or  necessarily,  or  unavoidably,  incurred  in  trans- 
acting the  partnership  business.^  On  the  other  hand 
(as  we  have  seen),^  no  partner  is  entitled,  unless  under 
some  special  agreement,  to  any  compensation,  commis- 
sion, or  reward,  for  his  skill,  labor,  or  services,  while  em- 
ployed in  the  partnership  business.^  The  nature  of  the 
contract  implying,  that  each  partner  shall  gratuitously 
give  and  exert  all  his  skill,  labor,  and  services,  so  far  as 
they  may  be  properly  required  for  the  due  accomplish- 
ment and  success  of  the  partnership  operation.^  If  any 
allowance  is  intended  to  be  made  for  extra  services  or 
labor,  it  is  a  fit  matter  to  be  adjusted  in  the  articles, 
under  which  the  partnership  is  formed. 

§  186.  John  Voet  lays  down  the  like  doctrine  in 
expressive  terms,  admitting  at  the  same  time,  that,  by 
custom  or  special  agreement,  a  compensation  may  be 
allowed  to  one  or  more  partners  for  extraordinary  labor, 
skill,  or  services.  "  Salarium  sen  honorarium  quod  at- 
tinet^  licet  rarior  ejus  in  societate,  quam  quidem  in 
mandato,  usus  sit,  dum  partes  lucri  singidis  ohvenientes 
sufficlens  operm  pretkmi  sunt ;  nihil  tamen  impedit,  quo 
minus  uni  socio,  negotia  societatis  forte  p>otissimum  aut 

'  See  Domat,  1,8,  4,  art.  11,  12;  Thornton  v.  Proctor,  1  Anst.  94. 

2  Ante,  §  1.82. 

'  Coll.  on  P.  B.  2,  c.  2,§  l,p.  130;  Id.  §2,  p.  142,  151,  2d  ed. ;  Franklin  v. 
Robinson,  1  Johns.  Ch.  157,  165  ;  Whittle  v.  M'Farlane,  1  Knapp,  311; 
Dougherty  v.  Van  Nostrand,  1  HofF.  68 ;  Burden  v.  Burden,  1  Ves.  &  B. 
170  ;  ante,  §  183. 

*  Ante,  §  183  ;  Franklin  v.  Boblnson,  1  Johns.  Ch,  157,  165  ;  Whittle  v. 
M'Farlane,  1  Knapp,  311  ;  Bradford  v.  Kimberly,  3  Johns.  Ch.  431  ; 
Dougherty  v.  Van  Nostrand,  1  Hoff.  68  ;  Burden  v.  Burden,  1  Ves.  &  B. 
170. 


CHAP.  IX.]       RIGHTS    AND    DUTIES    OF    PARTNERS.  321 

wiice  tractanti  ac  promoventi,  cum  ad  iUam  operam 
supra  ceteros  prcestandam  ex  conventione  non  teneretur^ 
vel  ah  initio  salarium  aliquod  assigtietur,  vel  2^osiea 
viri  honi  arhitratu  adjudiceUir,  idque  extraor dinar ia 
potius  tnagnistratus  cogtiitione,  quam  ordinaria pro  socio 
actione  intentata,  argmnento  eoriiin  quce  de  salario  in 
mandata  interveniente  dicta  sunt.  Quod  et  moribus 
hodiernis  conveniens  esse,  patet  ex  responso  Juriscon- 
sultorum  et  mercatorum  inter  Responsa  Jurisconsulto- 
rmn  HoIIandue"  ^  The  same  doctrine  may  be  traced 
back  to  the  Roman  law.^ 

'  1  Voet,  ad  Pand.  17,  2,  §  19,  p.  757.         •  Domat,  1,  8,  4,  art.  11,  12. 


322  PARTNERSHIP.  [cHAP.  X. 


CHAPTER  X. 

RIGHTS,    DUTIES,    AND    OBLIGATIONS    OF    PARTNERS    UNDER 
THE    ARTICLES    THEREOF. 

{  §  187.  Partnership  articles. 

188, 189.  Specific  performance  of  an  agreement  for  partnership. 

190.  Construction  of  general  words. 

191.  Articles  explained  by  conduct  under  them. 

192.  Articles  modified  and  waived  by  acts  of  the  partners. 

193.  Business  not  to  be  extended  beyond  the  articles. 

194.  Commencement  of  partnership. 

195.  Partnership  dissolved  by  death,  notwithstanding  articles. 

196.  Roman  law. 

197.  198.  Partnership  continued  beyond  the  time  hmited  in  the  articles. 

199.  Continuance  of  partnership,  notwithstanding  death. 

200.  Same  subject.    Appointment  of  successor. 

201.  Same  subject.     Election  of  executor  or  appointee. 

201  a.  Same  subject.     Liability  of  the  assets  of  the  deceased. 

202.  Firm  name. 

203.  Advances  of  capital. 

204.  Management  of  the  firm  business. 

205.  Ownei'ship  of  partnership  property. 

206.  Annual  accounts. 

207.  208.  Pui'chase  of  shares  on  dissolution. 

209.  Prohibition  from  carrying  on  business  during  the  partnership. 
210-212.  After  dissolution. 

213.  Power  of  a  majority. 

214.  Expulsion  of  partners. 

215.  Reference  to  arbitration. } 

§  187.  Hitherto,  we  have  been  mainly  considering 
the  rights,  duties,  and  obligations  of  partners  inter  sese, 
implied  by  law.  But,  as  written  articles  often  exist 
relative  to  the  formation,  management,  rights,  duties, 
and  obligations  of  the  particular  partnership,  it  may 
not  be  without  use  to  bring  together  some  of  the  more 
important  stipulations  and  arrangements  usually  con- 
tained in  those  articles,  and  to  ascertain  what,  in  point 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  323 

of  law,  is  the  true  interpretation,  application,  and  ob- 
jects thereof ;  and,  incidentally,  how  far  they  are  capable 
of  being  enforced,  either  in  Courts  of  Law,  or  in  Courts 
of  Equity.^ 

§  188.  At  the  threshold  of  these  inquiries  we  are  met 
with  the  question,  whether  Courts  of  Equity  (for  it  is 
clear,  that  Courts  of  Common  Law  have  no  jurisdiction, 
except  to  give  damages),  are  competent  to  decree  the 
specific  performance  of  a  preliminary  agreement  to 
enter  into  a  partnership  ;  and  if  so,  under  what  circum- 
stances a  specific  performance  wdll  be  decreed.  In  re- 
spect to  this  matter,  it  may  be  at  once  perceived  how 
full  of  delicacy,  diflftculty,  and  embarrassment  every  at- 
tempt to  enforce  a  preliminary  contract  of  this  sort 
must  be.  The  success  of  every  partnership  is  usually 
so  essentially  dependent  upon  the  hearty  co-operation 
and  exertions  of  all  the  partners  for  the  common  good ; 
and  reluctance,  and  discontent,  and  resistance  are  so 
incompatible  with  such  success ;  that  at  first  it  would 
seem,  that  no  Court  of  Equity  ought  to  exert  any  such 
authority  to  compel  an  observance  of  a  mere  treaty  to 
form  a  partnership.  But,  on  the  other  hand,  there 
may  be  serious  evils,  resulting  from  a  total  refusal  to  in- 
terfere in  all  cases  of  this  sort  under  any  circumstances  ; 
for  one  or  more  of  the  partners  may  have  incurred  re- 
sponsibilities on  account  of  the  intended  firm,  or  prelimi- 
nary steps  for  the  business  of  the  intended  partnership 
may  have  been  taken,  and  acts  done,  putting  the  same 
into  an  inchoate  and  imperfect  operation  upon  the  full 
faith    and   confidence   of  the  punctilious    discharge   of 

*  I  liave  availed  myself  throughout  this  whole  chapter  mainly  of  the 
materials  contained  in  Mr.  Collyer's  able  work  on  Partnership,  B.  2,  e.  2,  §  2, 
p.  131-1 G2,  2d  ed.  Mr.  Bell  has  also  devoted  a  considerable  space  to  the 
examination  of  the  same  subject,  which  will  well  reward  the  attentive  ex- 
amination of  the  learned  x-eader.  2  Bell,  Comm.  B.  7,  c.  2,  §  4,  p.  645-648, 
6th  ed. 


324  PARTNERSHIP.  [CHAP.  X. 

duties  by  the  other  side,  so  that  it  may  work  a  most  se- 
rious, if  not  an  irreparable  mischief  and  injury,  not  to 
enforce  the  specific  performance  of  the  contract,  so  as 
to  bind  all  parties  to  the  acts  so  done,  and  to  the  respon- 
sibilities so  incurred. 

§  189.  Courts  of  Equity  have  upon  this  subject  adopted 
an  intermediate  ground  ;  while,  on  the  one  hand,  they 
will  not  ordinarily  entertain  bills  for  a  specific  perform- 
ance of  such  a  preliminary  contract ;  they  will,  on  the 
other  hand,  under  special  and  peculiar  circumstances, 
in  order  to  suppress  frauds,  or  manifestly  mischievous 
consequences,  compel  such  a  performance.^  One  of  the 
cases,  in  which  Courts  of  Equity  will  not  ordinarily  in- 
terfere, is,  where  the  partnership  is  to  continue  during 
the  mere  pleasure  of  the  parties  ;  for  in  such  a  case  it 
seems  utterly  nugatory  to  decree  a  partnership,  which 
may  be  immediately  dissolved  at  the  will  of  the  dissatis- 
fied party.^     On  the  other  hand,  where  the  partnership 

'  Buxton  V.  Lister,  3  Atk.  383,  385 ;  Hibbert  v.  Hibbert,  cited  Coll.  on 
P.  B.  2,  c.  2,  §  2,  p.  132, 133,  2d  ed,;  Wats,  on  P.  c.  1,  p.  60,  2d  ed. ;  Anon. 
2  Ves.  Sr.  629,  630;  Gow  on  P.  c.  2,  §4,  p.  109,  110,  3d  ed. ;  1  Story,  Eq. 
Jur.  §  666,  and  note  ;  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  131-133,  2d  ed. ;  {Lind.  on 
P.  796  ;  Sichel  r.  Rosenthal,  30  Beav.  371 ;  Manning  v.  Wadsworth,  4  Md.  59.} 
Lord  Hardwicke,  in  Buxton  v.  Lister,  3  Atk.  385,  arguendo,  said :  "  Suppose  two 
partners  should  enter  into  an  agreement  by  such  a  memorandum  as  is  in  the 
present  case,  to  carry  on  a  trade  together,  and  that  it  should  be  specified 
in  the  memorandum,  that  articles  should  be  drawn  pursuant  to  it,  and  be- 
fore they  are  drawn,  one  of  the  parties  flies  off;  I  should  be  of  opinion, 
upon  a  bill  brought  by  the  other  in  this  court  for  a  specific  performance, 
that,  notwithstanding  it  is  in  relation  to  a  chattel  interest,  yet  a  specific 
performance  ought  to  be  decreed." 

*  Hercy  v.  Birch,  9  Ves.  357,  359  ;  1  Madd.  Ch.  Pract.  411,  note  (x)  ; 
Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  133-135,  2d  ed. ;  Van  Sandau  v.  Moore,  1  Russ. 
441,  463.  But  see  Gow  on  P.  c.  2,  §4,  p.  110,  111,  3d  ed.  — Mr.  Swanston, 
in  his  learned  note  to  Crawshay  v.  Maule,  1  Swans.  495,  513,  has  remai'ked  : 
"It  seems  clear,  that,  in  general,  the  Court  of  Chancery  will  compel  specific 
performance  of  an  agreement  for  a  partnership,  Buxton  v.  Lister,  3  Atk. 
385;  Anon.  2  Ves.  629;  but  Lord  Eldon  is  represented  to  have  held,  that 
this  doctrine  is  not  api)licable  to  partnerships,  which  may  be  immediately  dis- 
solved.   Hercy  v.  Birch,  9  Ves.  360.    See  1  Madd.  Prine.  &  Pract.  411,  2d  ed. 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  325 

has  informally  gone  into  operation,  or  it  is  for  a  specific 
term  of  time,  Courts  of  Equity  have  not  unfrequently 
decreed  a  specific  performance,  with  the  view  of  invest- 
ing the  parties  fully  with  all  their  legal  rights.^ 

§  190.  Passing  from  these  preliminary  considera- 
tions, let  us,  in  the  next  place,  attend  to  some  of  the 
more  important  stipulations  usually  contained  in  arti- 
cles of  partnership.  And  here  it  is  to  be  observed, 
that  the  same  rules  of  construction  apply,  as  in  ordinary 
cases ;  that  is  to  say,  to  ascertain  what  is  the  real 
intention  of  the  parties  in  particular  stipulations ;  and, 
when  ascertained,  to  carry  it  into  effect,  limiting  any 
general  language,  incautiously  used,  to  the  particular 
purposes  and  objects  and  transactions  specified.^  On 
the  other  hand,  general  language,  and  especially  such 
as  relates  to  the  nature  and  extent  of  covenants,  may 
frequently  be  applied,  and  deemed  to  run  through  the 
whole  body  of  the  articles.  Thus,  for  example,  the 
words  of  covenant,  which  usually  occur  at  the  com- 
mencement, or  introductory  part  of  the  articles,  usually 
declare  the  covenant  to  be  joint  and  several ;  and 
words  of  covenant  in  the  succeeding  stipulations  of 
the  mstrument  are  on  that  account  usually  construed, 

This  distinction,  however,  must  be  received,  it  is  presumed,  not  without 
qualification.  In  many  such  cases,  though  the  partnership  could  be  imme- 
diately dissolved,  the  performance  of  the  agreement  (like  the  execution  of  a 
lease  after  the  expiration  of  the  term,  see  Nesbitt  v.  Meyer,  1  Swans.  223,  226), 
might  be  important,  as  investing  the  party  with  the  legal  rights,  for  which  he 
contracted."  {England  v.  Curling,  8  Beav.  129;  Whitworth  r.  Harris,  40 
Miss.  483.}  We  have  already  seen  (ante,  §  181),  that,  although  in  ordinary 
partnerships  the  Roman  law  only  gave  the  action  pro  socio  after  a  dissolution 
of  the  partnersliip  ;  yet  in  certain  peculiar  partnerships  for  collection  of  the  pub- 
lic revenue  (Cou.s'a  Vecligalium),  the  action  jn'o  socio  for  an  account  lay  during 
the  continuance  of  the  partnership.     Poth.  Pand.  17,  2,  n.  33  ;  D.  17,  2,  65,  15. 

>  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  135,  2d  ed. ;  Gow  on  P.  c.  2,  §  4,  p.  109, 
110,  3d  ed.     But  see  Downs  v.  Collins,  6  Hare,  418 ;   [Lind.  on  P.  797.} 

-  Coll.  on  P.  B.  2,  c.  2,  p.  137 ;  1  Fonbl.  Eq.  B.  1,  c.  6,  §  16,  and  note 
(1)  ;   Gainsborough  v.  Stoi'k,  Barnard.  Ch.  312. 


326  PARTNERSHIP.  [CHAP.  X. 

although  not  so  expressed,  to  be  also  intended  to  be 
joint  and  several.^ 

§  191.  It  is  not,  however,  less  important,  in  order  to 
arrive  at  correct  results,  to  take  into  consideration 
other  matters.  Thus,  although  the  articles  of  part- 
nership regulate  the  rights,  duties,  obligations,  and 
interests  of  the  parties  thereto,  in  certain  specified 
cases ;  yet  they  leave  in  full  force  all  the  other  rights, 
duties,  obligations,  and  interests,  implied  by  law,  so 
far  as  they  are  not  superseded,  controlled,  qualified 
or  limited  by  those  articles.^  In  the  next  place,  in 
all  cases  of  doubtful  interpretation,  the  actual  construc- 
tion, adopted  by  the  partners  in  their  partnership  trans- 
actions, will  be,  and  indeed  ought  to  be,  adopted,-  as  the 
true,  legitimate,  and  appropriate  interpretation  intend- 
ed by  themselves.^ 

§  192.  In  the  next  place,  partnership  articles  in  the 
view  of  Courts  of  Equity,  whatever  may  be  the  rule  at 
law,  are  liable  to  be  controlled,  superseded,  qualified, 
or  waived  by  the  acts  and  transactions  of  the  partner- 
ship, in  the  course  of  the  business  thereof,  wherever 
the  assent  of  all  the  partners  thereto  may  be  fairly 
inferred,  and  however  positive,  or  stringent,  those  pro- 
visions may  be."^     In  short,  in  many  cases  of  this  kind, 

>  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  139,  2d  ed. ;  Id.  B.  2,  c.  8,  §  1,  p.  169. 

'^  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  138,  139;  Cra\yshay  v.  Collins,  15  Ves. 
218,  226 ;  Jackson  v.  Sedgwick,  1  Swans.  460,  469 ;  Pettyt  v.  Janeson, 
6  Madd.  146  ;   {Smith  v.  Jeyes,  4  Beav.  503.} 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  139,  2d  ed. ;  Geddes  v.  Wallace,  2  Bligh, 
270,  271,  297,  298;  [Beacham  v.  Eckford,  2  Sand.  Ch.  116.  Entries  in 
the  books  of  a  partnershijD  have  been  said  to  be  as  conclusive  of  the  rights 
of  the  partners,  as  if  prescribed  in  a  regular  contract.  Stewart  v.  Forbes, 
1  Hall  &  Tw.  461 ;  s.  c.  1  Macn.  &  G.  137.] 

■*  ["Partners,"  it  has  been  said,  "if  they  please,  may,  in  the  course  of 
the  partnership,  daily  come  to  a  new  arrangement  for  the  purpose  of  having 
some  addition  or  alteration  in  the  terms  on  which  they  carry  on  business, 
provided  those  additions  or  alterations  be  made  with  the  unanimous  concur- 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  327 

looking  to  the  course  of  conduct  of  the  partners,  and 
the  special  circumstances  of  their  business,  or  to  their 
general  acquiescence,  or  their  positive  acts,  we  may  often 
have  the  most  satisfactory  evidence  that  the  partnership 
articles  have  been  laid  aside,  either  pro  tanto^  or  in 
whole,  and  that  new  articles  and  arrangements  have 
been  entered  into  in  their  stead.^     Hence,  it  has  been 

rence  of  all  the  partners."  England  v.  Curling,  8  Beav.  129 ;  McDou- 
galdw.  Banks,  13  Ga.  451.] 

*  Geddes  v.  Wallace,  2  Bligh,  270,  297,  298 ;  Jackson  v.  Sedgwick,  1 
Swans.  460,  469;  [England  v.  Curling,  8  Beav.  129;  Stewart  v.  Forbes,  1 
Hall  &  Tw.  461 ;  s.  c.  1  Macn.  &  G.  137] ;  Const  v.  Harris,  Turn.  &  R.  496, 
523 ;  Gow  on  P.  c.  1,  §  1,  p.  9,  10,  3d  ed. ;  |  Coventry  v.  Barclay,  33  Beav. 
1,  affirmed  on  appeal,  12  Weekly  Rep.  500,  10  Jur.  N.  s.  Digest,  158.} 
—  In  Const  I'.  Harris,  Turn.  &  R.  523,  Lord  Eldon  said:  "In  ordinary 
partnerships  nothing  is  more  clear  than  this,  that  although  partners  enter 
into  a  written  agreement,  stating  the  terms,  upon  which  the  joint  concern  is 
to  be  carried  on,  yet,  if  there  be  a  long  course  of  dealing,  or  a  course  of 
dealing,  not  long,  but  still  so  long  as  to  demonstrate,  that  they  have  all 
agreed  to  change  the  terms  of  the  original  written  agreement,  they  may  be 
held  to  have  changed  those  terms  by  conduct.  For  instance,  if  in  a  com- 
mon partnership,  the  parties  agree,  that  no  one  of  them  shall  draw  or  accept 
a  biU  of  exchange  in  his  own  name,  without  the  concurrence  of  all  the 
othei's ;  yet,  if  they  afterwards  slide  into  a  habit  of  permitting  one  of  them 
to  draw  or  accept  bills,  without  the  concurrence  of  the  others,  this  court  will 
hold,  that  they  have  varied  the  terms  of  the  original  agreement  in  that  re- 
spect. So,  in  this  case,  if  it  can  be  shown,  that  in  the  administration  of  this 
property,  the  proprietors  in  general,  after  1812,  pursued  a  different  course 
from  that  provided  for  by  the  deed  of  March,  1812,  they  must  be  taken  to 
have  altered  the  agreement,  and  to  have  substituted  the  terms,  to  which,  in 
their  conduct,  they  have  adhered,  instead  of  the  terms  contained  in  the 
original  agreement.  And,  with  respect  to  the  present  plaintiff,  there  can  be 
no  doubt,  that  if,  after  the  deed  of  1812  was  executed,  his  testatrix  gave  in 
to  a  course  of  administration  of  the  property,  different  from  the  course  pro- 
vided for  by  the  deed ;  if  her  acts,  or  the  acts  of  others  with  her  consent, 
afforded  such  evidence  of  departure  from  the  terms  of  the  written  agree- 
ment, as  to  amount  to  the  substitution  of  a  ncAv  agreement,  though  evidenced 
only  by  parol,  instead  of  the  written  agreement ;  lie,  claiming  under  her, 
must  be  bound  by  her  acts,  and  cannot  be  at  liberty  to  revert  back  from 
those  acts,  establishing  a  new  agreement,  to  call  into  operation  again  the  old 
agi'eement,  and  to  insist,  that  the  non-execution  of  the  old  agreement  is,  in 
such  circumstances,  a  breach  of  trust.  So,  again,  it  is  a  principle  of  this 
court  with  respect  to  partnership  concerns,  that  a  partner,  who  complains 
that  the  other  partners  do  not  do  their  duty  towards  him,  must  be  ready  at 
all  times,  and  offer  himself  to  do  his  dutv  toward  them." 


328  PARTNERSHIP.  '      [cHAP.  X. 

judicially  declared,  that,  in  Courts  of  Equity,  articles 
of  partnership,  containing  clauses,  which  have  not  been 
acted  upon  by  the  parties,  are  read,  as  if  those  clauses 
were  expunged,  or  were  not  inserted  therein.^ 

§  193.  In  respect  to  the  nature,  and  extent,  and 
kind  of  business  of  the  partnership,  as  stated  in  the 
articles,  Courts  of  Equity  construe  the  articles  strictly, 
and  do  not  permit  the  business  to  be  extended  by  any 
of  the  partners,  without  the  consent  of  all  of  them, 
either  express  or  implied,  to  any  other  business  or 
branch  of  business,  of  a  different  nature,  extent,  or 
kind  ;  and  if  it  is  attempted,  they  will  interpose  by 
way  of  injunction  to  restrain  the  offending  parties.^ 

§  194.  In  the  next  place,  as  to  the  commencement 
of  the  partnership.  If  no  other  time  is  fixed  by  the 
articles,  the  commencement  will  take  place  from  the 
date  and  execution  of  the  instrument.^  And  this  rule 
is  so  inflexible  at  law,  that  parol  evidence  has  been 
deemed  inadmissible  to  control  this  intendment,  al- 
though the  partnership  would  thus  be  rendered  illegal 
at  least,  if  thereby  the  true  construction  of  the  words 
of  the  instrument  would  be  varied.'*  This  is  certainly 
pressing  the  law  of  implied  construction  to  a  great, 
but  perhaps  not  to  an  undue  extent.  It  would  not 
probably  be   acted   upon  by   Courts   of  Equity,  unless 

'  Jackson  v.  Sedgwick,  1  Swans.  460,  469 ;  Coll.  on  P.  B.  2,  c.  2,  §  2, 
p.  139,  2d  ed. 

2  Natusch  V.  Irving,  Gow  on  P.  Ap.  398,  407,  3d  ed. :  Id.  p.  Ill,  112. 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  140,  2d  ed. 

4  Williams  v.  Jones,  5  B.  &  C.  108;  {Lind.  on  P.  685;  Dix  v.  Otis,  5 
Pick.  38.  But  see  Davis  v.  Jones,  17  C.  B.  625;  Reboul  v.  Chalker,  27 
Conn.  114.}  —  Perhaps  Williams  v.  Jones  requires  a  more  full  exposition. 
The  ground,  upon  which  the  learned  judges  put  it,  was,  that  the  evidence 
made  the  instrument  conditional,  instead  of  being,  as  it  was  in  terms,  abso- 
lute. But,  suppose  the  instrument  had  been  signed  on  the  first  day  of  Janu- 
ary, and  it  was  agreed  between  the  parties  by  parol,  that  it  should  commence 
on  the  first  day  of  the  ensuing  February,  would  the  like  objection  have 
applied  ? 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  329 

the  parol  evidence  was  repugnant  to  the  terms  of  the 
written  contract,  as,  for  example,  by  making  the  agree- 
ment conditional,  when  upon  its  face  it  was  absolute  ; 
and  not  merely  a  supplement  thereto. 

§  195.  In  the  next  place,  as  to  the  duration  of  the 
partnership.  Although  the  partnership  be  fixed  to  a 
particular  term  or  period  of  time,  yet  it  is  always 
understood,  as  an  implied  condition  or  reservation 
(unless  the  contrary  is  expressly  stipulated),  that  it  is 
dissolved  by  the  death  of  either  of  the  partners,  at 
any  time  within  that  period.^  This  doctrine  seems  an 
exception  to  the  ordinary  rules  of  the  common  law  in 
the  interpretation  of  contracts  ;  and  it  has  sometimes 
been  complained  of  as  unreasonable.  But  it  seems 
founded  in  very  equitable  principles,  and  is  a  natural 
result  of  the  peculiar  objects  of  the  contract.^  Every 
partnership  is  founded  upon  a  delectus  jiersonce.,  which 
implies  confidence  and  knowledge  of  the  personal 
character  and  skill  and  ability  of  the  other  associates ; 
and  their  personal  co-operation,  advice,  and  aid,  in  all 

1  Coll.  on  P.  B.  1,  c.  2,  §  2,  jj.  73,  74,  2d  etl. ;  Id.  B.  2,  c.  2,  §  2,  p.  140 ; 
Crawford  v.  Hamilton,  3  Madd.  251  ;  Scholefield  v.  Eichelberger,  7  Pet.  586, 
594 ;  VuUiamy  v.  JJoble,  3  Mer.  593,  614 ;  Gow  on  P.  c.  5,  §  1,  p.  219,  220,  3d 
ed. ;  Gratz  v.  Bayard,  11  S.  &  R.  41  ;  {Bell  v.  Nevin,  15  Weekly  Rep.  85  ; 
6  Am.  Law  Reg.  n.  s.  181.} 

^  In  Crawsbay  v.  Maule,  1  Swans.  495,  509,  Lord  Eldon  said:  "The 
doctrine,  that  death  or  notice  ends  a  partnership,  has  been  called  unrea- 
sonable. It  is  not  necessary  to  examine  that  opinion ;  but  much  remains 
to  be  considered  before  It  can  be  approved.  If  men  will  enter  into  a 
partnership,  as  into  a  marriage,  for  better  and  worse,  they  must  abide  by 
it ;  but  if  they  enter  into  it  without  saying  how  long  it  shall  iendure,  they 
are  understood  to  take  that  course  in  the  expectation,  that  circumstances 
may  arise,  in  which  a  dissolution  will  be  the  only  means  of  saving  them  from 
ruin  ;  and  considering  what  persons  death  might  introduce  into  the  partner- 
ship, unless  it  works  a  dissolution,  there  is  strong  reason  for  saying,  that  such 
should  be  its  effect.  Is  the  surviving  partner  to  receive  into  the  partnership, 
at  all  hazards,  the  executor  or  administrator  of  the  deceased,  his  next  of  kin, 
or  possibly  a  creditor  taking  administration,  or  whoever  claims  by  represen- 
tation, or  assignment  from  his  representative  ?  " ' 


330  PARTNERSHIP.  [CHAP.  X. 

the  transactions  thereof.  The  death  of  any  one  part- 
ner necessarily  puts  an  end  to  all  such  co-operation, 
advice,  and  skill.  If,  therefore,  the  partnership  were 
not,  whatever  might  be  the  stipulated  terms  for  its 
continuance,  put  an  end  to  by  the  death  of  any  one 
partner,  one  of  two  things  must  follow  ;  either  that  the 
whole  business  of  the  partnership  must  be  carried  on 
by  the  surviving  partners  exclusively,  at  the  hazard  of 
the  estate  and  interests  of  the  deceased  partner  ;  or 
else  that  the  personal  representative  of  the  deceased, 
toties  quoties,  who  may  be  a  mere  stranger,  or  even  a 
woman,  wholly  unfit  for  and  unacquainted  with  the 
business,  must  be  admitted  into  the  management.  We 
see  at  once,  that  either  alternative  may  be  highly 
inconvenient  or  injurious  to  the  rights,  interests,  and 
objects  of  the  original  concern.^  The  law,  therefore, 
will  not  force  it  upon  the  parties ;  but  it  presumes,  in 
the  absence  of  all  contrary  stipulations,  that  by  a  tacit 
consent,  death  is  to  dissolve  the  partnership,  because  it 
dissolves  the  power  of  a  personal  choice,  confidence, 
and  management  of  the  concern.^ 

§  196.  The  Roman  law  adopted  this  doctrine  in  its 
fullest  extent,  and  did  not  (as  we  have  seen),  even  per- 
mit the  parties  by  their  private  stipulations  to  agree,  that 
upon  the  death  of  a  partner,  his  heir  should  be  admitted 
into  the  partnership  for  the  reasons  before  suggested. 
Solmtur  adhuc  societas  etiam  morte  socii  ;  quia  qui  so- 
cietatem  contrahit,  certa7n  jjersonam,  sibi  eliglt  Sed  et, 
si  consensu  plurium  societas  contracta  sit,  morte  unius 
socii  solviiur,  etsi  j^hires  supersint ;  nisi  in  coeunda  so- 
cietate  aliter  convenerit.^     This  last  qualification,  as  we 

1  See  Pearcev.  Chamberlain,  2  Ves.  Sr.  33,  34  ;  Poth.  de  Soc.  n.  144,  145  ; 
Domat,  1,  8,  4,  art.  14 ;  Id.  1,  8,  2,  art.  3,  4. 

^  Gow  on  P.  c.  5,  §  1,  p.  218-220,  3d  ed. ;  Mr.  Swanston's  note  to  Craw- 
shay  V.  Maule,  1  Swans.  509,  note  (a). 

3  Inst.  3,  2G,  5. 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  331 

shall  presently  see,  applied  only  to  the  continuance  of 
the  partnership  by  the  survivors.^  Nemo  2^otest  societa- 
tem  heredi  suo  sic  parere^  ut  ipse  heres  socius  sit.^  Idem 
respondit,  societatem  non  posse  idtra  mortem  porrlgi ; 
et  ideo  nee  lihei^tatem  de  suprem,is  judiciis  constrimjere 
quis  poterit,  vel  cognatum  ulteriorem  proximiorihus  in- 
ferre.^  Again :  Adeo,  moi^te  socii  solvitwr  socletas,  ut 
nee  ah  initio  2^cicisci  possimns^  ut  heres  etiam  succedat 
societati.^  Societas  quemadmodum  ad  heredes  socii 
non  transit,  ita  nee  ad  adrogatorem  ;  Ne  alioquin  in- 
vitus  quis  socius  efficiatur,  cui  non  vult.^  The  law  of 
England,  as  well  as  that  of  France  (as  we  have  seen),  is 
contrary  in  this  respect  to  the  Roman  law ;  and  permits 
the  parties,  by  express  stipulation,  to  provide  for  the 
continuance  of  the  partnership  after  the  death  of  one 
partner,  and  for  the  admission  thereto  of  his  heir,  or 
other  representative.'^ 

§  197.  But  suppose  the  original  term  of  the  partner- 
ship should  expire  by  the  mere  effluxion  of  time,  and 
still  the  partnership  should  (as  indeed  not  unfrequently 
happens)  continue  to  be  carried  on  by  the  same  parties, 
without  the  execution  of  any  new  articles  of  partnership, 
or  without  any  express  recognition  of  the  old  articles ; 
the  question  would  arise,  as  to  what  ought,  under  such 
circumstances,  to  be  deemed  the  terms  and  stipulations 
of  the  continued  partnership.  Is  it  to  be  presumed  to 
be  renewed  for  the  like  period  of  time,  and  upon  the 
like  stipulations  and  conditions,  as  those  which  were 
contained  in  the  old  articles  ?     Or  is  it  to  be  deemed  a 

'  Domat,  1,  8,  5,  art.  14,  15. 

*  D.  17,  2,  35.  ==  D.  17,  2,  52,  9. 

*  D.  17,  2,  59.  ^  D.  17,  2,  65,  11 ;  D.  3,  2,  6,  6. 

^  Ante,  §  5;  Pearce  v.  Cliamberlain,  2  Yes.  Sr.  33;  Baliiiain  v.  Shore,  9 
Ves.  500;  Crawshay  v.  Maule,  1  Swans.  495,  508;  Poth.  de  Soc.  n.  144,  145; 
Gow  on  P.c.  5,  §  1,  p.  219,  220,  3d  ed.;  Coll.  on  P.  B.  2,  c.  2,  §  2, p.  140,  147, 
2d  ed.;  Gratz  v.  Bayard,  11  S.  &  R.  41. 


332  PARTNERSHIP.  [cHAP.  X. 

mere  partnership  during  the  pleasure  of  both  parties, 
and  dissoluble  instantaneously  at  the  will  of  either] 
And,  if  the  latter  be  the  true  predicament  thereof,  then, 
are  the  interests  of  the  parties,  and  their  shares  in  the 
profits,  while  it  is  actually  continued,  to  be  governed 
and  guided  by  the  stipulations  of  the  old  articles  or 
not? 

§  198.  Perhaps  these  inquiries  cannot  be  answered 
universally  in  the  same  manner,  as  equally  applicable 
to  the  circumstances  of  all  cases  ;  for  the  habits  of  the 
trade,  and  the  conduct  of  the  parties,  may  often  estab- 
lish the  fact  satisfactorily,  that  some  of  the  articles  have 
been  practically  waived,  or  abrogated,  or  qualified,  while 
others  are  necessarily  implied,  as  being  in  full  force  and 
operation.  In  such  cases,  the  presumption  of  the  actual 
state  of  the  partnership  contract  will  necessarily  vary 
with  the  circumstances,  and  be  governed  by  them,  and 
not  govern  them.  In  the  absence,  however,  of  all  pre- 
sumptions of  this  nature,  the  general  rule  seems  to  be, 
that  the  partnership  is  to  be  deemed  one  for  no  definite 
period,  but  dissoluble  at  the  will  of  any  of  the  part- 
ners ;  ^  but  that,  in  other  respects,  the  old  articles  of  the 
expired  partnership  are  to  be  deemed  adopted  by  impli- 
cation, as  the  basis  of  the  new  partnership  during  its 
actual  continuance.^ 

'  Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  307.  [See  Gould  v.  Horner, 
12  Barb.  fiOl.] 

^  Bootli  V.  Parks,  1  Molloy,  4G5  ;  Crawshay  v.  Collins,  15  Ves.  218, 
228;  U.  S.  Bank  v.  Binney,  5  Mason,  176,  185.  —  In  this  last  case 
the  Court  said :  "  Whether  the  present  be  a  limited  or  general  partner- 
ship, is  to  be  determined  by  the  whole  evidence  in  the  case.  It  is  certain, 
that  by  the  articles  it  is  a  limited  coi^artnership,  and  confined  to  the  soap 
and  candle  business.  Those  articles  expired,  by  their  own  limitation,  in  two 
years,  and  had  force  no  longer,  unless  the  parties  elected  to  continue  the 
partnership  on  the  same  terms.  That  is  matter  of  evidence  upon  the  whole 
facts.  The  natural  presumption  is,  that  as  the  partnershij)  was  continued  in 
fact,  it  was  continued  on  the  same  terms  as  before,  unless  that  presumption 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  333 

§  199.  In  this  connection,  it  may  be  well  to  say  a  few 
words,  as  to  clauses  in  articles  of  partnership,  stipulat- 
ing for  the  continuance  thereof,  notwithstanding  the 
death  of  one  or  more  of  the  partners.^  Such  a  clause 
is  usually  introduced  into  partnerships  for  a  long  term 
of  years,  where  the  outlay  of  capital  is  great  in  perma- 
nent fixtures  and  manufacturing  establishments,  and  the 
locality  of  the  trade  renders  it  important  in  point  of 
profit  and  good-will,  that  it  should  be  steadily  carried 
on,  as  long  as  may  be,  under  the  same  proprietors  or 
their  representatives.  In  cases  of  this  sort,  the  clause 
commonly  empowers  the  representative  of  the  deceased 


is  rebutted  by  the  other  circumstances  in  the  case.  There  is  no  written 
agreement  respecting  the  extension  of  the  copartnership ;  and  therefore  it 
is  open  for  inquiry  upon  all  the  evidence.  The  present  notes  were  made 
and  indorsed  long  after  the  term  of  two  years  expired.  The  plaintiffs  con- 
tend, that  the  partnership  was  then  general ;  the  defendants,  that  it  was  lim- 
ited, as  before.  The  jury  must  determine  between  them,  upon  weighing  all 
the  facts  and  presumptions."  [Thus,  if  by  the  written  agreement  one  jiart- 
ner  is  to  receive  no  compensation  for  his  time  and  services  unless  a  profit  is 
realized  from  the  business,  and  by  the  articles  of  partnership  it  was  to  con- 
tinue for  one  year,  but  was  in  fact  continued  two  years  without  any  new 
agreement,  it  was  held  that  the  same  provision  must  apply  to  the  second 
year.  Bradley  v.  Chamberlin,  16  Vt.  613];  {Essex  v.  Essex,  20  Beav. 
442;  Parsons  v.  Hayward,  31  Beav.  199,  affirmed  on  appeal  8  Jur.  n.  s. 
924;  s.  c.  6  L.  T.  N.  s.  628;  Mifflin  v.  Smith,  17  S.  &  R.  165.  A  memo- 
randum of  a  partnership  between  A.,  B.,  and  C.  provided  that,  if  one  died,  the 
survivors  should  pay  to  his  executors  the  value  of  his  capital  as  appearing  on 
the  last  account.  A.  died,  and  B.  and  C.  continued  the  business.  B.  after- 
wards died.  Held,  from  the  conduct  of  the  parties,  that  the  same  stipulation 
was  continued  in  existence,  and  that  C.  should  pay  to  B.'s  executors  the  value 
of  his  capital  as  appearing  on  the  last  account.  King  v.  Chuck,  17  Beav. 
325.  But  where  the  articles  of  a  partnership  for  a  term  provided  that 
either  partner  might,  in  the  event  of  specified  conduct  on  the  part  of  the 
other,  dissolve  the  partnership  by  notice,  and  that  the  latter  partner  should, 
in  that  case,  be  considered  as  quitting  the  business  of  the  former,  this  pro- 
vision was  held  not  applicable  to  a  continuation  of  the  partnership,  afler  the 
term,  without  an  express  renewal.  Clark  v.  Leach,  32  Beav.  14,  affirmed  on 
appeal.     1  De  G.  J.  &  S.  409.} 

*  {See  Laughlin  v.  Lorenz's  Adm'rs,  48  Penn.  275;  Stan  wood  v.  Owen, 
14  Gray,  195.} 


334  PARTNERSHIP.  [CHAP.  X. 

partner  to  carry  on  the  trade,  in  conjunction  with  the 
survivors,  for  the  benefit  of  the  widow  and  children  of 
the  deceased  partner ;  and  frequently,  also,  for  the  ad- 
mission of  one  or  more  of  his  children  into  the  concern, 
upon  his  or  their  arrival  at  majority.^  Sometimes  the 
provision  partakes  of  the  character  of  a  settlement,  giv- 
ing an  interest  in  the  partnership  to  the  widow,  during 
her  life,  and  dividing  her  share,  after  her  death,  equally 
among  all  the  children.^  Under  such  circumstances, 
the  question  may  arise,  whether  all  the  children  take  a 
vested  interest  in  the  partnership  trade,  from  time  to 
time,  as  they  are  born,  so  that,  although  they  should  die 
during  the  lifetime  of  their  mother,  yet  their  shares 
thereof  will  be  transmissible  ;  or,  whether  such  children 
only,  as  are  living  at  the  death  of  the  mother,  are  en- 
titled to  take  a  vested  share  or  interest.  It  has  been 
decided,  that  the  latter  is  the  true  interpretation  to  be 
put  upon  such  provisions  ;  upon  the  ground,  that  the 
primary  object  of  all  such  clauses  is  the  continuance  of 
the  partnership  ;  and  that  all  the  other  provisions,  con- 
tained therein,  ought  to  be  treated  as  subservient  to  this 
leading  purpose.^ 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  147,  148,  2d  ed.  [See  Downs  v.  Collins, 
6  Hare,  418.] 

2  Ibid.     {See  Skirving  v.  Williams,  24  Beav.  275.} 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  147,  148,  2ded. ;  Balmain  v.  Shore,  9  Ves. 
500,  506,  507.  —  The  case  of  Balmain  w.  Shore  was  of  this  nature  ;  and  Sir 
William  Grant,  in  delivering  his  judgment,  said :  "  The  object  of  these  very 
ill-drawn  articles  is  to  constitute  a  partnership  for  the  very  unusual  term  of 
99  years.  As  it  was  not  to  be  expected  any  of  the  parties  should  live  so  long, 
it  was  necessary  to  ascertain  in  what  mode  the  partnership  was  to  continue 
after  their  death  ;  and  it  appears  to  have  been  intended  for  their  own  bene- 
fit, and  that  of  their  families,  called,  in  some  parts  of  the  articles,  their  se- 
quels in  right.  From  the  manner  in  which  the  interests  are  given  in  the 
clause,  more  particulai-ly  ascertaining  the  mode  of  succession  to  the  shares, 
the  question  arises,  whether  the  words  are  to  be  construed  as  they  would 
be,  if  applied  to  dispositions  of  property  in  general ;  or  a  different  con- 
struction is  to  be  made,  from  the  consideration  of  the  subject.     It  must  be 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  335 

§  200.  Sometimes  the  clause  provides  for  the  con- 
tinuance of  the  partnership,  by  stipuhiting,  that  the 
interest  of  the  deceased  partner  in  the  concern,  after 
his  death,  and  during  the  term  of  the  partnership, 
shall  go  to  such  persons  as  he  shall  by  his  will  name 
and  appoint ;  and  in  default  of  such  appointment,  that 
it  shall  devolve  on  his  wife,  and  in  case  of  her  death, 
upon  his  children,  in  equal  shares ;  and  in  case  of  the 
death  of  all  his  children,  to  his  executors  and  adminis- 
trators, who  are  to  succeed  to  all  his  rights  and  powers 

admitted,  that  if  this  were  a  settlement  of  a  sum  of  money,  or  other  proper- 
ty, the  children  would  take  vested  interests ;  and  the  words,  '  after  the  de- 
cease of  such  widow,'  &c.,  would  postpone,  not  the  commencement  of  the 
interest,  but  only  the  commencement  of  the  possession.  Accordingly,  it 
was  contended,  on  the  one  hand,  that  under  this  instrument  all  the  children 
took  vested  interests  in  the  partnership  shares,  as  they  were  born ;  and 
though  some  died  before  their  mothers,  yet  their  shares  were  transmissible  ; 
on  the  other,  that  the  words  in  the  clause,  to  which  I  have  alluded,  are  tb 
have  a  different  construction  ;  and  that  such  children  only  Avill  be  entitled 
to  a  share,  as  shall  be  living  at  the  death  of  the  widow.  The  words,  I  think, 
must  receive  their  construction  from  the  consideration  of  the  particular  in- 
strument. The  primary  object  was  to  constitute  a  partnership,  and  to  as- 
certain the  manner  in  which  the  shares  were  to  be  enjoyed  in  succession.  It 
was  but  a  secondary  object,  and  through  that  medium,  to  give  a  benefit  to 
the  families  ;  and  it  appears  to  me,  the  object  of  this  clause  was  to  designate 
and  ascertain,  who  are  to  supply  the  vacancies,  as  they  shall  happen ;  that 
no  interest  was  intended  by  anticijiation  to  any  one  ;  but  the  object  was  to 
provide  for  the  filling  up  of  that  vacancy,  which  might  happen  by  the  death 
of  any  partner  interested  in  the  partnership.  For  instance,  where  one  of 
the  original  partners  died,  and  left  a  widow,  she  instantly  was  to  succeed  to 
a  share ;  when  she  died,  and  left  children,  they  were  instantly  to  succeed 
to  that  share ;  and,  until  a  vacancy  happened,  there  was  no  room  for  ascer- 
taining the  objects,  who  were  to  come  in  the  place  of  the  party  dying ;  and 
therefore  such  children  only,  as  should  be  living  at  the  time  the  vacancy 
happened,  could  be  intended  to  succeed  upon  that  vacancy.  That  is  more 
evident  from  the  provision  as  to  the  sale  of  a  share ;  which  is  perfectly  in- 
compatible with  the  supposition,  that  the  children,  as  they  were  born, 
should  take  vested  interests  in  the  partnership  shares  of  their  parents. 
It  was  impossible  the  children,  then  born,  could  take  such  a  vested  inter- 
est, as  they  must  at  all  events  succeed  to.  It  was  only  upon  the  suppo- 
sition, that  the  p'artner  left  a  share,  that  there  could  be  any  successor; 
and  the  vacancy  must  happen,  before  the  succession  could  be  ascertained." 


336  PAKTNERSHIP.  [CHAP.  X. 

in  the  business  and  management  of  the  partnership. 
Now,  under  such  circumstances,  the  question  may  arise, 
in  what  manner  this  power  of  appointment  is  to  be 
construed ;  whether  as  a  technical  power  of  appoint- 
ment, or  not.  If  as  a  technical  power,  then  it  will  be 
necessary  for  the  testator,  in  making  the  appointment 
by  will,  to  allude  in  some  distinct  manner  to  the  power, 
so  as  to  demonstrate,  that  it  is  thereby  intended  to  be 
executed ;  for  a  general  gift  of  all  his  estate  and  effects 
to  one  or  more  of  his  children,  will  not  be  deemed  a 
specific  execution  of  the  power.  But,  if  not  to  be  con- 
strued technically,  then  such  a  gift  will  amount  to  a 
sufficient  designation  of  the  donee  or  donees,  as  ap- 
pointees of  his  share  and  interest  in  the  concern,  as 
succeeding  partners.  Upon  the  same  enlarged  view  of 
the  objects  of  this  clause  (as  to  the  continuance  of  the 
partnership  business),  it  has  been  held,  that  such  a 
power  of  appointment  is  not  to  be  treated  as  technical ; 
and,  therefore,  that  the  appointment  is  well  executed 
by  such  a  general  gift.^ 

§  201.  Another  question  may  arise  under  clauses 
for  the  continuance  of  the  partnership,  and  the  admis- 
sion of  the  executor  and  administrator  of  the  deceased 
partner  into  the  firm,  and  that  is,  whether,  when  the 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  148,  149,  2d  ed. ;  Ponton  v.  Dunn,  1 
Russ.  &  M.  402.  — On  this  occasion  Sir  John  Leach  (Master  of  the  Rolls) 
said  :  "  It  is  true,  the  words  '  name  and  appoint '  are  used  in  the  deed ;  but 
considering  the  relation  of  the  parties,  I  cannot  understand  them  to  be  used 
with  a  view  to  create  a  power  of  appointment  in  its  technical  sense,  and  to 
limit  the  testator's  power  of  disposition  by  will  over  this  part  of  his  prop- 
erty. Without  this  stipulation,  those  who  claimed  through  him,  would  have 
had  no  title  to  share  in  the  partnership  profits  after  his  death ;  and  it  is  a 
mere  bargain  with  his  partner,  that  he  should  have  a  power  of  disposition 
by  will,  and  if  he  died  without  a  will,  that  the  property  should  devolve  to 
his  family  in  the  manner  stated.  This  property  will  therefore  pass  under 
the  description  in  his  will,  of  '  all  other  his  estate  and  effects,  of  whatsoever 
nature  or  description.'" 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  337 

partnership  is  intended  to  be  continued  after  the  death 
of  the  partner,  it  is  a  matter  of  election  with  the 
widow,  children,  appointee,  or  executor,  or  administra- 
tor, of  the  deceased,  to  continue  the  same,  or  not ;  or 
whether  it  is  absolute  and  peremptory  upon  them.  In 
respect  to  clauses  of  this  nature,  the  general  rule  is,  in 
the  absence  of  all  clear  and  well-defined  declarations 
to  the  contrary,  that  they  are  to  be  construed,  as  giving 
the  executor  or  administrator  an  option,  so  that  he  may 
continue  the  partnership,  or  not,  as  he  may  think 
proper  ;  and  of  course  a  reasonable  time  will  be  allow- 
ed to  him  for  that  purpose.^  Probably  the  same  rule 
would  prevail  in  the  case  of  a  widow,  a  child,  a  legatee, 
or  appointee,  unless  the  language  of  the  provision 
clearly  established  a  positive  direction,  that  at  all 
events  the  partnership  should  be  continued.^  If  it 
did,  then  it  would  seem  clear,  that  every  such  party 
must  take,  if  he  takes  at  all,  according  to  the  terms 
of  the   will,   and  not   otherwise ;    and  that   he  cannot 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  149,  150,  2d  ed. ;  Pigott  v.  Bagley,  1  ]\Ic- 
Cle.  &  Y.  569;  [Downs  v.  Collins,  6  Hare,  418]  ;  {Madgwick  v.  Wimble, 
6  Beav.  495.}  Where  the  articles  provide,  that  the  executors  or  ad- 
ministrators shall  continue  the  partnership,  if  they  think  fit,  they  will  be 
considered  as  partners  unless  they  give  notice  within  a  reasonable  time  to 
the  contrary.  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  151,  2d  ed. ;  Morris  v.  Harri- 
son, CoUes,  157. 

2  Kershaw  v.  Matthews,  2  Russ.  62 ;  Pigott  v.  Bagley,  1  McCle.  &  Y. 
509.  —  In  the  former  case  Lord  Eldon  said  :  "  If  there  is  a  partnership  car- 
ried on  under  articles,  which  stipulate  that,  upon  the  death  of  a  partner,  he 
shall  be  succeeded  in  the  business,  either  by  some  person,  whom  he  shall 
appoint,  or  by  his  executors,  it  may  happen,  that  his  appointees  or  his  ex- 
ecutors do  not  think  proper  to  come  into  his  place  on  the  same  terms  on 
which  he  was  a  partiier  in  the  concern.  In  that  case,  the  death  of  the  party 
puts  an  end  to  the  partnership.  The  stipulation  may  be,  that  the  appointee 
or  executor  of  the  deceased  partner  is  to  be  a  partner  only,  if  he  does  this 
or  that  particular  thing.  If  the  executor  or  appointee  refuses  to  comply 
with  the  proviso,  the  whole  concern  must  be  wound  up.  But  the  dissolution 
which  takes  place,  is  not  a  dissolution  wrouglit  l)y  the  exclusion  of  the  ex- 
ecutor or  appointee ;  for  he  never  becomes  a  partner." 

22 


338  PARTNERSHIP.  [CHAP.  X. 

elect  to  take  the  benefit  without  continuing  the  part- 
nership.^ 

§  201  a.  Another  question  of  a  very  important  na- 
ture may  arise  out  of  a  provision  for  the  continuation 
of  a  partnership  after  the  death  of  one  of  the  partners, 
as  to  the  extent  to  which  contracts  made  after  the 
death  of  that  partner  bind  his  assets.^  A  testator, 
directing  the  continuance  of  a  partnership,  may,  if  he 
so  choose,  bind  his  general  assets  for  all  the  debts  of 
the  partnership  contracted  after  his  death.^  But  he 
may  also  limit  his  responsibility,  either  to  the  funds 
already  embarked  in  the  trade,  or  to  any  specific 
amount  to  be  invested  therein  for  that  purpose  ;  and 
then  the  creditors  can  resort  to  that  fund  or  amount 
only,  and  not  to  the  general  assets  of  the  testator's 
estate,  although  the  partner,  or  executor,  or  other 
person  carrying  on  the  trade,  may  be  personally  re- 
sponsible for  all  the  debts  contracted.^     And  this  leads 

>  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  149,  150,  2d  ed. ;  Crawshay  v.  Maule,  1 
Swans.  495,  512.  {See  Page  v.  Cox,  10  Hare,  163. }  [Where  the  option  was 
secured  to  "  the  executor  or  administrator,*'  on  giving  notice  within  three 
months  after  the  decease  of  the  parties  ;  and  the  parties  dying  intestate,  the 
widow  gave  such  notice  within  the  three  months,  but  without  taking  out  let- 
ters of  administration  till  some  time  after  the  three  months,  it  was  held, 
that  she  had  not  effectually  complied  with  the  condition,  so  as  to  be  admit- 
ted into  the  firm.     Holland  v.  King,  6  C.  B.  727.] 

*  Burwell  u.'Mandeville's  Ex'r,  2  How.  560,  576.  ,See  also  Ex  parte  Gar- 
land, 10  Ves.  110,  119  ;  Ex  parte  Richardson  in  re  Hodgson,  3  Madd.  138 ; 
Thompson  v.  Andrews,  1  Myl.  &  K.  116;  Pitkin  v.  Pitkin,  7  Conn.  307; 
Scholefield  v.  Eichelberger,  7  Pet.  586,  594;  Gratz  v.  Bayard,  11  S.  &  R. 
41.  [7n  re  Xorthern  Coal  Mining  Co.,  10  Eng.  L.  &  Eq.  171 ;  s,  c.  siib  nom. 
Ex  parte  Blakeley's  Ex'rs,  3  Macn.  &  G.  726.]     {See  §  319  a. } 

'  {Laughlin  v.  Lorenz's  Adm'r,  48  Penn.  St.  275 ;  Davis  v.  Christian,  15 
Gratt.  11.  But  see  Stanwood  v.  Owen,  14  Gray,  195.  | 
•  *  This  is  clearly  established  by  the  case  Ex  parte  Garland,  10  Ves.  110, 
where  the  subject  was  fully  discussed  by  Lord  Eldon,  and  Ex  parte  Rich- 
ardson, 3  Madd.  138,  157,  where  the  like  doctrine  was  affirmed  by  Sir  John 
Leach  (then  Vice-Chancellor),  and  by  the  same  learned  judge,  when 
Master  of  the  Rolls,  in  Thompson  v.  Andrews,  1  Myl.  &  K.  116.  The  case 
of  Hankey  v.  Hammock,  before  Lord  Kenyon,  when  Master  of  the  Rolls, 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  339 

US  to  remark,  that  nothing  but  the  most  clear  and 
unambiguous  language,  demonstrating  in  the  most 
positive  manner  that  the  testator  intends  to  make  his 
general  assets  liable  for  all  debts  contracted  in  the 
continued  trade  after  his  death,  and  not  merely  to 
limit  it  to  the  funds  embarked  in  that  trade,  would 
justify  the  court  in  arriving  at  such  a  conclusion,  from 
the  manifest  inconvenience  thereof,  and  the  utter  im- 
possibility of  paying  off  the  legacies  bequeathed  by 
the  testator's  will,  or  distributing  the  residue  of  his 
estate,  without  in  effect  saying  at  the  same  time  that 
the  payments  may  be  recalled,  if  the  trade  should 
become  unsuccessful  or  ruinous.  Such  a  result  would 
ordinarily  be  at  war  with  the  testator's  intention  in 
bequeathing  such  legacies  and  residue,  and  would,  or 
might  postpone  the  settlement  of  the  estate  for  a  half- 
centm'y,  or  until  long  after  the  trade  or  continued 
partnership  should  terminate.  Lord  Eldon^  put  the 
inconvenience  in  a  strong  light,  by  suggesting  several 
cases  where  the  doctrine  would  create  the  most  mani- 
fest embarrassments,  if  not  utter  injustice  ;  and  he  said, 
that  the  convenience  of  mankind  required  him  to  hold, 
that  the  creditors  of  the  trade,  as  such,  have  not  a  claim 
against  the  distributed  assets  in  the  hands  of  third  per- 
sons, under  the  directions  in  the  same  will,  which  has 


reported  in  Cook's  Bankrupt  Law,  67,  5th  ed.,  and  more  fully  in  a  note  to 
3  Madd.  148 ;  so  far  as  may  be  thought  to  decide  that  the  testators  assets 
are  generally  liable  under  all  circumstances,  where  the  trade  is  directed  to 
be  carried  on  after  his  death,  has  been  completely  overturned  by  other  later 
cases,  and  expressly  overruled  by  Lord  Eldon,  in  Ex  parte  Garland,  10 
Ves.  110,  121,  122,  where  he  stated  that  it  stood  alone,  and  he  felt 
compelled  to  decide  against  its  authority.  The  case  of  Pitkin  v.  Pitkin, 
7  Conn.  307,  is  fully  in  point  to  the  same  effect.  See  also  Burwell  v. 
Mandeville's  Ex'r,  2  How.  560,  576,  where  the  doctrine  stated  in  the  text 
was  affirmed. 

'  Ex  paHe  Garland,  10  Ves,  110,  121,  122. 


340  PARTNERSHIP.  [cHAP.  X. 

authorized  the  trade  to  be  carried  on  for  the  benefit  of 
other  persons.^ 

§  202.  In  partnership  articles  it  is  also  often  agreed 
what  shall  be  the  proper  style  of  the  firm,  as  for 
example,  John  Doe  and  Company  ;  and,  under  such 
circumstances,  it  is  a  part  of  the  duty  of  every  partner, 
in  signing  contracts  and  other  instruments,  punctili- 
ously to  observe  and  follow  the  very  formulary.^  This 
may  be  necessary,  not  only  to  bind  the  firm  itself,  but 
also  to  absolve  him  from  any  personal  liability,  not 
only  to  third  persons,  but  also  to  his  partner.^     It  will 

^  This,  also,  was  mauifestly  the  opinion  of  Sir  John  Leach  in  the  cases 
Ex  par^e  Richardson,  3  Madd.  138;  Thompson  v.  Andrews,  1  Myl.  &  K. 
116,  and  was  expressly  held  in  the  case  in  Pitkin  v.  Pitkin,  7  Conn.  307. 
|In  Kirkman  v.  Booth,  11  Beav.  273,  280,  Lord  Langdale,  M.  R.,  says: 
"It  is,  and  it  has  been  admitted  to  be,  a  rule  without  exception,  that,  to 
authorize  executors  to  carry  on  a  trade  or  permit  it  to  be  carried  on  with 
the  property  of  a  testator  held  by  them  in  trust,  there  ought  to  be  the  most 
distinct  and  positive  authority  and  direction  given  by  the  will  itself  for  that 
purpose."  So  Cutbush  v.  Cutbush,  1  Beav.  184 ;  McISTeillie  v.  Acton,  4  De 
G.  M.  &  G.  744.  In  Stanwood  v.  Owen,  14  Gray,  195,  it  was  held, 
that  a  stipulation  that,  on  the  death  of  either  partner,  the  survivor  might 
carry  on  the  business  for  one  year  for  the  benefit  of  the  parties,  did  not 
•  justify  the  allowance,  against  the  insolvent  estate  of  a  deceased  partner,  xjf  a 
debt  contracted  by  the  survivor  within  the  year.  In  Laughlin  v.  Lorenz's 
Adm'r,  48  Penn.  St.  275,  articles  of  partnership  provided  that  in  the  case 
of  the  death  of  either  partner,  the  partnership  should  continue  to  the  next 
1st  of  August,  and  should  then  be  settled  up  "in  such  manner  as  may  be 
decided  on  by  the  survivor  and  the  representatives  of  the  deceased  partner." 
One  partner  died,  and  on  the  next  1st  of  August,  his  representative,  the 
surviving  partner,  and  a  third  person,  formed  a  partnership  for  five  years 
under  the  name  of  the  old  firm,  continuing  its  business,  collecting  its  assets 
and  paying  its  debts.  Held,  that  the  estate  of  the  deceased  partner  was 
liable  for  the  debts  of  the  new  firm.  This  case  seems  to  go  far  beyond  any 
other  of  the  recent  cases  in  extending  the  liability  of  the  estate  of  the 
deceased  partner.  The  court  seem  to  consider  that  the  presumption  is  in 
favor  of  binding  the  general  assets,  and  not  against  it  as  would  appear  to  be 
considered  in  the  cases  cited  above.  In  Davis  v.  Christian,  15  Gratt.  11,  a 
deceased  partner's  general  assets  were  held  liable.} 

2  Coll.  on  P.  B.  2,  c.  2,  §'2,  p.  241,  2d  ed. 

•■'  See  ante,  §  102 ;  Shipton  v.  Thornton,  9  Ad.  &  E.  314,  329-332 ; 
Faith  V.  Richmond,  11  Ad.  &  E.  339 ;  ante,  §  102,  136,  142. 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  341 

be  a  clear  breach  of  such  duty  and  engagement,  to  use 
another  firm  name  as  that  of  the  firm ;  as,  for  example, 
if  the  firm  name  be  Doe  &  Roe,  to  use  the  name  of 
Doe  &  Company,  or  Doe  &  Roe  &  Company.^  It  will 
be  equally  a  breach  for  one  partner  to  sign  his  own 
name,  adding  "  for  self  and  partners ; "  because  by 
those  words  it  can  no  more  be  known,  who  are  his 
partners,  whom  he  means  to  bind,  than  by  any  other 
general  words.^  This  doctrine  applies,  a  fortiori^  where 
the  firm  name  is  intended  to  express  the  names  of  all, 
who  are  partners,  as  for  example,  John  &  Richard  Doe; 
for  in  such  a  case  it  may  be  for  the  benefit  of  each 
partner,  that  he  may  be  known  to  the  world  to  be  a 
member  in  that  concern,  and  also,  that,  as  between  the 
partners  themselves  and  the  world,  it  should  not  be 
left  as  a  mere  matter  of  speculation,  who  are  really 
partners,  or  who  are  not  dormant  partners  ;  but  that 
the  firm  may  have  the  credit,  and  the  public  the  confi- 
dence, resulting  from  the  knowledge  of  the  fact.^  And 
probably  a  Court  of  Equity  might,  in  a  case  of  this  sort, 
interfere  by  way  of  injunction,  to  prevent  any  mischief 
to  the  firm,  by  thus  exposing  it  to  the  consequence  of 
being  made  liable  for  proceedings  of  one  partner,  to 
which  it  did  not  really  assent.^ 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  141,  2(1  ed. ;  Marshall  v.  Colman,  2  Jac. 
&  W.  266,  268,  269.  [But  where  a  partnership  was  to  be  carried  on  "in 
the  name  of  Seymour  &  Ayres,"  a  signature  of  these  names,  with  the  addi- 
tion of  their  respective  Christian  names,  was  held  to  bind  the  partnership. 
Newton  v.  Boodle,  3  C.  B.  795.     But  see  In  re  Warren,  Daveis,  320,  326.] 

^  Ibid.  »  Marshall  v.  Colman,  2  Jac.  &  W.  26G,  269. 

*  In  Marshall  v.  Colman,  2  Jac.  &  W.  266,  a  bill  was  filed  for  such  an 
injunction,  not  asking  for  a  dissolution.  But  it  was  denied  upon  special 
grounds.  On  that  occasion  Lord  Eldon  said  :  "There  is  only  this  point  in 
the  case  now  before  me,  which  I  wish  seriously  to  consider,  namely,  that 
although  this  Court  will  interfere,  where  there  is  a  breach  of  covenants  in 
articles  of  partnership,  so  important  in  its  consequences,  as  to  authorize  the 
party  complaining  to  call  lor  a  dissolution  of  the  partnership,  whether  (and 
it  is  a  matter  that  will  deserve  a  great  deal  of  consideration  before  it  goes 


342  PARTNERSHIP.  [CHAP.  X. 

■  §  203.    In  the  next  place,  partnership  articles  often 
contain  provisions  for  the  advance  of  particular  amounts 

so  far)  it  will  entertain  the  jurisdiction  of  producing  a  decree  (for  this  is 
what  is  to  be  done  in  the  cause,  in  which  this  motion  is  now  made)  for  a  per- 
petual injunction,  as  to  a  particular  covenant,  the  partnership  not  being  dis- 
solved by  the  Court.  There  is  one  case,  which  is  constantly  occurring,  that 
of  a  partner  raising  money  for  his  private  use  on  the  credit  of  the  partner- 
ship firm ;  and  the  Court  interferes  then,  because  there  is  a  gi-ound  for  dis- 
solving the  partnership.  But  then  the  danger  must  be  such,  there  must  be 
that  abuse  of  good  faith  between  the  members  of  the  partnership,  that  the 
Court  will  try  the  question,  whether  the  partnership  should  not  be  dissolved 
in  consequence.  But  it  is  quite  a  different  thing,  and  it  would  be  quite  a 
new  head  of  equity  for  the  Court  to  interfere,  where  one  party  violates  a 
particular  covenant,  and  the  other  party  does  not  choose  to  put  an  end  to 
the  partnership ;  in  that  way  there  may  be  a  separate  suit  and  a  perpetual 
injunction  in  respect  of  each  covenant;  that  is,  a  jurisdiction,  that  we  have 
never  decidedly  entertained.  All  this  bill  seeks  is  a  jserpetual  injunction 
against  using  any  other  than  this  particular  firm  and  name  ;  and  the  ques- 
tion would  be,  if  very  serious  mischief  were  to  arise  from  not  using  it, 
whether  the  party  would  not  be  obliged  to  frame  his  bill  differently.  I 
have  no  difficulty  in  saying,  that,  where  the  members  of  a  partnership 
contract  by  covenant,  that  the  firm  shall  be  A.,  B.,  C,  and  D.,  it  is  a 
breach  of  that  covenant  for' A.  -to  sign  those  instruments,  to  which  the 
covenant  refers,  in  the  name  A.  and  Co. ;  but  it  is  no  less  a  breach  of  that 
covenant  for  D.  to  sign  his  own  name,  adding  '  for  self  and  partners,' 
because  by  these  words  it  can  no  more  be  known,  who  are  his  partners, 
than  by  the  word  Co.  When  partners  enter  into  such  contracts,  the 
meaning  and  intent  is,  that,  in  the  first  place,  it  may  be  known  to  the 
world,  for  the  benefit  of  each  partner,  that  he  is  a  partner  in  that  con- 
cern, and  also  that,  as  between  each  partner  and  the  world,  it  should  not 
be  left  to  them  to  speculate,  who  are  really  partners,  or  who  are  dormant 
partners,  and  so  on.  It  is  intended,  that  each  individual  may  have  the 
credit,  which  belongs  to  his  name,  and  may  not  be  exposed  to  conse- 
quences, which  might  arise  from  his  name  not  being  used.  But  it  must 
be  made  out  to  be  a  case,  which  goes  further  than  this  does,  to  entitle 
the  Court  to  grant  an  injunction  against  the  breach  of  such  a  contract; 
it  must  be  a  studied,  intentional,  prolonged,  and  continued  inattention  to 
the  application  of  one  party  calling  upon  the  other  to  observe  that  con- 
tract. Looking  at  the  circumstances  of  this  case  altogether,  recollecting 
that  the  application  was  only  made  by  the  plaintiff  in  April  last,  and  even 
admitting,  that  some  of  the  letters,  as  has  been  insisted,  may  amount  to 
contracts  binding  on  the  plaintiff,  the  question  is,  whether  it  was  not 
known  who  were  really  partners  ?  I  do  not  mean  to  say,  that  there  has 
been  such  au  exact  performance  of  the  contract  as  there  ought  to  be ;  and 
these  gentlemen  will  do  well  (if  they  mean  to  protect  themselves  from  the 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  343 

towards  the  capital  stock,  at  particular  periods,  or  pro- 
visions for  the  admission  of  other  partners,  upon  the 
payment  of  particular  sums  of  money,  by  them,  by  in- 
stalments. In  all  such  cases  the  party  so  contracting  is 
treated  as  a  debtor  to  the  firm,  to  the  full  amount  so  to 
be  contributed  or  paid,  as  debitum  in  prcesenti,  sohen- 
dum  in  futuro  ;  and,  indeed,  he  stands  in  equity  as  to 
such  debts,  precisely  in  the  same  relation  to  them,  as  if 
he  were  a  third  person,  who  was  a  debtor  thereto.^ 

§  20-1.  In  the  next  place,  partnership  articles  some- 
times provide,  that  one  or  more  of  the  partners  shall 
exclusively  manage  and  administer  all  the  concerns 
thereof,  or  one  or  more  particular  departments  of  the 
business.  In  cases  of  this  sort,  courts  of  equity  wiU 
uphold  with  a  steady  hand  every  such  stipulation,  and 
give  it  full  effect  during  the  continuance  of  the  part- 
nership, and  inhibit  the  non-competent  partners  from 
intermeddling  therewith.^  And  this  is  entirely  in  coin- 
interference  of  this  Court)  to  use  all  the  names  in  the  concern,  —  they 
must  do  that,  or  the  Court  will  be  under  the  necessity  of  awarding  an 
injunction,  or  dissolving  the  partnership."  The  motion  was  refused  Avith- 
out  costs.  As  to  whether  the  right  to  use  the  partnership  firm,  after  the 
death  of  one  partner,  belongs  to  the  survivor,  or  is  a  part  of  the  good- 
will of  the  partnership,  see  ante,  §  100,  and  Lewis  v.  Langdon,  7  Sim.  421. 
See  also  Webster  v.  TV^ebster,  3  Swans.  490,  n.  In  Miles  v.  Thomas,  9 
Sim.  606,  Sir  Launcelot  Shadwell  (the  Vice-Chancellor)  thought,  that  an 
injunction  might  be  granted,  whenever  the  act  complained  of  is  one  that 
leads  to  the  destruction  of  the  partnership  property,  notwithstanding  a 
dissolution  thereof  may  not  be  prayed. 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  141, 2d  ed. ;  Akhurst  i'.  Jackson,  1  Swans.  85,  89. 
[See  also  Bury  v.  Allen,  1  Coll.  589,  607]  ;  {  Stevens  v.  Yeatman,  19  Md.  480. 
In  Featherstonhaugh  v.  Turner,  25  Beav.  382,  it  is  said  that  a  person  selling 
a  share  in  his  business  and  becoming  a  partner  with  the  purchaser,  for  an  in- 
definite period,  cannot,  in  equity,  immediately  dissolve  the  partncrsliip  and 
retain  the  premium,  and  to  a  similar  effect  are  the  decisions  in  Astle  v.  Wright, 
23  Beav.  77,  and  Freeland  v.  Stansfeld,  2  Sm.  &  G.  479.  On  the  allowance 
of  interest  on  advances,  see  §  182,  n.,  and  on  the  return  of  premiums  on  dis- 
solution, see  Airey  v.  Borham,  29  Beav.  620;  Pease  v.  Hewitt,  31  Beav.  22; 
Bullock  v.  Crockett,  3  Giff.  507  ;  Lee  v.  Page,  30  Law  J.  x.  s.  Ch.  857.} 

^  Ante,§  173,  182,  193,  202;  Coll.  on  P.  B.  5,  c.  1,  §  3,  p.  753-759,  2ded. 


344  PARTNERSHIP.  [cHAP.  X. 

cidence  with  the  French  law  on  the  same  subject ;  for, 
by  that  law,  where  by  the  articles  one  or  more  partners 
are  exclusively  to  administer  the  affairs  of  the  partner- 
ship, the  power  is  deemed  irrevocable  during  the  con- 
tinuance of  the  partnership,  and  cannot  be  lawfully  in- 
terfered with  by  the  other  partners.^  The  Roman  law 
seems  impliedly  to  have  promulgated  the  same  doc- 
trine.^ The  Code  of  Louisiana  has  also  made  it  a  part 
of  its  own  positive  regulations.^ 

§  205.  In  the  next  place,  in  partnership  articles  it  is 
sometimes  agreed,  that  the  real  estate  and  fixtures,  be- 
longing to  the  firm,  shall  not  be  treated  as  partnership 
property,  as  between  the  partners ;  but  that  all  the 
partners  shall  have  a  several  and  individual  interest 
therein.  In  such  cases,  the  interests  of  the  partners 
will  be  treated  throughout,  as  their  several  and  sepa- 
rate estate ;  and  of  course,  in  cases  of  bankruptcy  of 
the  partners,  it  will  be  distributable  to  and  among  their 
separate  creditors  respectively,  in  preference  to  their 
joint  creditors.^  The  rule  is,  or  at  least  may  be,  differ- 
ent in  cases  of  mere  personal  property,  which  still  re- 
mains in  the  reputed  ownership  of  the  partnership, 
although  it  will  be  the  same,  if  the  property  be  clearly 
and  exclusively  in  the  ownership  of  one  partner,  as  his 
separate  personal  property.^ 

•  Poth.de  Soc.  n.  71,  72. 

2  D.  14,  1,  1,  §  13,  14 ;  Poth.  Pand.  14,  1,  n.  4. 

'  Code  of  Louisiana  (1825),  arts.  2838-2840. 

■»  Coll.  on  P.  B.  2,  c.  2,§  2,  p.  141,  2d  ed.;  Id.  B.  4,  c.  2,  §  1,  p.  595,  596, 
600;  Id.  B.  2,  c.  1,  §  2,  p.  113;  Smith  v.  Smith,  5  Ves.  189;  Ex  parte  Smith, 
3  Madd.  63.  {Where  the  owner  of  a  lease  admits  another  to  be  his  partner 
in  the  use  of  a  part  only  of  the  demised  property,  and  afterwards  dissolves 
the  partnership,  the  partner  no  longer  has  any  interest  in  the  lease.  Burdon 
V.  Barkus,  3  Giff.  412.} 

*  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  141,  2d  ed. ;  Id.  B.  4,  c.  2,  §  1,  p.  595, 
596,  600 ;  Id.  B.  2,  c.  1,  §  2,  p.  113  ;  Smith  v.  Smith,  5  Ves.  189 ;  Ex  parte 
Smith,  3  Madd.  63  ;  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  596-605,  2d  ed.  {See 
Parsons  on  P.  252  ;  Penny  v.  Black,  9  Bosw.  310.} 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  345 

§  206.  Connected  with  this  stipulation  is  ordinarily 
another  for  an  annual  account,  valuation,  and  balance 
of  the  moneys,  stock  in  trade,  and  credits  of  the  part- 
nership, and  also  of  the  debts  due  by  the  partnership  ;  ^ 
and  sometimes  also  for  an  annual  division  of  the  profits, 
or  of  a  portion  thereof.  The  annual  accounts,  when  so 
settled  and  balanced,  are  ordinarily  held  to  be  conclu- 
sive, unless  some  error  is  shown  ;  and  to  guard  against 
the  opening  of  such  accounts,  upon  suggested  errors  at 
distant  periods,  it  is  not  unfrequently  further  provided, 
that  such  annual  statements  and  settlements  of  the  ac- 
counts shall  be  binding  and  conclusive  upon  all  the 
parties,  notwithstanding  any  errors,  unless  they  are  dis- 
covered in  the  lifetime  of  the  partners,  or  during  the 
term  of  the  partnership.^  But  all  such  clauses  are 
nugatory,  in  cases  where  the  error  has  arisen  from  the 
fraud  of  any  of  the  partners  ;  for  fraud  will  vitiate  any, 
even  the  most  solemn  transactions.^ 

§  207.  Another  usual  stipulation  in  the  articles  is  for 
a  general  account  of  all  the  partnership  property  and 
concerns,  upon  the  dissolution  or  expiration  of  the 
partnership,  which  is  followed  up  by  another,  pointing 
out  the  mode  of  winding  up  the  concerns,  and  of  divid- 
ing and  distributing  the  partnership  property  and  effects. 
This  is  generally  provided  for  in  one  of  two  modes.  One 
mode  is,  by  a  general  conversion  of  all  the  partnership 
assets  into  cash,  by  a  sale,  and  dividing  the  produce 
thereof,  after  providing  for  the  payment  of  the  debt's  of 
the  firm,  among  all  the  parties,  in  proportion  to  their 
respective  shares    and  interests.     Another  mode  is  by 

1  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  144,  145,  2d  ed. 

2  See  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  145,  146,  2d  ed. ;  Oldaker  v.  Laven- 
der, 6  Sim.  239;  {Coventry?;.  Barclay,  33  Beav.  1,  affirmed  on  appeal,  12 
Weekly  Rep.  500 ;   s.  c.  10  Jur.  N.  s.  Digest,  158.} 

3  See  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  145,.  146,  2d  ed. ;  Oldaker  v.  Laven- 
der, 6  Sim.  239. 


346  PARTNERSHIP.  [CHAP.  X. 

providing,  that  one  or  more  of  the  partners  shall  be 
entitled  to  purchase  the  shares  of  the  other  at  a  valu- 
ation.^ The  former  mode  is  that  constantly  adopted  by 
Courts  of  Equity,  in  the  absence  of  any  express  stipu- 
lations; the  latter  mode  can  be  insisted  upon,  only 
when  there  is  an  express  stipulation  to  that  very  effect.^ 
A  mere  stipulation  for  the  division  of  the  partnership 
stock  and  effects,  at  the  end  of  the  partnership,  will  not 
be  deemed  by  Courts  of  Equity  sufficient  to  entitle  one 
or  more  of  the  partners  to  purchase  them  at  a  valua- 
tion ;  but  merely  to  provide  for  a  division  in  the  usual 
manner,  by  a  sale.^  The  same  rule  of  a  sale  is  applied 
in  all  cases,  where  the  mode  prescribed  by  the  partner- 
ship articles  becomes  impracticable,  or  cannot  otherwise 
be  fairly  obtained.'' 

§  208.  Under  the  clause  in  the  articles  for  the  pur- 
chase at  a  valuation,  upon  the  dissolution  of  a  part- 
nership, the  question  has  arisen,  whether  that  clause  is 
applicable  to  a  dissolution  by  bankruptcy.  It  has  been 
thought  that  it  is  not,  although  the  point  has  not  ex- 
pressly come  under  decision  ;  but  a  strong  inclination 
of  opinion,  in  that  direction,  was  expressed  by  Lord 
Eldon.^     The  question  turns  upon  this,  whether  a  man 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  145,  146,  2d  ed.,  which  cites  7  Jarman's 
Convey.  31  ;  Cookson  v.  Cookson,  8  Sim.  529.  {See  Burfield  v.  Rouch,  31 
Beav.  241 ;  Homfray  v.  Fothergill,  Law  Rep.  1  Eq.  567.} 

^  Ibid.;  Wilson  v.  Greenwood,  1  Swans.  471,  482  ;  Featherstonhaugh  w. 
Fenwick,  17  Ves.  298;   {Dickinson  v.  Dickinson,  29  Conn.  600.} 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  146;  Rigden  v.  Pierce,  6  Madd.  353 ;  Cook 
V.  Collingridge,  Jac.  607. 

^  Cook  V.  Collingridge,  Jac.  607. 

°  Wilson  V.  Greenwood,  1  Swans.  471,  481,  and  the  Reporter's  note  (a)  ; 
Gow  on  P.  c.  5,  §  3,  p.  300,  3d  ed.;  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  145,  146,  2d 
ed. ;  post,  §  396.  —  Mr.  Swanston  in  his  note  says:  "  The  following  are  some 
of"  the  principal  authorities  applicable  to  this  point.  Lockyer  i\  Savage,  2 
Str.  947  ;  Roe  v.  Galliers,  2  T.  R.  133  ;  Ex  parte  Hill,  Cook's  Bankr.  Law, 
228  ;  1  Cox,  300 ;  Ex  parte  Bennet,  Cook's  Bankr.  Law,  229.  In  the  mat- 
ter of  Murphy,  1  Sch.  &  Lef.  44  ;  Ex  parte  Henecy,  cit.  Id. ;  In  the  matter 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  347 

can,  by  contract,  or  otherwise,  provide  for  a  particular 
disposition  of  his  property,  in  an  event  which  deprives 
him  of  all  disposing  power  over  it,  and  vests  that  right 
in  other  persons.^ 

§  209.  We  have  already  seen,  that  it  is  an  implied 
duty  and  obligation  of  every  partner,  not  to  carry  on 
any  business  inconsistent  with,  or  contrary  to  the  true 
interest  of  the  partnership.^  But  this  is  often  expressly 
provided  for  by  a  special  stipulation  in  the  partnership 
articles.  Where  the  language  is  general,  it  will,  of 
course,  be  construed  to  apply  to  all  other  business,  inju- 
rious to,  or  interfering  with  the  interest  and  business 
of  the  partnership.  But  if  the  stipulation  be  limited  to 
engaging  in  the  same  business  on  the  separate  account 
of  the  partner,  or  to  engaging  in  any  other  particularly 
specified  business,  during  the  continuance  of  the  part- 
nership, there,  it  would  seem  to  leave  the  partner  free 
to  engage  in  any  other  than  the  excepted  business,  upon 
the  known  maxim  of  the  law,  that  ExiJressio  imius  est 
exdusio  alterius.^ 

of  Meaghan,  1  Sch.  &  Lef.  179;  Dommett  v.  Bedford,  6  T.  K.  684;  3  Ves. 
149  ;  Ex  parte  Cooke,  8  Ves.  353  ;  Ex  pai-te  Hinton,  14  Ves.  598  ;  Ex  parte 
Oxley,  1  Ball  &  Beat.  257;  Higinbotham  v.  Holme,  19  Ves.  88;  Ex  parte 
Vere,  19  Ves.  93;  1  Rose,  281;  Ex  parte  Young,  Buck,  179;  3  Madd. 
124;  Ex  parte  Hodgson,  19  Ves.  206.  And  see  Brandon  v.  Robinson,  18 
Ves.  429.  The  general  distinction  seems  to  be,  that  the  owner  of  property 
may,  on  alienation,  qualify  the  interest  of  his  alienee,  by  a  condition  to  take 
effect  on  bankruptcy ;  but  cannot,  by  contract  or  otherwise,  qualify  his  own 
interest  by  a  like  condition,  determining  or  controlling  it  in  the  event  of  his 
own  bankruptcy,  to  the  disappointment  or  delay  of  his  creditoi'S ;  the^ws  dispo- 
nendi,  which  for  the  first  purpose  is  absolute,  being,  in  the  latter  instance, 
subject  to  the  disposition  previously  prescribed  by  law." 

'  Ibid. 

-  Ante,  §  178,  179. 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  143,  2d  ed.;  (iHassington  v.  Thwaites,  1  Sim. 
&  St.  124.  — Mr.  Collyer  (Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  142,  143,  2d  ed.)  has 
remarked :  "  If  several  persons  enter  into  partnership,  under  a  stipulation, 
that  the  copartners,  or  any  of  them,  shall  not,  during  the  continuance  of  the 
copartnership,  engage  in  any  business  otherwise  than  upon  the  account  and 


348  PARTNERSHIP.  [CHAP.  X. 

§  210.  The  like  language,  in  partnership  articles,  will 
also,  in  some  cases,  be  construed  to  import  a  prohibition 
to  engage  in  the  same  trade,  upon  a  withdrawal  from 
the  partnership,  even  when  there  are  no  express  words 
to  the  purpose,  but  the  prohibition  arises  by  mere  im- 
plication. Thus,  where  by  the  articles  it  was  agreed, 
that  the  trade  of  the  partnership  (that  of  a  brewer) 
should  continue  for  eleven  years,  with  a  proviso,  that  if 
either  of  the  parties  should  be  so  minded,  upon  giving 
six  months'  notice  to  the  other,  he  should  be  at  liberty 
to  quit  the  trade  and  mystery  of  a  brewer,  and  the  other 
party  should  be  at  liberty  to  continue  the  trade  upon 
his  own  account;  it  was  held  by  the  Court,  that  the 
party  giving  such  notice,  upon  the  true  interpretation 
of  the  words,  "to  be  at  liberty  to  quit  the  trade  and 
mystery  of  a  brewer,  &c."  was  not  at  liberty  to  engage 
in  the  brewery  business  on  his  own  account,  but  was 
bound  to  quit  it  altogether.^ 

§  211.  So,  where,  upon  the  retirement  of  one  of  two 
partners  from  a  partnership  in  trade,  it  was  left  to  arbi- 
trators to  determine  (among  other  things)  what  was  to 
be  paid  to  the  retiring  partner  for  the  good-will  of  the 
trade  ;  and  the  arbitrators,  upon  the  understanding  that 
the  retiring  partner  would  not  set  up  the  trade  in  the 
same  street  or  vicinity,  awarded  to  him  a  certain  sum 
for  liis  share  of  the  good- will  thereof,  which  was  accord- 
ingly paid  by  the  other  partner ;  and  he  afterwards  set 

for  the  benefit  of  the  same  copartnership ;  and,  after  the  execution  of  the 
articles,  one  of  the  partners  with  the  consent  of  the  others  becomes  a  partner 
in  a  separate  firm,  the  articles  of  partnership,  coupled  with  such  consent,  will 
not  operate  to  make  the  other  partners  of  the  original  firm  partners  also  in  the 
separate  firm.  But  a  person  may,  by  the  decree  of  a  Court  of  Equity,  be- 
come a  partner  in  the  separate  business  of  his  copartner,  entered  into  without 
his  consent,  in  violation  of  the  articles." 

'  {Lind.  on  P.  705-712;  ante,  §  99,  100,  and  notes}  ;  Cooper  v.  Wat- 
lington,  3  Doug.  413 ;  s.  c.  2  Chitty,  451. 


CHAP.  X,]  CONSTRUCTION    OF    ARTICLES.  349 

up  the  trade  in  the  same  neighborhood ;  the  Court,  not- 
withstanding the  arbitrators  had  laid  no  express  restraint 
on  the  retiring  partner,  in  their  award,  held,  that  he 
should  be  restrained  by  injunction  from  carrying  on  the 
trade  there,  as  it  was  a  violation  of  the  implied  parol 
understanding  of  all  parties  at  the  time.^ 

§  212.  A  fortiori^  an  injunction  will  lie  in  a  case, 
where,  upon  the  withdrawal  of  a  partner,  it  is  agreed 
between  the  parties,  that  the  business  shall  be  carried  on 
by  the  remaining  partners  alone,  if  such  retiring  part- 
ner should  act  in  any  manner  inconsistent  with  such  an 
agreement.  Thus,  where  the  plaintiff  and  defendant 
had  been  partners  in  stage-coaches  ;  and  by  an  agreement 
on  the  dissolution  of  their  partnership,  it  was  stipulated, 
that  the  business,  so  far  as  it  was  carried  on  between 
Newbury  and  London,  should  belong  to  the  plaintiff, 
and  that  the  defendant  should  not  carry  on  the  business 
of  coach  proprietor  between  Newbury  and  London ;  the 
defendant  afterwards  set  up  a  stage-coach,  which  began 
its  journey  at  a  place  a  few  miles  distant  from  Newbury, 
but  travelled  through  Newbury  to  London.  On  a  bill 
filed,  and  an  affidavit  in  support  thereof,  Lord  Eldon 
granted  an  injunction  to  restrain  the  defendant  from 
carrying  on  the  business  between  Newbury  and  London, 
So,  where  a  company,  in  which  A.  and  B.  were  partners, 
contracted  with  the  Postmaster-General  for  the  service 
of  the  mail,  each  partner  supplying  horses  for  a  distinct 
part  of  the  road  ;  but  in  consequence  of  the  bad  manner, 
in  which  A.  horsed  the  coach,  the  Postmaster-General 
had  been  frequently  obliged  to  suspend  the  contract ;  it 
was  held,  that  B,  might  maintain  an  injunction  against 
A.  to  restrain  him  from  interfering  with  B.'s  portion  of 
the  road,  upon  the  ground  of  the  irreparable  injury  to 

'  Harrison  v.  Gardner,  2  Madd.  198 ;  Gow  on  P.  c.  2,  §  4,  p.  107,  3d  ed. 


350  PARTNERSHIP.  [cHAP.  X. 

the  partnership,  which  would  ensue  from  such  an  inter- 
ference.^ 

§  213.  We  have,  also,  already  seen  Avhat  the  general 
rule  of  law  is,  as  to  the  right  and  authority  of  a  major- 
ity, or  of  a  definite  number,  to  direct  and  regulate  the 
concerns  of  the  partnership.^  This  subject,  in  cases  of 
partnerships,  composed  of  numerous  persons,  frequently 
constitutes  a  matter  of  a  special  provision  in  the  arti- 
cles ;  and  so  far  as  the  provision  extends,  it  will  form 
the  rule  of  the  partnership.^  But  it  will  not  be  extended 
by  implication  to  any  collateral  cases,  although  they 
may  fall  within  the  same,  or  even  a  greater,  mischief.^ 
Thus,  for  example,  if  it  is  intended,  that,  in  cases  of  dif- 
ficulty, the  majority  shall  have  power  to  wind  up  or  sell 
the  concern,  the  authority  must  be  expressly  given  ;  for 
it  will  not  be  inferred  frpm  the  general  language  of  any 
provision,  that  the  majority,  or  any  definite  number, 
shall  have  authority  to  direct  and  regulate  the  concerns 
of  the  partnership.^  And  in  these,  as  in  the  like  cases 
the  provision  itself,  so  far  at  least  as  Courts  of  Equity 
may  be  called  upon  to  enforce  it,  may  be  controlled,  or 
waived  by  the  acquiescence,  or  action,  of  the  partners 
habitually  in  a  different  course.^ 

§  214.  Provision  is,  also,  often  made  in  partnership 
articles,  for  the  expulsion  of  a  partner  for  gross  mis- 
conduct, or  in  case  of  insolvency,  or  bankruptcy,  or 
other  special  enumerated  cases.  Of  course,  such  a 
provision  will  govern  in  all  cases  to  which  it  properly 

'  Coll.  on  P.  B.  2,  c.  3,  §  o,  p.  238,  2d  ed. ;  Williams  v.  Williams,  1 
Wils.  Ch.  473,  note ;  Anderson  v.  Wallace,  2  Molloy,  540. 

*  Ante,  §  123-125. 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  143,  144,  2d  ed. 

*  Ibid. 

^  Ibid. ;  Chappie  v.  Cadell,  Jac.  537. 

^  Ante,  §  192 ;  Glassington  v.  Thwaites,  1  Sim.  &  St.  124 ;  Jackson  v. 
Sedgwick,  1  Swans.  460. 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  351 

applies.^  And  where  a  provision  is  made  for  insolvency, 
the  question  may  arise  whether  it  means  a  technical  in- 
solvency under  the  insolvent  debtor's  act,  or  a  mere  ina- 
bility to  pay  just  debts,  according  to  the  common  use  of 
the  phrase  in  commercial  transactions.  The  latter,  it 
should  seem,  is  to  be  deemed  the  true  sense.^ 

§  215.  It  is  also  usual  to  insert  in  articles  of  partner- 
ship, a  stipulation  that  disputes  and  controversies  between 
the  partners  shall  be  referred  to  arbitrators,  to  be  named 
by  the  respective  partners.  It  seems,  that  no  action  at 
law  is  maintainable  for  a  breach  of  any  stipulation  of 
this  sort,  as  it  is  against  the  policy  of  the  common  law, 
and  has  a  tendency  to  exclude  the  jurisdiction  of  the 
Supreme  Courts,  which  are  provided  by  the  Govern- 
ment with  ample  means  to  entertain  and  decide  all  legal 
controversies.^     Besides ;    there  is  this  additional  diffi- 

'  [See  the  late  important  case  of  Blisset  v.  Daniel,  10  Hare,  493,  23  Eng. 
L.  &  Eq.  105];  {Patterson  v.  Silliman,  28  Penn.  St.  304.  See  Smith  u. 
Mules,  9  Hare,  556.  On  expulsion  from  a  club,  see  Hopkinson  v.  Marquis 
of  Exeter,  Law  Rep.  5  Eq.  63.  Evans  v.  Philadelphia  Club,  50  Penn.  St. 
107.} 

2  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  151,  152,  2d  ed. ;  Parker  v.  Gossage,  2 
Cr.  M.  &  R.  617  ;  Biddlecome  v.  Bond,  4  Ad.  &  E.  332. 

'  Gow  on  P.  c.  2,  §  3,  p.  72,  89,  3d  ed. ;  Figes  v.  Cutler,  3  Stark.  139 ; 
Coll.  on  P.  B.  2,  c.  3,  §  1,  p.  165,  166,  2d  ed. ;  Kill  v.  Hollister,  1  Wils. 
129  ;  Wats,  on  P.  c.  7,  p.  383,  2d  ed.  [The  more  recent  cases  in  England 
establish  the  doctrine,  that  an  agreement  to  submit  a  controversy  to  ai'bitra- 
tion  before  a  suit  is  brought,  is  binding  upon  the  parties  making  it.  See 
Scott  V.  Avery,  8  Exch.  487  ;  5  H.  L.  Cas.  811 ;  Livingston  v.  Ralli,  5  E.  & 
B.  132  ;  Russell  v.  Pelligrini,  6  E.  &  B.  1020.]  {In  Livingston  v.  Ralli,  5  E. 
&  B.  132,  it  was  held  that  an  action  lay  for  breach  of  a  covenant  to  refer. 
An  agreement  to  reier,  and  arbitrators  named,  and  a  covenant  not  to  sue, 
and  a  power  to  examine  witnesses  under  oatli,  and  to  make  the  submission 
a  rule  of  court,  prevents  a  party  from  filing  a  bill  with  the  view  of  withdraw- 
ing the  case  from  the  arbitration.  Dimsdale  v.  Robertson,  2  Jones  &  Lat. 
58.  But  an  agreement  to  submit  the  affairs  of  a  partnership  to  arbitra- 
tion, and  that  the  submission  shall  be  made  a  rule  of  court,  cannot  be  pleaded 
in  bar  to  a  bill  in  equity  seeking  discovery,  complaining  that  the  plaintiff  is 
harassed  by  actions,  and  praying  for  a  receiver;  though  before  the  bill  was 
filed,  arbitrators  were  appointed,  and,   since  bill  filed,  the  submission  has 


352  PARTNERSHIP.  [CHAP.  X. 

culty,  that  it  would  be  impracticable  for  the  party  to 
establish  at  the  trial,  that,  upon  such  an  arbitration,  he 
would  have  succeeded,  so  as  to  entitle  him  to  damages.^ 
In  either  view,  the  stipulation  would  seem  to  be  nuga- 
tory and  futile.  But  be  this  as  it  may,  it  is  very  clear,  that 
no  stipulation  of  this  sort  will  be  decreed  to  be  specifi- 
cally performed  by  a  Court  of  Equity  ;  not  merely  upon 
the  ground  of  public  policy,  but  also  upon  the  ground  of 
the  utter  inadequacy  of  arbitrators  to  administer  entire 
justice  between  the  parties,  from  a  defect  of  power 
in  them  to  examine  under  oath,  and  to  compel  the 
production  of  papers,  as  well  as  upon  the  ground  of 
the  utter  impracticability  of  a  Court  of  Equity's  com- 
pelling a  suitable  performance  of  such  a  stipulation 
between   the   parties.^      But,   under   a   clause    of  this 

been  made  a  rule  of  court.  Cooke  v.  Cooke,  Law  Rep.  4  Eq.  77.  See 
Horton  v.  Sayer,  4  H.  &  N.  643 ;  Wallis  v.  Hirscli,  1  C.  B.  n.  s.  316 ; 
Scott  V.  Corporation  of  Liverpool,  3  De  G.  &  J.  334,  Elliott  v.  Royal  Ex- 
change Assurance  Co.,  Law  Rep.  2  Ex.  237 ;  Lee  v.  Page,  Law  J.  n.  s. 
Ch.  857  ;  Wood  v.  Robson,  15  Weekly  Rep.  756.} 

1  Ibid. ;  Tattersall  v.  Groote,  2  B.  &  P.  131 ;  Street  v.  Rigby,  6  Ves. 
815,  818. 

2  Coll.  on  P.  B.  2,  c.  3,  §  1,  p.  165-168,  2d  ed. ;  Street  v.  Rigby,  9  Ves. 
815,  817,  818;  Tattersall  ??.  Groote,  2  B.  &  P.  131,  135,  136;  Wellington 
V.  Mcintosh,  2  Atk.  569 ;  {Agar  v.  Macklew,  2  Sim.  &  St.  418 ;  Darbey  v. 
Whitaker,  4  Drew.  134.  See  Jackson  v.  Jackson,  1  Sm.  &  G.  184.} 
Gow  on  P.  c.  2,  §  4,  p.  103,  104,  3d  ed. ;  1  Story,  Eq.  Jur.  §  670.  —In 
the  case  of  Street  v.  Rigby,  6  Ves.  815,  Lord  Eldon  discussed  the  subject 
at  large,  upon  a  covenant  of  this  nature,  and  said :  "It  has  occurred  to  me, 
that  in  almost  every  case  of  this  sort,  the  parties  have  adopted  a  fancy,  that 
they  can  make  any  thing,  in  the  contemplation  of  the  court,  fit  to  be  consid- 
ered matter  of  dispute,  upon  Avhich  they  think  proper  to  dispute.  That  is 
not  so.  It  must  be  that  which  a  Court  will  say  is  fairly  and  reasonably 
made  matter  of  dis^jute.  Another  circumstance  is,  that  the  parties  do  not 
frequently  appreciate  the  effect  of  such  a  covenant.  First,  at  law,  in  the 
case  in  the  Court  of  Common  Pleas,  the  Judges,  Heath  and  Rooke, 
seemed  to  think  it  futile,  and  tantamount  to  a  covenant  to  forbear  suit.  I 
take  notice  of  the  circumstance,  as  material  with  regard  to  Halfhide  v. 
Penning ;  for  if  the  meaning  of  a  covenant  to  refer  is  to  forbear  suit 
altogether,  that  covenant  to  refer,  before  you  bring  suit,  and  to  suspend  it 
in  the  mean  time,  wouh]  stand  upon  principles,  pro  temjiore,  that  it  would 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  353 

nature,  where  the  partners  do  actually  refer  matters  to 
arbitrators,  questions  may  arise  as   to    the   nature   and 

be  very  difficult  to  say,  do  not  apply  to  both  those  covenants.  Sup- 
pose an  action  brought.  The  question  would  be,  what  the  damages  would 
have  been,  if  the  defendant  had  joined,  and  named  an  arbiti'ator,  and  evi- 
dence had  been  produced  (and  what  would  be,  could  by  no  means  be  cor- 
rectly proved),  and  an  award  had  been  made,  giving  some  sujiposed  sum, 
which  no  proof  could  ascertain.  The  effect,  thei-efore,  of  such  a  covenant 
is,  that,  as  the  damages  are  not  to  be  ascertained  by  evidence,  nominal 
damages  only  can  be  got.  Whose  fault  is  it  ?  There  are  prudential  ways 
of  drawing  these  articles.  There  might  have  been  an  agreement  for  liqui- 
dated damages,  to  enforce  a  specific  performance,  if  an  action  could  not 
produce  sufficient  damages,  or  equity  would  not  entertain  a  bill  for  a  specific 
performance.  If  they  had  enforced  their  legal  remedy  by  such  a  stipulated 
security,  it  would  be  very  difficult  to  say,  they  would  also  have  a  remedy  in 
equity.  In  the  case  from  Astley's  Theatre,  Astley  v.  Weldon,  2  B.  &  P. 
346,  there  was  no  dispute  in  the  Court  of  Common  Pleas,  that  the  actress 
might  have  agreed  upon  a  liquidated  sum  to  be  forfeited  for  non-attendance, 
&c.  The  Court  were  of  opinion,  very  properly,  that  where  there  was  a 
stipulated  sum  in  the  covenant,  that  was  the  stij^ulated  damages ;  and  the 
general  sum  of  £200  for  breach  of  any  of  the  articles  was  a  penalty ;  but 
it  was  not  doubted  that  sum  might  have  been  made  the  liquidated  damages, 
if  they  thought  proper.  The  party  must  put  himself  in  a  situation  to  have 
substantial  damages.  In  this  case,  upon  an  action,  they  could  have  only  Is. ; 
for  they  could  not  ascertain  what  more  they  were  to  have.  Then,  what  can 
they  have  in  equity  ?  There  is  considerable  weight  as  evidence  of  what  the 
law  is,  in  the  circumstance,  that  no  instance  is  to  be  found  of  a  decree  for 
sjjecific  performance  of  an  agreement  to  name  arbitrators  ;  or  that  any  dis- 
cussion upon  it  has  taken  place  in  experience  for  the  last  twenty-five  years. 
I  was  counsel  in  Price  v.  Williams,  3  Bro.  Ch.  168 ;  1  Yes.  Jr.  365,  a  case 
which  justifies  considerable  doubts,  whether  the  eulogia  upon  the  domestic 
forum  of  arbitrators  are  well  founded.  That  was  a  case  before  Lord  Thur- 
low,  upon  a  bill  for  specific  performance  of  such  an  agreement,  sending 
parties  to  arbitrators,  who  might  or  might  not  be  able  to  come  to  a  decision  ; 
and  Lord  Thurlow  was  of  opinion  that  the  Court  would  not  perform  such  an 
agreement.  The  Court,  if  it  is  not  part  of  the  agreement,  cannot  give 
them  authority  to  examine  upon  oath ;  and  the  agi-eement  itself  cannot 
authorize  any  person  to  administer  an  oath.  A  difficulty  arises  from  the 
want  of  the  conscience  of  the  party.  This  court  has  given  credit  to  itself, 
notwithstanding  what  has  passed  in  the  Court  of  King's  Bench,  in  their 
rules  upon  attachments,  as  likely  to  decide  as  well  as  arbitrators ;  and  it  re- 
quires a  strong  case  to  deprive  a  person  of  the  right  to  a  decision  here.  In 
Price  V.  Williams,  the  account  came  back  very  favorably  to  my  client ;  the 
result  being,  that  a  very  small  sum  was  due  from  him.  A  vast  number  of 
exceptions  were  taken ;  and  the  Court  felt  that  soi-t  of  difficulty  of  dealing 

23 


354  PARTNERSHIP.  [CHAP.  X. 

extent  of  the  matters  upon  which  the  arbitrators  may 
make  their  award.     Thus,  for  example,  if  there  should 

with  the  exceptions,  that  led  to  an  arbitration ;  though  at  first  the  Court 
would  not  hear  of  it ;  and  the  party,  who  had  not  been  able  to  establish  any 
thing  before  the  Master,  in  that  mode  gained  several  thousand  pounds. 
Then  the  difficulty  occurred  about  the  power  of  this  Court  to  review  the 
decision  of  arbitrators ;  and  in  the  end  my  client  fared  much  worse  than  he 
would  have  done  before  the  Master.  That  case  and  others  led  me  to  adopt  a 
rule  never  to  advise  an  arbitration  afterwards.  If  such  a  bill  never  has  been 
usually  filed  in  this  Court,  and  if  in  that  instance  Lord  Thurlow  was  of  opinion 
it  could  not  be  maintained,  the  jurisdiction  would  stand  upon  principles  not 
very  intelligible,  if  a  party,  who  by  the  imbecility  belonging  to  the  covenant 
could  recover  only  Is.  damages  in  an  action,  coming  to  this  Court  for  sub- 
stantial justice,  to  have  an  account  taken,  that  person,  who  could  not  file  a 
bill  for  a  specific  execution  of  the  agreement  to  refer,  can  say,  that  though 
he  admits,  neither  of  them  could  recover  more  than  Is.  at  law,  and  he  can- 
not demand  the  relief  by  way  of  a  specific  performance,  he  can  have  it  by 
pleading  the  covenant,  if  he  is  brought  in  the  character  of  a  defendant ;  and 
can  compel  the  other  to  go  to  that  tribunal,  to  which  the  defendant,  com- 
ing in  the  character  of  plaintiff,  could  not  oblige  him  to  resort.  It  is  very 
difficult  to  say,  that  should  be  the  law  of  the  Court.  Then,  is  it  so  ?  I 
look  upon  the  case  of  Wellington  v.  Mcintosh  as  an  authority,  that  at  that 
time  it  was  not  the  law  of  the  Court.  At  that  period  the  distinction,  taken 
in  later  cases,  had  not  obtained ;  that  the  plea,  though  it  might  have  been 
good  as  to  the  relief,  is  bad,  if  bad  as  to  the  discovery.  As  to  that,  the 
course  of  the  later  authorities  seems  to  have  altered  the  law  of  pleading. 
But  quoad  such  a  point  as  this,  the  plea,  if  good  to  the  relief,  must  be  good 
to  the  discovery;  for  this  plea  means  this,  if  any  thing;  that  the  parties  will 
not  harass  themselves  by  going  to  courts  of  justice ;  but  will  state  to  each 
other  what  is  in  dispute,  and  refer  that  to  arbitrators ;  and  entering  into  such 
a  covenant  they  must  be  taken  to  mean,  that  they  will  be  content  with  a 
decision  upon  such  discovery  as  arbitrators  can  compel,  without  subjecting 
each  other  to  the  necessity  for  either  to  be  examined  upon  oath  before  arbi- 
trators, who  cannot  examine  them  upon  oath.  They  choose,  therefore,  that 
forum,  exclusive  of  the  jurisdiction  of  the  country  to  all  intents  and  pur- 
poses ;  meaning  that  arbitrators  shall,  from  beginning  to  end,  do  that  which 
they  are  enabled  to  do,  viz.,  to  decide  between  them  as  well  as  they  can.  It 
would  be  a  breach  of  covenant,  that  would  entitle  them  to  nominal  damages, 
to  file  a  bill  for  discovery,  as  much  as  a  bill  for  discovery  and  relief  In 
Half  hide  v.  Fenning,  the  whole  of  my  argument,  according  to  the  report, 
amounts  to  taking  the  distinction  between  discovery  and  relief,  and  putting 
the  case  upon  that  distinction ;  and  if  it  was  so  argued,  I  am  not  surprised, 
that  Lord  Kenyon  should  take  it,  that  the  counsel  thought,  if  not  put  upon 
that,  it  could  not  be  supported.  But  it  is  not  to  be  put  upon  that  distinction 
but  upon   the   ground  I  have  stated.     It  is  said,  courts  of  law  think  these 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  355 

be  a  submission  to  arbitrators  of  all  matters  in  difference 
between  the  partners,  the  question  may  arise,  whether  it 

agreements  very  wise.  Kill  v,  Hollister,  however,  shows,  that  courts  of  law 
are  ready  enough  to  say  the  agreement  of  the  parties  shall  not  oust  their 
jurisdiction  ;  though  they  permit  it  to  oust  the  jurisdiction  of  courts  of  equity. 
But  they  enforce  the  agreement,  not  as  agreement,  but  by  granting  an  at- 
tachment for  breach  of  the  rule.  It  is  dealing  a  little  imperiously  to  say, 
that  an  agreement  which,  made  out  of  Court,  would  not  bar  an  action,  if 
made  in  Court,  shall  bar  a  bill.  It  was  justly  observed  upon  the  passage  in 
Atkyns,  Wellington  v.  Mcintosh,  2  Atk.  569,  that  arbitrators  cannot  ad- 
minister an  oath ;  and  the  agreement  will  not  enable  them.  We  see  in  daily 
practice  at  law,  the  Court  administers  the  oath ;  and  under  that  the  parties 
go  before  the  arbitrators.  It  is  said,  the  party  must  have  discovery  some 
way.  But  if  the  distinction  cannot  be  maintained  between  a  bill  for  discov- 
ery only,  and  for  both  discovery  and  relief,  it  must  be  said,  they  are  bound 
to  go  first  before  the  arbitrators ;  and  the  party  must  be  brought  there,  and 
must  refer ;  the  parties  to  be  examined  upon  honor,  for  they  cannot  upon 
oath ;  and  then  it  is  said,  as  in  the'argument  of  these  cases,  if  it  so  turns  out, 
then  they  are  come  to  this  Court ;  saying,  there  is  then  a  failure  of  the  jus- 
tice, for  which  they  covenanted  ;  and  therefore  there  is  a  jurisdiction  in  this 
Court.  Till  Half  hide  v.  Fenning  no  such  decree  was  ever  heard  of.  Next, 
expressing  it  in  terms  of  the  highest  respect  and  veneration  for  that  noble 
and  learned  person,  now  no  more,  I  doubt  whether  it  is  a  very  wise  exercise 
of  the  jurisdiction  of  this  Court,  recollecting,  that  it  is  to  give  a  relief  be- 
yond the  law,  not  to  order  the  parties  to  go  to  law  to  take  the  effect  of  the 
stipulated  remedy,  but  under  a  jiositive  covenant,  not  a  negative  covenant, 
that  they  will  not  sue  (upon  which  there  would  be  considerable  difficulty), 
to  send  them  by  way  of  experiment  to  that  jurisdiction,  so  likely  to  miscarry, 
under  the  circumstance  that  it  has  not,  unless  received  under  the  authority 
of  the  Court,  a  power  to  administer  an  oath,  where  the  justice  that  tribunal 
can  render  is  so  insufficient,  though  they  have  not  expressly  bound  themselves 
by  covenant ;  and,  whether  the  court  would  not  act  more  discreetly  by  say- 
ing, they  are  in  a  Court,  where  justice  can  certainly  be  done ;  and  as  they 
have  not  stipulated  to  the  contrary,  their  fate  shall  be  decided  here,  instead 
of  sending  them  to  so  improvident  a  tribunal.  I  recollect  passages,  in  which 
courts  of  justice,  however  full  of  eulogia  upon  these  domestic  forums,  have 
recollected  their  own  dignity  sufficiently  to  say,  they  would  not  be  ancillary 
to  those  forums ;  that  the  parties  should  not  be  permitted  to  take  their  relief 
from  them,  coming  here  for  discovery.  It  is  enough  for  me  to  say,  it  is  not 
a  necessary  consequence  of  a  covenant  to  refer,  that  the  i^arty  thereby 
agreed  to  forbear  to  sue.  I  do  not  enter  into  the  question  of  the  effiict  at 
law  of  a  covenant  to  forbear  to  sue.  But,  supposing  it  good,  in  strict  law  it 
cannot  be  maintained,  that,  having  covenanted  to  refer,  the  party  has  cov- 
enanted to  forbear  to  sue ;  and  if  not,  he  has  only  left  himself  open  to  an 
action  for  damages,  if  he  does  not  refer ;  which  the  suit  does  not  prevent,  if 


356  PARTNERSHIP.  [CHAP.  X. 

is  within  the  competency  of  the  arbitrators  to  award  a  dis- 
solntion  of  the  partnership ;  and  it  has  been  held,  that 

thought  advisable.  It  would  be  very  strong  to  say,  that  where  the  legal 
remedy  they  have  provided  for  themselves  is  utterly  incompetent  to  justice, 
this  Court  is  precluded  from  granting  its  ordinary  remedy  by  a  covenant, 
■which  does  not  in  terms  express  an  undertaking  not  to  resort,  to  this  Court, 
and  must  hold  that  doctrine  upon  a  plea ;  in  that  shape  permitting  the  de- 
fendant to  have  in  substance  a  specific  performance,  which  would  have  been 
refused  to  him  as  a  plaintiff;  at  the  hazard  of  doing  substantial  injustice,  of 
a  delay  of  justice  almost  of  necessity,  and  where  the  examination  cannot  be 
addressed  to  the  conscience  of  either  the  parties  or  the  witnesses  ;  from  which 
the  subject  cannot  be  debarred,  unless  by  express  terms,  or  necessary  impli- 
cation. That  this  has  not  the  effect  of  barring  the  legal  remedy,  is  clear 
from  the  cases  at  law,  which  agree  that  it  is  still  competent  to  him  to  take  the 
legal  remedy.  Then  why  not  the  equitable  ?  The  competency  to  take  both 
stands  upon  the  same  principle."  See  also  Wilks  v.  Davis,  3  Mer.  507. 
Mr.  Collyer  has  remarked  (Coll.  on  P.  B..2,  c.  3,  §  1,  p.  167,  168)  :  "This 
leads  us  to  a  more  general  consideration  of  clauses  of  this  nature.  There 
are  many  covenants,  to  which  such  clauses  may  be  added  with  effect ;  but 
there  are  others,  the  breach  of  which  does  not  admit  of  compensation  by 
liquidated  damages,  and  to  which,  therefore,  they  cannot  properly  be  ap- 
plied. Thus,  on  the  one  hand,  if  the  covenant  be  such,  that  the  breach  of 
it  must  of  necessity  be  uncertain  in  its  nature  and  amount,  then,  if  liqui- 
dated damages  be  reserved,  they  will  be  deemed  the  real  damages,  and  a 
verdict  in  an  action  on  the  covenant  will  be  found  for  the  amount  of  the  liq- 
uidated damages.  On  the  other  hand,  if  the  breach  of  covenant  be  attended 
with  certain  damage,  as,  for  instance,  if  it  consist  in  the  omission  to  pay  a 
certain  sum  of  money,  in  such  case,  although  liquidated  damages  be  reserved 
eo  nomine,  they  will  be  considered  by  a  jury  only  in  the  nature  of  a  penalty, 
and  the  real  damages  will  be  measured  by  the  sum  omitted  to  be  paid.  In 
a  late  case,  even  where  the  real  damage  was  uncertain,  yet,  as  it  was  evi- 
dently far  less  than  the  amount  of  the  liquidated  damages,  the  Court  of 
Common  Pleas,  although  the  language  in  which  the  liquidated  damages  were 
agreed  to  be  paid  was  the  strongest  that  could  be  employed,  referred  it  to 
the  prothonotary,  to  ascertain  what  damages,  if  any,  the  plaintiff  had  sus- 
tained, and  how  much,  if  any  thing,  ought  to  be  paid  to  the  plaintiff.  Mr. 
Jarman,  in  commenting  upon  this  case,  observes,  that,  upon  the  reasoning 
there  adopted  by  the  Court,  it  is  obvious,  that  a  covenant  to  pay  a  sum  of 
money  as  liquidated  damages,  on  the  breach  of  any  one  of  a  series  of 
stipulations,  must  in  all  cases  be  nugatory,  as  the  covenant  necessarily  em- 
braces acts  of  various  degrees  of  importance,  all  which  cannot  with  equal 
justice  be  compensated  for  by  the  payment  of  the  same  sum ;  if  it  were 
sufficient  in  regard  to  some,  it  must  be  excessive  as  to  others ;  the  conse- 
quence is,  that,  in  order  to  give  an  effectual  remedy  for  the  recovery  of  a 
sum  of  money  as  stipulated  damages  in  such  a  case,  a  distinct  and  separate 


CHAP.  X.]  CONSTRUCTION    OF    ARTICLES.  357 

they  may.^  So,  upon  a  like  broad  submission,  and  also 
giving  authority  to  arbitrators  to  dissolve  the  partnership, 
upon  such  terms  and  conditions  as  they  might  prescribe, 
it  has  been  held,  that  the  arbitrators  may  provide,  that 
upon  the  dissolution,  one  partner  shall  not  carry  on  the 
trade  within  a  particular  prescribed  distance  of  the  place 
where  the  remaining  partners  are  to  carry  it  on.^  So, 
upon  a  general  submission  by  partners  of  all  actions,  notes, 
accounts,  dealings,  controversies,  and  demands,  in  law 
or  equity,  it  has  been  held,  that  it  is  competent  for  the 
arbitrators  to  award  that  one  of  the  partners  shall  take 
all  the  joint  property,  he  paying  to  the  other  a  sum  in 
gross,  and  also  discharging  all  the  partnership  debts. ^ 

amount  should  be  assessed,  as  the  measure  of  compensation  on  the  breach 
of  each  several  contract." 

'  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  152,  2d  ed. ;  Green  v.  Waring,  1  W. 
Bl.  475. 

*=  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  152,  2d  ed. ;  Green  v.  Waring,  1  W.  Bl. 
475 ;  Morley  v.  Newman,  5  Dowl.  &  R.  317. 

«  Byers  v.  Van  Deusen,  5  Wend.  268;  {§  299-301,  and  see  Burton  v. 
Wigley,  1  Bing.  N.  C.  665 ;  Wood  v.  Wilson,  2  Cr.  M.  &  K.  241 ;  Wilkin- 
son V.  Page,  1  Hare,  276.  But  it  is  said  that  an  ai'bitrator  cannot  appoint  a 
receiver.  Cook  v.  Catchpole,  10  Jur.  n.  s.  1068 ;  s.  c.  34  L.  J.  n.  s.  Ch.  60.} 


358  PARTNERSHIP.  [cHAP,  XI. 


CHAPTER   XI. 

REMEDIES    BETWEEN    PARTNERS. 

{  §  216.  Preliminary. 

217.  Remedies  between  partners. 

218.  Action  lies  for  breach  of  stipulation  in  articles. 

219.  No  action  lies  foi' money  paid  on  partnership  account. 

220.  Nor  for  money  paid  on  account  of  torts  affecting  the  partnership. 

221.  Reasons  whj-  no  action  lies. 

222.  Remedies  in  equity. 

223.  Roman  law. 

224.  Enforcement  of  positive  and  negative  obligations. 
225-227.  When  an  injunction  will  be  granted. 

228.  Appointment  of  a  receiver  during  the  continuance  of  the  partner- 

ship. 

229.  Whether  an  injunction  will  be  decreed  without  a  dissolution. 

230.  Roman  law. 

231.  Appointment  of  a  receiver. 

232.  Partnership  declared  void  for  fraud. 

233.  Relief    against  losses    caused  by  misconduct.      Rights  lost  by 

delay. } 

§  216.  These  are  the  most  material  considerations, 
which  seem  proper  to  be  brought  before  the  learned 
reader,  as  to  the  true  interpretation  and  construction  of 
partnership  articles,  so  far  as  they  have,  as  yet,  come 
under  judicial  cognizance  and  decision.  They  are  ne- 
cessarily imperfect ;  but  at  the  same  time  they  may  serve, 
in  some  degree,  as  lights  and  guides,  to  direct  our  in- 
quiries in  analogous  cases,  and  to  point  out  the  diffi- 
culties to  be  surmounted,  as  well  as  the  defects  to  be 
avoided. 

§  217.  The  next  inquiry  naturally  presented  is,  as  to 
the  remedies,  which  belong  to  partners  themselves, 
either  at  law  or  in  equit}' ,  during  the  continuance  of 
the  partnership,  either  to  enforce  the  particular  stipu- 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  359 

lations,  contained  in  the  articles  of  partnership,  or  other 
duties  and  obligations  which  arise  by  operation  and  im- 
pUcation  of  law.  A  full  examination  of  this  topic  prop- 
erly belongs  to  a  treatise  on  remedies  and  pleadings  at 
law  and  in  equity,  and  is  beside  the  purpose  of  the  pres- 
ent Commentaries  ;  but  it  may  be  found  discussed  at 
large  in  elementary  works,  devoted  to  the  consideration 
of  remedies  at  law  and  in  equity.^  It  may  not,  how- 
ever, be  without  use  to  bring  together,  in  this  place, 
some  general  suggestions  and  doctrines  applicable  to 
the  subject,  which  may  serve  to  explain  other  decisions, 
or  to  clear  away  lurking  doubts. 

§  218.  Wherever  there  is  an  express  stipulation  in 
the  partnership  articles,  which  is  violated  by  any  part- 
ner, an  action  at  law,  either  assumpsit,  or  covenant,  as 
the  case  may  require,  will  ordinarily  lie,  to  recover  dam- 
ages for  the  breach  thereof."^  In  many  cases,  indeed, 
such  damages  may  be  merely  nominal,  and  inadequate 
for  redress.  But  still  we  must  take  the  law  as  we  find 
it ;  and  in  such  cases,  as  in  some  other  relations  in  life, 
we  enter  into  the  connection  for  better  or  for  worse. ^ 

^  See  Coll.  on  P.  B.  2,  c.  3,  §  1-5,  p.  162-257,  2d  ed. ;  Gow  on  P.  c.  2, 
§  3,  4,  p.  69-116,  3ded. 

■  Gow  on  P.  c.  2,  §  3,  p.  69-73,  3d  ed. ;  {Lind.  on  P.  730 ;  Leighton  v. 
Wales,  3  M.  &  W.  545  ;  White  v.  Ansdell,  Tyrw.  &  G.  785  ;  Bagley  v.  Smith, 
10  N.  Y.  489  ;  Glover  v.  Tuck,  24  Wend.  153 ;  See  Holyoke  t'.Mayo,  50 
Me.  385  ;  Capen  v.  Barrows,  1  Gray,  376  ;  Addams  v.  Tutton,  39  Penn.  St. 
447;  MuUany  y.  Keenan,  10  Iowa,  224;  Lock  v.  Purdon,  2  All.  (Xew 
Bruns.)  33. } 

3  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  131,  2d  ed.  ;  Goodman  v.  Whitcomb,  1 
Jac.  &  W.  589,  592;  Wray  ».  Hutchinson,  2  Uy\.  &  K.  235;  1  Story,  Eq. 
Jur.  §659-665;  Gow  on  P.  c.  2,  §  3,  p.  69-93,  3ded.  — The  action  of 
account  seems  properly  applicable  only  to  cases  where  the  partnership  is 
ended.  See  1  Story.  Eq.  Jur.  §  659-665 ;  Gow  on  P.  c.  2,  §  3,  p.  68-70 ; 
Id.  p.  73,  74,  3d  ed. ;  Wray  v.  Milestone,  5  M.  &  W.  21 ;  Foster  v.  Allan- 
son,  2  T.  R.  479  ;  Duncan  v.  Lyon,  3  Johns.  Ch.  351,  361,  362.  Actions  of 
tort  can  scarcely  be  maintained  at  law  by  one  partner  against  the  other, 
touching  the  partnership  property ;  even  if  one  partner  should  wilfully 
destroy  the  property.     Gow  on  P.  c.  2,  §  3,  p.  89-93,  3d  ed. ;  Coll.  on  P. 


360  PARTNERSHIP.  [cHAP.  XI. 

§  219.  It  is  sometimes  laid  down  by  elementary  writ- 
ers, that,  during  the  continuance  of  tlie  partnership,  an 
action  at  law  will  lie  by  one  partner  against  the  others, 
for  moneys  advanced,  or  paid,  or  contributed,  on  account 
of  the  partnership,  or  of  the  debts  and  obligations  in- 
curred thereby.^  But  this  doctrine,  in  the  general  terms 
in  which  it  is  laid  down,  is  utterly  untenable,  and  incon- 
sistent with  the  rights,  and  duties,  and  relations  of  the  . 
partners  with  each  other.^     It  is  true,  that  one  partner 

B.  2,  c.  3,  §  8,  p.  257,  268,  2d  ed.  The  appropriate  remedy  seems  to  be  in 
equity.  {But  see  Liud.  on  P.  740  ;  Maybew  v.  Herrick,  7  C.  B.  229  ;  Barton 
V.  Williams,  5  B.  &  Aid.  395,  affirmed,  sub  nom.  Williams  v.  Barton,  3 
Bing.  139.} 

>  See  Gow  on  P.  c.  2,  §  3,  p.  79-81,  citing  Abbot  v.  Smith,  2  Yf .  BI. 
947,  and  what  was  said  by  Lord  Kenyon  in  Merryweather  v.  Xixon,  8  T.  R. 
186,  and  by  Mr.  Justice  Bayley  in  Ansell  v.  Waterhouse,  6  M.  &  S.  385,  390, 
and  Holmes  «.  Williamson,  6  M.  &  S.  158*  See  also  1  Mont,  on  P.  c.  4,  p. 
50  ;  Gary  on  P.  65  ;  [Hamilton  v.  Hamilton,  18  Penn.  St.  20.] 

^  Most  of  the  cases  which  are  supposed  to  inculcate  this  doctrine,  turn 
upon  other  very  distinct  grounds.  They  are  nearly  all  summed  up  in  Mr. 
GoUyer's  valuable  Treatise.  Goll.  on  P.  B.  2,  c.  3,  §  2,  p.  174-193; 
{Lind.  on  P.  728,  Met.  on  Gontr.  130.}  They  are  cases,  (1.)  where  either 
the  debt  was  a  separate  debt  and  not  a  partnership  debt.  Smith  v.  Bai-row, 
2  T.  R.  476 ;  {See  next  note}  ;  Gow  on  P.  c.  2,  §  3,  p.  75-77,  3d  ed.  (2.) 
Or,  a  separate  and  distinct  security,  or  negotiable  instrument,  was  given  by 
one  partner  to  another,  on  the  partnership  account.  Preston  v.  Strutton,  1 
Anst.  50;  Venning  v.  Leckie,  13  East,  7;  [Gridley  v.  Dole,  4  Gomst. 
486]  ;  {Van  Ness  v.  Forrest,  8  Granch,  30;  Rockwell  v.  Wilder,  4  Met. 
556  ;  Ghamberlain  v.  Walker,  10  All.  429.}  (3.)  Or,  where  the  contract  was 
preliminary  to  the  partnership,  and  merely  in  contemplation  of  it ;  such  as  a 
promise  to  contribute  so  much  to  the  partnership  funds,  in  stock  or  money. 
Gale  V.  Leckie,  2  Stark.  107;  Venning  v.  Leckie,  13  East,  7;  Helme  v. 
Smith,  7  Bing.  709;  [Vance  v.  Blair,  18  Ohio,  532]  ;  {Elgie  v.  Webster, 
5  M.  &  W.  518;  Brown  v.  Tapscott,  6  M.  &  W.  119;  French  v.  Styring, 
2  G.  B.  N.  s.  357 ;  Gurrier  v.  Webster,  45  N.  H.  226 ;  Gurrier  v.  Rowe, 
46  N.  H.  72.}  (4.)  Or,  where  the  case  is  one  of  part-owners  or  joint-con- 
tractors, and  not  of  partners.  Helme  v.  Smith,  7  Bing.  709  ;  Graham  v. 
Robertson,  2  T.  R.  282;  Sadler  v.  Nixon,  5  B.  &  Ad.  936;  [French 
V.  Styring,  2  G.  B.  n.  s.  357 ;  s.  c.  40  Eng.  L.  &  Eq.  274.]  (5.)  Or, 
where  the  money  or  funds  have  been  voluntarily  se^jarated  from  the 
partnership  stock  or  moneys,  and  appropriated  to  one  partner,  and  he 
alone  is  interested  in  a  contract  touching  the  same.  Goffee  v.  Brian,  3 
Bing.  54 ;   Jackson  v.  Stopherd,  2  Gr.  &  M.  361 ;   Wilson  v.  Gutting,  10 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  361 

may  maintain  an  action  at  law  against  the  other  part- 
ners, or  any  one  or  more  of  them,  for  moneys  advanced, 
or  paid,  or  contributed,  at  their  request,  for  their  sepa- 
rate and  distinct  account  and  benefit.  But  this  is  upon 
the  plain  ground,  that  it  has  no  connection  with  the 
partnership  concerns  and  liabilities  ;  and  that  the  trans- 
actions or  contracts  are  between  the  parties  in  their  sev- 

Bing.  436;  Sharp  v.  Warren,  6  Price,  131;  {Caswell  v.  Cooper,  18  111. 
532.}  (6.)  Or,  where  a  balance  has  been  struck,  and  a  separate  promise 
made  to  pay  the  same  to  one  partner.  {Whether  an  express  promise 
to  pay  a  balance  is  necessary  to  support  an  action,  is  a  point  on  which 
the  cases  are  in  much  conflict.  To  the  effect  that  no  express  promise 
is  necessary,  are  Wray  v.  Milestone,  5  M.  &  W.  21 ;  Fanning  v.  Chad- 
wick,  3  Pick.  420 ;  M'Coll  v.  Oliver,  1  Stew.  510.  See  Spear  v.  Newell, 
13  Vt.  288 ;  Van  Amringe  v.  Ellmaker,  4  Penn.  St.  281 ;  Wright  v. 
Cumpsty,  41  Penn.  St.  102 ;  Wycoff  v.  Purnell,  10  Iowa,  332.  To  the 
effect  that  an  express  promise  is  necessary  are  Westerlo  v.  Evertson,  1 
Wend.  532;  Pattison  v.  Blanchard,  6  Barb.  537;  Chadsey  t>.  Harrison,  11 
111.  151;  Course  v.  Prince,  3  Mills,  Const.  R.  416.  See  Gulick  v.  Gulick, 
2  Green,  578}  ;  Moravia  v.  Levy,  2  T.  R.  483,  note;  Foster  v.  Allanson,  2 
T.  R.  479 ;  Preston  v.  Strutton,  1  Anst.  50  ;  Brierly  v.  Cripps,  7  C.  «&  P. 
709.;  Wray  v.  Milestone,  5  M.  &  W.  21;  Henley  v.  Soper,  8  B.  &  C.  16; 
Winter  v.  White,  1  Brod.  &  B.  350.  See  also  Gow  on  P.  c.  2,  §  3,  p.  69- 
97,  3d  ed. ;  Fremont  v.  Coupland,  2  Bing.  170;  Carr  v.  Smith,  5  Q.  B. 
128,  138.  But  the  mere  fact  that  an  account  has  been  taken  and  balance 
struck  between  partners  at  a  certain  period  during  the  partnership,  would 
not  entitle  any  partner  to  maintain  an  action  therefor,  unless  agreed  to 
generally  by  all  the  partners.  See  Morrow  v.  Riley,  15  Ala.  710.  In 
Carr  v.  Smith,  5  Q.  B.  138,  Lord  Denman  said:  "The  case  of  Fremont  v. 
Coupland,  and  other  similar  cases,  seem  to  limit  the  action  to  a  settlement 
of  accounts  on  a  final  close  of  all  partnership  transactions ;  but  this  case 
does  not  necessarily  raise  that  question ;  for  at  all  events  the  settlement,  in 
order  to  ground  an  action,  must  be  one  which  is  binding  and  conclusive 
upon  the  partners.  Now  it  does  not  appear  here  that  the  adjustment  and 
settlement  was  ever  agreed  to  by  all  the  partners,  nor  indeed  by  the  plain- 
tiff and  the  testator ;  if,  therefore,  it  were  binding  and  conclusive  on  them, 
it  must  have  been  so  by  reason  of  the  power  confided  to  the  persons  who 
drew  it  up,  and  in  that  case  it  would  be  an  award,  and  required  a  stamp. 
It  would  come  within  the  authority  of  Jebb  v.  McKierman,  rather  than 
within  Boyd  v.  Emmerson,  Sybray  v.  White,  and  similar  cases."  {Lind.  on 
P.  735,  Holyoke  v.  Mayo,  50  Me.  385.  See  also  Gibson  v.  Moore,  6  N.  H. 
547  ;  Williams  v.  Henshaw,  11  Pick.  83  ;  s.  c.  12  Pick.  378  ;  Dickinson  v.  Gran- 
ger, 18  Pick.  315,  317  ;  Sikes  v.  Work,  6  Gray,  433  ;  Shattuck  v.  Lawson,  10 
Gray,  405  ;  Wiggin  v.  Cumings,  8  All.  353  ;  Warren  v.Wheelock,  21  Vt.  323.} 


362  PARTNERSHIP.  [cHAP.  XI. 

era],  distinct,  and  independent  capacities,  separate  from 
the  partnership.  For  there  is  no  incompetency  in  part- 
ners to  enter  mto  contracts  with  each  other,  as  individ- 
uals, in  matters  dehors  the  partnership  concerns  and 
business.^  But  this  is  very  different  from  the  case  of 
a  partner's  entering  into  contracts  with  the  partnership, 
as  such,  or  of  his  paying  moneys,  or  incurring  Kabilities 
on  account  thereof,  he  being  in  all  such  cases  one  of  the 
parties  in  interest,  and,  as  such,  bound  jointly  with  the 
others  to  contribute  towards  the  discharge  of  the  com- 
mon obligations  of  the  partnership."^ 

§  220.  This  doctrine  is  not  confined  to  cases  of 
moneys  paid,  or  debts  incurred,  or  contributions  made, 

»  Gow  on  P.  c.  2,  §  3,  p.  75,  76,  3d  ed. ;  Coffee  v.  Brian,  3  Bing.  54 ; 
Smith  V.  Barrow,  2  T.  R.  476 ;  Nockels  v.  Crosby,  3  B.  &  C.  814;  Coll.  on 
P.  B.  2,  c.  3,  §  2,  p.  175-178,  2d  ed. ;  1  Story  Eq.  Jur.  §  664-666  ; 
Wats,  on  P.  c.  8,  p.  394-409,  2d  ed ;  {Cross  v.  Cheshire,  7  Exch.  43 ;  Cham- 
berlain V.  Walker,  10  All.  429 ;  Paine  v.  Thaoher,  25  Wend.  450 ;  Roberts 
V.  Fitler,  13  Penn.  St.  265;  Wright  v.  Michie,  6  Gratt.  354;  Edens  v. 
Williams,  36  111.  252 ;  Elder  v.  Hood,  38  111.  533.  See  Coleman  v.  Cole- 
man, 12  Rich.  183.} 

*  Gow  on  P.  c.  2,  §  3,  p.  77-79;  Holmes  v.  Higgins,  1  B.  &  C.  74; 
IMilburn  v.  Codd,  7B.  «&  C.  419  ;  [Caldicott  v.  Griffiths,  8  Exch.  898 ;  s.  c. 
22  Eng.  L.  &  Eq.  527]  ;  Xeale  v.  Turton,  4  Bing.  149  ;  league  v.  Hubbard, 
8  B.  &  C.  345;  Geddes  v.  Wallace,  2  Bligh,  270;  Coll.  on  P.  B.  2,  c.  3, 
§  2,  p.  174-178,  2d  ed. ;  Worrall  v.  Grayson,  Tyrw.  &  G.  477,  480;  s.  c. 
1  M.  &  W.  166 ;  Brown  v.  Tapscott,  6  M.  &  W.  119,  123;  BoviU  v.  Ham- 
mond, 6  B.  &  C.  149;  Pearson  v.  Skelton,  1  M.  &  W.  504;  s.  c.  Tyrw.  & 
G.  848 ;  Sadler  v.  Nixon,  5  B.  &  Ad.  936 ;  Haskell  v.  Adams,  7  Pick.  59  ; 
1  Story,  Eq.  Jur.  §  679-681 ;  {Harris  v.  Harris,  39  N.  H.  45;  Ordiorne  v. 
Woodman,  39  N.  H.  541;  White  v.  Harlow,  5  Gray,  463;  Ives  v.  Miller, 
19  Barb.  196 ;  Crottes  v.  Frigerio,  18  La.  Ann.  283 ;  De  Jarnette  v,  Mc- 
Queen, 31  AJa.  230. }  [In  a  late  English  case.  A.,  B.,  &  C.  were  shareholders 
in  a  joint-stock  mining  company,  and  money  being  necessary  to  carry  on 
the  mine,  a  loan  was  made  upon  the  joint  and  several  promissory  note  of 
the  three,  and  applied  to  the  use  of- the  mine.  A.  being  compelled  to  pay 
the  whole  note,  was  allowed  to  sue  the  others  for  contribution.  Sedgwick 
V.  Daniell,  2  H.  &  N.  319.  So,  also,  if  partners,  by  an  express  agreement, 
separate  a  distinct  matter  from  the  partnership  dealing,  and  one  party 
expressly  agrees  to  pay  the  other  a  specific  sum  for  that  matter,  assumpsit 
will  lie  on  that  promise,  although  the  matter  arose  from  their  partnership 
dealing.     Collamer  v.  Foster,  26  Vt.  754.] 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTMERS.  363 

by  one  partner  on  account  of  liabilities  of  the  partner- 
ship, resulting  from  contracts  binding  the  same ;  but  it 
equally  applies  to  moneys  paid,  and  debts  incurred,  and 
contributions  made,  by  one  partner  on  account  of  negli- 
gences and  torts,  affecting  the  partnership.^  In  the 
ordinary  course  of  things  there  is  not,  indeed,  as  is  well 
known,  any  right  of  contribution  allowed  by  the  com- 
mon law  between  joint  wrong-doers,  where  one  has 
paid  the  whole  damages  or  expenses  occasioned  there- 
by.^ And  this  rule  is  just  as  applicable  to  partners  as 
to  other  persons.^  But,  then,  the  rule  is  to  be  under- 
stood according  to  its  true  sense  and  meaning,  which  is, 
where  the  tort  is  a  known,  meditated  wrong,  and  not 
where  the  party  is  acting  under  the  supposition  of  the 
entire  innocence  and  propriety  of  the  act,  and  the  tort 
is  merely  one  by  construction  or  inference  of  law.^  In 
the  latter  case,  although  not  in  the  former,  there  may 
be,  and  properly  is,  a  contribution  allowed  by  law,  for 
such  payments  and  expenses  between  the  constructive 
wrong-doers,  whether  partners,  or  not.°  Still,  however, 
the  same  difficulty  occurs  at  law  in  such  cases  of  con- 
structive torts,  as  in  cases  of  contracts  ;  and  no  remedy 
at  law  is  maintainable  therefor  between  the  partners. 
The  remedy,  as  we  shall  presently  see,  must  be  admin- 
istered in  another  tribunal.^ 

1  Pearson  v.  Skelton,  1  M.  &  W.  504;  s.  c.  Tyrw.  &  G.  848. 

^  Merryweather  v.  Nixan,  8  T.  R.  186. 

»  Pearson  v.  Skelton,  1  M.  &  W.  504 ;  s.  c.  Tyrw.  &  G.  848. 

*  Adamson  v.  Jarvls,  4  Bing.  66.  °  Ibid. 

«  Pearson  v.  Skelton,  1  M.  &  W.  504;  s.  c.  Tyrw.  &  G.  848.  — In 
this  case  Baron  Parke  is  reported,  in  Tyrw.  &  G.  850,  851,  to  have  said: 
"  How  were  the  profits  divided?  Did  the  partners  divide  the  net  profits, 
after  the  payment  of  all  expenses,  or  the  gross  profits  according  to  the 
number  of  miles  that  each  partner  horsed  the  coach  ?  If  the  latter  was  the 
case,  there  was  no  common  fund,  and  you  will  be  entitled  to  a  rule ;  but  if 
there  was  a  partnership  fund,  out  of  which  losses  were  to  be  paid,  your 
remedy  is  in  equity.     We  will  consult  the  Lord  Chief  Justice,  and  ascertain 


364  PARTNERSHIP.  [CHAP.  XI. 

§  221.  The  ground,  why  at  law,  independent  of  any 
special  covenant,  or  any  distinct  several  contract,  one 
partner  cannot  maintain  a  suit  against  the  other  part- 
ners, for  moneys  paid,  or  advanced,  or  contributed,  or 
liabilities  incurred,  on  account  of  the  partnership/  may  be 
readily  explained  in  a  satisfactory  manner.  In  the  first 
place,  upon  the  mere  technical  principles  of  the  common 
law,  one  partner  cannot  sue  the  others  for  a  contribution 
or  payment  made  for  a  just  partnership  liability  ;  for  in 
such  a  suit  all  the  partners,  including  himself,  must  be 
made  defendants  ;  and  it  is  clear,  upon  the  acknowledged 
principles  of  pleading  at  the  common  law,  that  a  party 
cannot  at  once  be  a  plaintiff  and  a  defendant  in  the  same 
suit ;  or,  in  other  words,  he  cannot  sue  himself,  either 
alone,  or  in  conjunction  with  others.^     But  a  reason,  far 

what  evidence  he  has  upon  his  notes,  as  to  the  existence  of  a  partnership 
fund.  With  respect  to  the  first  objection  taken  at  the  trial,  it  does  not 
apply."  On  a  subsequent  day  Parke,  B.,  said,  "that  on  consulting  the 
notes  of  the  Lord  Chief  Justice,  it  appeared  that  there  was  a  partnership 
fund,  out  of  which  the  expenses  were  first  to  be  paid,  and  the  residue 
divided  among  the  partners ;  consequently  the  nonsuit  was  right."  See 
ante,  §  61,  and  note. 

'  [Or  for  neglect  of  the  partnership  business.  Capen  v.  Barrows,  1 
Gray,  376.] 

2  Coll.  on  P.  B.  2,  c.  3,  §  2,  p.  188-193,  2d  ed. ;  Bosanquet  v.  Wray,  6 
Taunt.  597  ;  MofFatt  v.  Van  Millingen,  cited  2  B.  &  P.  124,  note  ;  Mainwaring 
V.  Newman,  2  B.  &  P.  120 ;  De  Tastet  v.  Shaw,  1  B.  &  Aid.  664 ;  Neale  v. 
Turton,  4  Bing.  149 ;  Teague  v.  Hubbard,  8  B.  &  C.  345 ;  Brown  v.  Tap- 
scott,  6  M.  &  W.  119,  123 ;  Holmes  v.  Higgins,  1  B.  &  C.  74 ;  Malyne's 
Lex  Merc.  p.  310;  Niven  v.  Spickerman,  12  Johns.  401;  1  Story,  Eq.  Jur. 
§664,665,679;  Jones  v.  Yates,  9  B.  &  C.  532;  [Rawlinson  v.  Clarke,  15 
M.  &  W.  292;  Cruikshank  v.  M'Vicar,  8  Beav.  106]  ;  {Met.  on  Contr. 
131,  132.}  — In  this  respect  the  Roman  law,  the  law  of  France,  and  the  law 
of  Scotland,  present  a  marked  contrast  to  the  common  law.  In  the  juris- 
prudence of  each  of  these  latter  countries,  the  firm  is  treated,  in  its  aggre- 
gate capacity,  as  having  an  independent  existence,  somewhat  like  a  quasi 
corporation ;  and  the  firm  may,  therefore,  sue  and  be  sued,  by  a  single 
partner,  without  any  repugnancy,  exactly  as  a  member  of  a  corporation 
may  sue  and  be  sued  by  the  corporation  itself.  In  this  respect  there 
is  an  analogy  to  the   proceedings  in  our  Courts  of  Equity,   where    one 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  365 

more  satisfactory,  because  it  is  in  no  shape  founded 
upon  technical  principles,  is,  that  until  all  the  partner- 
partner  is  entitled  to  sue  all  the  other  partners,  for  an  adjustment  of  the 
partnership  concerns,  or  for  any  transactions  growing  out  of  the  same  con- 
cerns. Mr.  Bell  (2  Bell,  Comm.  B.  7,  p.  619,  620,  5th  ed.)  states  the  Scot- 
tish law  as  follows  :  "  Some  lawyers  have  considered  the  obligation  of  the 
company  as  only  the  joint  and  several  obligations  of  the  partners.  But 
this  is  not  correct  in  the  law  of  Scotland.  The  partnership  is  held  as,  in 
law,  a  separate  person ;  capable  of  maintaining  independently  the  relations 
of  debtor  and  creditor.  As  a  separate  person,  the  company  is  known  and 
recognized  in  obligations  and  contracts  by  its  separate  name  or  firm,  as  its 
personal  appellation.  But  it  cannot  hold  feudal  property  in  the  so- 
cial name.  It  is  a  consequence  of  this  separate  existence  of  the  company 
as  a  person,  that  an  action  cannot  directly,  and  in  the  first  instance,  be 
maintained  against  a  partner  for  the  debt  of  the  company.  The  demand 
must  be  made,  first,  against  the  company ;  or  the  company  must  have  failed 
to  pay,  or  have  dishonored  their  bill,  before  the  partner  can  be  called  on. 
It  also  follows  that  the  partners  are  guarantees  or  sureties  for  the  company  ; 
not  proper  or  principal  debtors.  And  so,  although  diligence  may  proceed 
against  the  partners  directly,  the  company  having  failed  to  pay  according  to 
their  obligation ;  and  although  personal  diligence  necessarily  can  proceed 
only  against  the  individuals,  the  estate  of  the  partner  can,  in  bankruptcy,  be 
charged  only  with  the  balance  remaining  due,  after  what  may  be  drawn  from 
the  company  estate.  Another  consequence  is,  that  the  creditors  of  a  part- 
ner, if  they  would  attach  his  share,  must  arrest  in  the  hands  of  the  company 
as  a  separate  person.  Action  or  diligence  seems  to  be  legally  competent  by 
a  company  firm,  or  against  the  partnership  by  its  firm  ;  though  personal  ex- 
ecution, of  course,  is  possible  only  against  the  individuals.  But  so  many 
doubts  have  been  raised  of  late  on  these  points,  that  the  safer  course  is  to 
use  the  names  of  the  partners.  Sequestration  of  the  company''s  estate  pro- 
ceeds in  the  name  of  the  firm.  In  England,  a  doctrine  prevails,  which  does 
not  accord  with  the  law  of  Scotland,  and  which,  perhaps,  is  to  be  ascribed 
to  a  difference  of  principle,  on  the  point  now  under  discussion.  At  law,  in 
England,  there  can  be  no  debt  between  two  partnerships,  of  each  of  which 
one  person  is  a  partner ;  and  this  on  the  ground,  that  '  no  man  can  con- 
tract with  himself,  and,  therefore,  cannot  bind  himself  in  the  society  of  one 
set  of  persons  to  another,  in  which  he  is  also  a  partner.'  It  is  allowed  that 
the  contract  is  available  in  equity,  but  not  in  law.  In  Scotland,  debts  be- 
tween companies,  in  which  the  same  individual  is  partner,  are  every  day 
sustained  as  quite  unexceptionable."  See  Poth.  de  Soc.  n.  135,  136.  The 
Roman  law,  while  it  ordinarily  gave  the  action  pro  socio  only  in  cases  of  a 
dissolution  of  the  partnership,  excepted  special  cases.  Nonnunquam  necessa- 
rium  est,  et  manente  societate,  agi  pro  socio ;  veluti,  cum  societas,  vectiga- 
lium  causa,  coita  est,  propter([ue  varios  contractus  neutri  expcdiat  recedere 
a  societate,  nee  refertur  in  medium,  quod  ad  alterum  pervenerit.  D.  17, 
2,  65,  15  ;  Id.  17,  2,  52  ;  Poth.  Pand.  17,  2,  n.  33. 


366  PARTNERSHIP.  [cHAP.  XI. 

ship  concerns  are  ascertained  and  adjusted,  it  is  impossi- 
ble to  know  whether  a  particular  partner  be  a  debtor  or 
a  creditor  of  the  firm  ;  for  although  he  may  have  ad- 
vanced large  sums  of  money  on  account  thereof,  he  may 
be  indebted  to  the  firm  in  a  much  larger  amount.  Now, 
a  settlement  of  all  the  partnership  concerns  is  ordina- 
rily, during  the  continuance  of  the  partnership,  unat- 
tainable at  law ;  and  even  in  equity  it  is  not  ordinarily 
enforced,  except  upon  a  dissolution  of  the  partaership. 
If  one  partner  could  recover  against  the  other  partners 
the  whole  amount  paid  by  him  on  account  of  the  part- 
nership, they  would  immediately  have  a  cross  action 
against  him  for  the  whole  amount,  or  his  share  thereof; 
and  if  he  could  recover  only  their  shares  thereof,  then, 
in  order  to  ascertain  those  shares,  a  full  account  of  all 
the  partnership  concerns  must  be  taken,  and  the  part- 
nership itself  wound  up.  This  would  manifestly  be  a 
most  serious  inconvenience,  as  well  as  a  change  of  the 
original  contract,  from  a  joint  contract  of  all  the  part- 
ners, ill  solido,  to  a  several  contract,  each  for  his  own 
aliquot  part  of  the  final  balance,  due  to  a  particular 
partner  upon  a  special  transaction.^  And  in  cases  of 
this  sort  the  maxim  may  justly  apply :  Friistra  petis^ 
quod  statim  alteri  reddere  cogeris :  ^  or,  as  it  is  some- 
times expressed,  Frustra  peteret,  quod  mox  restiturus 
esset.^ 

§  222.  But,  although,  in  cases  of  the  sort  above  men- 
tioned, no  remedy  lies  at  law,  yet  in  equity  an  appro- 
priate remedy  may  and  will  be  granted,  wherever  it  is 
ex  cequo  et  bono  necessary  and  proper ;  for,  in  equity, 
there  is  no  difficulty  in  one  partner's   suing  the  other 

1  Coll.  on  P.  B.  2,  c.  3,  §  2,  p.  174-193,  2d  ed. ;  Harvey  v.  Crickett,  5 
M.  &  S.  336  ;  Gow  on  P.  c.  2,  §  3,  p.  69-77,  3d  ed. ;  Id.  c.  2,  §  4,  p.  93-102 ; 
{Towle  V.  Meserve,  38  N.  H.  9 ;  Stoddard  v.  Wood,  9  Gray,  90.} 

*  Branch,  Maxims,  p.  51,  Am.  Ed.  1824 ;  Jenkins,  Cent.  25G. 

=>  Coll.  on  P.  B.  2,  c.  3,  §  2,  p.  175,  2d  ed. ;  1  Story,  Eq.  Jur.  §  664. 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  367 

partners  for  money  advanced,  or  contributions  made,  or 
liabilities  incurred,  simply  on  the  ground  that  it  has 
its  foundation  in  a  partnership  transaction,  if  in  other 
respects  the  suit  is  unobjectionable,  as  no  technical 
difficulty  occurs  in  equity,  as  to  the  joinder  of  all  the 
proper  parties  to  the  suit.^  Indeed,  the  ordinary  remedy 
now  administered,  in  matters  of  account,  or  requiring 
an  account  between  partners,  is  exclusively  in  equity.^ 
But  this  subject,  which  is  rarely  if  ever  acted  upon 
in  Courts  of  Equity,  except  upon  a  dissolution  of  the 
partnership,  will  more  appropriately  occur  in  another 
place.^ 

§  223.  The  Roman  law  did  not  to  the  same  extent 
or  precisely  in  the  same  manner  as  our  law,  recognize 
the  distinction  between  remedies  at  law  and  remedies  in 
equity,  although  it  is  very  clear,  that  an  analogous  dis- 
tinction, between  suits  in  the  ordinary  forum,  and  suits 
ex  cequo  et  bono  before  the  Praetor's  forum,  was  well  un- 
derstood, and  fully  acted  upon.  But,  in  cases  of  part- 
nership, owing  to  the  complicated  nature  thereof,  a 
special  remedy  was  provided,  commonly  called  the  Actio 
2)ro  socio,  the  nature,  character,  and  operation  whereof 
are  fully  explained  in  the  Digest.'' 

§  224.  And,  here,  a  question,  of  a  local  and  general 

>  Coll.  on  P.  B.  2,  c.  3,  §  2,  p.  174-193,  2d  ed. ;  Id.  c.  3,  §  7,  p.  245-249  ; 
Abbot  V.  Smith,  2  W.  Bl.  947  ;  Gow  on  P.  c.  2,  §  4,  p.  93-102,  3d  ed. ;  1 
Story,  Eq.  Jur.  §  666-674 ;  Id.  §  679,  680 ;  Pearson  v.  Skelton,  1  M.  &  W. 
504 ;  s.  c.  T\Tw.  &  G.  848. 

2  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  197-232,  2d  ed. ;  Duncan  v.  Lyon, 
3  Johns.  Ch.  351,  361-363;  Gow  on  P.  c.  2,  §  3,  p.  73,  74,  3d  ed. ;  Id.  c. 
2,  §  4,  p.  93-102. 

3  Ibid. ;  post,  §  228,  229 ;  Forman  v.  Hoinfray,  2  Ves.  &  B.  329  ;  Har- 
rison V.  Armitage,  4  Madd.  143  ;  Richards  v.  Davies,  2  Russ.  &  M.  347  ;  Los- 
combe  V.  Russell,  4  Sim.  8  ;  Knebell  v.  White,  2  You.  &  C.  Ex.  15  ;  Glassing- 
ton  V.  Thwaites,  1  Sim.  &  St.  124,  and  the  Reporter's  notes  (a)  and  (b) ; 
Natusch  V.  Irving,  Gow  on  P.  App.  398,  3d  ed. ;  Wallworth  v.  Holt,  4  Myl. 
&  C.  619,  635,  639. 

*  Dig.  17,  2,  31-34,  &c. ;  Poth.  Pand.  17,  2,  n.  30-54. 


368  PARTNERSHIP.  [cHAP.  XI. 

nature  may  arise,  when,  and  under  what  circumstances, 
and  to  what  extent,  Courts  of  Equity  will  interfere  to 
enforce  either  the  express  or  implied  duties  and  obliga- 
tions of  partners  inter  sese.  In  respect  to  such  duties 
and  obligations  as  are  of  a  positive  and  personal  nature, 
it  seems  difficult  to  perceive  how  Courts  of  Equity  can 
enforce  a  specific  performance  of  them  ;  and,  therefore, 
in  case  of  a  breach  thereof,  the  injured  party  must  be 
left  to  his  remedy,  if  any,  at  law.^  But  the  same  objec- 
tion does  not  seem  to  iipply  to  cases  where  the  relief 
sought  is  to  enforce  the  due  observance  of  negative 
duties  and  obligations  ;  for,  here,  all  that  is  required  is, 
that  the  Court  should  restrain  the  partner  from  violat- 
ing them ;  or.  in  other  words,  from  doing  acts  which 
violate  the  express  or  implied  obligation  which  he  is 
under  to  forbear.  Thus,  for  example,  although  a  Court 
of  Equity  could  not  compel  a  partner  to  bestow  his 
skill,  and  diligence,  and  services  faithfully  in  the  part- 
nership business,  yet  it  may  interpose  by  injunction  to 
restrain  him  from  wasting  the  partnership  property, 
from  misusing  the  partnership  name,  from  interfering 
to  stop  the  partnership  business,  or  from  fraudulent 
practices  injurious  or  ruinous  to  the  partnership,  in  vio- 
lation of  his  express  duties  or  express  contracts." 

'  Kemble  v.  Kean,  6  Sim.  333 ;  Clarke  v.  Price,  2  Wils.  Ch.  157 ; 
Kimberley  v.  Jennings,  6  Sim.  340 ;  [Downs  v.  Collins,  6  Hare,  418]  ;  Coll. 
on  P.  B.  2,  c.  2,  §  2,  p.  142,  2d  ed. ;  Id.  B.  2,  c.  2,  §  1,  p.  131 ;  2  Story, 
Eq.  Jur.  §  722  a. 

2  Ibid. ;  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  233-240,  2d  ed. ;  Id.  B.  2,  c.  2,  § 
2,  p.  142  ;  3  Kent,  60;  Miles  v.  Thomas,  9  Sim.  606.  —  The  comments  of  the 
Vice-Chancellor  (Sir  L.  Shadwell)  on  this  subject,  in  Kemble  v.  Kean,  6  Sim. 
333,  are  so  important,  that  they  deserve  to  be  cited  at  large.  "In  the  case  of 
a  mere  contract  between  two  persons,  who  are  both  carrying  on  the  same  trade, 
that  one  shall  not  cany  on  his  trade  within  a  limited  distance  in  which  the 
party  contracted  with  intends  to  carry  on  his  trade,  the  whole  agreement  is  of 
so  genuine  a  kind,  that  the  Court  would  enforce  the  performance  of  the  agree- 
ment by  restraining  the  party  by  injunction  from  breaking  the  agreement  so 
made.    In  the  case  where  the  parties  are  partners,  and  one  of  the  partners 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  369 

§  225.  A   few   illustrations   of  the    general   doctrine 
may  be  here   properly  introduced.     Courts   of  Equity, 

contracts  that  he  shall  exert  himself  for  the  benefit  of  the  partnership,  though 
the  Court,  it  is  true,  cannot  compel  a  specific  performance  of  that  part  of  the 
agreement,  yet,  there  being  a  partnership  subsisting,  the  Court  will  restrain 
that  party  (if  he  has  covenanted  that  he  will  not  carry  on  the  same  trade 
with  other  persons)  from  breaking  that  part  of  the  agreement.  That  is  in 
case  of  a  partnership.  In  the  case  of  Morris  v.  Colman,  18  Ves.  437,  the 
bill  was  fil<;d  by  ]Morris  against  Colman  for  the  purpose  of  having  a  question 
upon  the  articles  of  partnership  determined,  and  for  restraining  Colman  from 
doing  many  acts  which  he  was  disposed  to  do ;  and  I  think,  in  that  case  (for 
I  was  counsel  for  Colman  from  the  beginning  to  the  end),  that  Colman  al- 
ways stood  on  the  defensive.  The  only  question  was,  whether  Colman  should 
be  at  liberty  to  do  certain  acts,  which  he  insisted  he  was  at  liberty  to  do,  and 
Morris  contended  that  he  was  not.  Xow,  I  apprehend,  that  what  Lord  El- 
don  says,  in  giving  his  judgment  upon  that  point,  must  be  taken  with  refer- 
ence to  the  subject  that  was  before  him  ;  and  I  perfectly  well  recollect  the 
time  when  the  injunction  was  granted  to  restrain  Mr.  Colman,  but  I  am  not 
quite  sure  it  is  exactly  in  the  way  in  which  the  report  represents.  But  Col- 
man insisted,  generally,  tliat  he  had  a  right  to  write  dramatic  pieces  for  other 
theatres ;  and  then  there  was  an  injunction  granted  to  restrain  the  represen- 
tation of  one  of  the  pieces  which  he  had  written,  and  which  was  intended  to 
be  represented,  I  think,  at  Covent-garden  Theatre.  In  the  argument  jt  was 
said,  that  the  particular  provision  which  is  stated  in  the  case,  was  a  provision 
restraining  Colman  from  writing  dramatic  pieces  for  any  other  theatre ;  and 
in  the  argument  it  was  said  by  the  counsel  for  the  plaintiff,  that  that  provi- 
sion was  no  more  against  public  policy,  than  a  stipulation  that  Mr.  Garrick 
should  not  perform  at  any  other  theatre  than  that  at  which  he  was  engaged, 
would  have  been.  Xow,  with  reference  to  what  was  said  by  counsel,  upon 
arguing  the  case  of  a  partnership,  Lord  Eldon  says  :  '  If  Mr.  Garrick  was 
now  living,  would  it  be  unreasonable  that  he  should  contract  with  Mr.  Col- 
man to  perform  only  at  the  Haymarket  Theatre,  and  Mr.  Colman  with  him  to 
write  for  that  theatre  alone  ?  Why  should  they  not  thus  engage  for  the  tal- 
ents of  each  other  ? '  That  mode  of  putting  the  question  appears  to  me  to 
show,  that  Lord  Eldon  is  speaking  of  a  case  Avhere  the  parties  are  in  part- 
nership together ;  because  it  would  be  a  strange  thing  that  one  should  con- 
tract to  perform  only  at  the  Haymarket  Theatre,  and  the  other  to  write  for 
that  theatre  alone,  except  in  the  case  of  a  partnership,  where  botii  parties 
would  be  exerting  themselves  for  their  mutual  benefit;  because  if  they  were 
not  in  partnership,  the  effect  of  such  an  agreement  might  be,  that  neither 
might  exert  his  talents  at  all.  In  this  case,  however,  there  is  no  partnership 
whatever  between  the  proprietors  of  Covent-garden  Theatre  and  Mr.  Kean  ; 
but  the  contract  is  nothing  more  than  this,  that  ^Ir.  Kean  shall,  for  a  given 
remuneration,  act  a  certain  number  of  nights  at  Covent-garden  Theatre, 
with  a  proviso,  that  in  the  mean  time  he  shall  not  act  at  any  other  theatre. 

24 


370  PARTNERSHIP.  [cHAP.  XI. 

in  interfering  by  way  of  injunction  in  cases  of  part- 
nership,   act   upon    a   sound    discretion,   and   will   not 

And  it  is  quite  clear,  that  this  bill  is  filed  for  the  purpose  of  having  the  per- 
formance of  an  agreement  with  regard  to  his  contract  to  act.  [His  Honor 
here  stated  the  substance  of  the  bill,  and  then  proceeded]  ;  —  So  that  it  was 
an  agreement  to  act  at  Covent-garden  Theati-e,  a  certain  number  of  nights  in 
the  season,  1830-31,  and  that,  in  the  mean  time,  the  defendant  should  not 
act  in  London ;  and  the  bill  is  filed  for  the  purpose  of  enforcing  the  per- 
formance of  that  agreement,  which  mainly  consists  in  the  fact  of  his  acting; 
and  it  appears  to  me,  that  it  is  utterly  impossible  that  this  Court  can  execute 
such  an  agreement.  In  the  first  place,  independently  of  the  difficulty  of 
compelling  a  man  to  act,  there  is  no  time  stated,  and  it  is  not  stated  in  what 
characters  he  shall  act ;  and  the  thing  is  altogether  so  loose,  that  it  is  per- 
fectly impossible  for  the  Court  to  determine  upon  what  scheme  of  things 
Mr.  Kean  shall  perform  his  agreement.  There  can  be  no  prospective 
declaration  or  direction  of  the  Court,  as  to  the  performance  of  the  agree- 
ment ;  and,  supposing  Mr.  Kean  should  resist,  how  is  such  an  agreement  to 
be  performed  by  the  Court  ?  Sequestration  is  out  of  the  question ;  and 
can  it  be  said,  that  a  man  can  be  compelled  to  perform  an  agreement  to  act 
at  a  theatre  by  this  Court  sending  him  to  the  Fleet  for  refusing  to  act  at  all  ? 
There  is  no  method  of  arriving  at  that  which  is  the  substance  of  the  contract 
between  the  parties,  by  means  of  any  process,  which  this  Court  is  enabled 
to  issue ;  and,  therefore  (unless  there  is  some  positive  authority  to  the  con- 
trary), my  opinion  is,  that,  where  the  agreement  is  mainly  and  substantially 
of  an  active  nature,  and  is  so  undetermined  that  it  is  impossible  to  have 
performance  of  it  in  this  Court,  and  it  is  only  guarded  by  a  negative  pro- 
vision, this  Court  will  leave  the  parties  altogether  to  a  court  of  law,  and 
will  not  give  partial  relief  by  enforcing  only  a  negative  stipulation.  I 
think,  for  the  reasons  which  I  have  stated,  that  what  Lord  Eldon  has  said  in 
the  case  of  Morris  v.  Colman,  bears  upon  this  case.  In  Clarke  v.  Price,  2 
Wils.  Ch.  157  (in  which,  also,  I  was  counsel),  there  was  a  positive  stipula- 
tion, by  Price,  that  he  would  write  reports  for  Clarke  the  bookseller.  Lord 
Eldon  says,  in  his  judgment,  upon  that  case:  'The  case  of  Morris  v.  Col- 
man is  essentially  different  from  the  present.  In  that  case,  Morris,  Colman, 
and  other  persons  were  engaged  in  a  partnership  in  the  Haymarket  Theatre, 
which  was  to  have  continuance  for  a  very  long  period,  as  long  indeed  as  the 
theatre  should  exist.  Colman  had  entered  into  an  agreement,  which  I  was 
very  unwilling  to  enforce,  not  that  he  would  write  for  the  Haymarket 
Theatre,  but  that  he  would  not  write  for  any  other  theatre.  It  appeared  to 
me,  that  the  Court  could  enforce  that  agreement  by  restraining  him  from 
writing  for  any  other  theatre.  The  Court  could  not  compel  him  to  write  for 
the  Haymai'ket  Theatre ;  but  it  did  the  only  thing  in  its  power ;  it  induced 
hira,  indirectly,  to  do  one  thing  by  prohibiting  him  from  doing  another. 
There  was  an  express  covenant  on  his  part,  contained  in  the  articles  of 
partnership.     But  the  tei'ms  of  the  prayer  of  this  bill  do  not  solve  the  diffi- 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  371 

incerfere  to  remedy  any  breaches  of  duty,  unless  they 
are  of  such  a  nature,  as  may  produce  permanent  injury 
to  the  partnership,  or  involve  it  in  serious  perils  or 
mischiefs  in  future.  A  mere  fugitive,  temporary  breach, 
involving  no  serious  evils  or  mischiefs,  and  not  endan- 
gering the  future  success  and  operations  of  the  part- 
nership, will,  therefore,  not  constitute  any  case  for 
equitable  relief.^  It  is  upon  this  ground,  that  Courts 
of  Equity  will  not  interfere  in  cases  of  frivolous  vexa- 
tion, or  for  mere  differences  of  temper,  casual  disputes, 
or  other  minor  grievances  between  the  parties  ;  but 
will  deem,  as  in  some  other  more  important  relations 
in  life,  that  the  parties  enter  into  them  with  a  fair  un- 
derstanding, that  such  infirmities  are  to  be  borne  with, 
and  that  a  separation  of  interests,  or  an  injunction 
against  acts,  is  not  to  be  decreed,  because  one  of  the 
parties  is  more  sullen  or  less  good-tempered  than  the 
other.^ 

§  226.  It  was  upon  the  same  ground  of  the  fugitive 

culty ;  for,  if  this  contract  is  one  which  the  Court  will  not  carry  into  execu- 
tion, the  Court  cannot,  indirectly,  enforce  it  by  restraining  Mr.  Price  from 
doing  some  other  act.'  His  Lordship  then  proceeds  to  observe  upon  the 
express  terms  of  the  contract,  and  says,  that  he  will  not,  in  that  case,  inter- 
fere to  enforce  an  implied  negative  stipulation  ;  for  that  is  the  utmost  that 
can  be  made  of  his  Lordship's  observations  in  that  case.  For  the  reasons, 
which  I  have  stated,  I  am  of  opinion,  that,  if  this  cause  were  now  being 
heard,  and  the  agreement  were  admitted  to  be  such,  as  it  appears  to  be,  this 
Court  could  not  make  any  decree,  but  must  dismiss  the  bill."  See  2  Story, 
Eq.  Jur.  §  958,  and  note.  See  also  the  doctrine  of  the  Roman  law  on 
this  subject  (ante,  §  181),  where  it  is  stated,  that  the  action  ^7?'o  socio  for  an 
account  did  not  lie  until  after  a  dissolution  of  the  partnership ;  but  it  did  in 
certain  special  partnerships,  such  as  a  partnership  for  collection  of  the 
public  revenue  (Causa  Vectigalium). 

'  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  236,  2d  ed. ;  Charlton  r.  Poulter,  19  Ves. 
148,  n. ;  Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  592  ;  Miles  v.  Thomas,  9 
Sim.  606,  6U9.     {See  Petit  v.  Chevelicr,  2  Beasl.  181. } 

2  Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  592  ;  Coll.  on  P.  B.  2,  c.  2,  §  2, 
p.  131,  2d  ed. ;  ante,  §  218  ;  {Cofton  v.  Horuer,  5  Price,  537.  See  Anderson  v. 
Anderson,  25  Beav.  190.} 


372  PARTNERSHIP.  [CHAP.  XI, 

or  temporary  nature  of  the  breach  of  the  stipulation, 
that,  where  a  covenant  in  the  partnership  articles  pro- 
vided, that  the  business  should  be  carried  on  in  the 
joint  names  of  all  the  partners,  and  that  all  contracts 
and  engagements  on  account  of  the  trade,  and  all 
checks  and  drafts  drawn  by  them,  and  all  receipts  of 
money  paid,  should  be  in  the  joint  names  of  all  the 
partners,  and  some  of  them  afterwards  refused  to  fulfil 
the  covenant,  and  to  add  the  name  of  the  plaintiff  to 
certain  contracts,  entered  into  for  and  on  account  of 
the  firm,  the  Court  refused  to  interfere  by  way  of  in- 
junction.^ 

§  227.  On  the  other  hand,  where  one  partner  has 
improperly  involved  the  partnership  in  debt,  or  has 
himself  become  insolvent,  or  has  otherwise  grossly 
misconducted  himself.  Courts  of  Equity  will  interpose, 
and  restrain  him  from  drawing,  accepting,  or  indorsing, 
bills  or  notes  in  the  name  of  tlie  firm,  or  from  contract- 
ing, or  receiving  partnership  debts.^  So,  an  injunction 
will  be  granted  against  a  partner,  who  grossly  and 
wantonly  obstructs,  injures,  or  prevents  the  carrying 
on  of  the  partnership  business ;  ^  or  who  designedly 
misapplies  the  property  of  the  partnership  to  purposes 
not  warranted   by  the    articles   or  the    objects    of  the 

1  Marshall  v.  Colman,  2  Jac.  &  W.  266. 

2  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  233,  234,  and  note  (b),  2d  ed. ;  WilHams  v. 
Bingley,  2  Vern.  278,  Mr.  Raithby's  note;  Master  r.  Kirton,  3  Ves.  Jr.  74  ; 
Lawson  v.  Morgan,  1  Price,  303  ;  Hood  v.  Aston,  1  Russ.  412;  Gow  on  P. 
c.  2,  §  4,  p.  108,  109,  3d  ed. ;  1  Story,  Eq.  Jur.  §  667;  Miles  v.  Thomas,  9 
Sim.  606  ;    {England  v.  Curling,  8  Beav.  129.} 

^  Charlton  v.  Poulter,  19  Ves.  148,  note;  {Smith  v.  Jeyes,  4  Beav. 
503  ;  Hall  v.  Hall,  12  Beav.  414  ;  s.  c.  20  Beav.  139  ;  s.  c.  3  Macn.  &  G.  79  ; 
AVarder  v.  Stihvell,  3  Jur.  n.  s.  9  ;  Anon.  Z.  v.  X.  2  Kay.  &  J.  441  ;  Lind  on. 
P.  840.  An  injunction  will  be  granted  to  restrain  the  taking  away  of  part- 
nership books.  Taylor  v.  Davis,  3  Beav.  388,  note ;  Greatrex  v.  Greatrex,  1 
Dc  G.  &  Sm.  692.  See  Morison  v.  Moat,  9  Hare,  241  ;  Marshall  v.  Watson, 
25  Beav.  501.} 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  373 

trade.'  If,  therefore,  a  partnership  negotiable  security 
is  misapplied  to  the  payment  of  the  separate  debt  of 
one  partner,  an  injunction  will  be  granted  to  restrain 
its  further  negotiation,  and  to  require  it  to  be  restored 
to  the  partnership,  or  cancelled,  as  the  case  may  require, 
unless,  indeed,  it  has  passed  into  the  hands  of  a  bona 
fide  holder,  without  notice  of  the  misapplication.^ 

§  228.  Independently  of  the  administration  of  relief 
by  Courts  of  Equity  in  the  cases  to  which  we  have 
alluded,  they  will,  it  seems,  in  some  instances,  inter- 
pose and  appoint  a  receiver  of  the  joint  effects,  during 
the  continuance  of  the  partnership.  But  to  authorize 
a  partner  to  call  for  the  appointment  of  a  receiver  of 
the  stock  of  a  subsisting  partnership,  he  must  be  pre- 
pared to  show  a  case  of  the  grossest  abuse  and  the 
strongest  misconduct  on  the  part  of  the  managing 
partner ;  for,  except  under  such  ch'cumstances,  the 
Court   will   not   interfere,   inasmuch    as    the    probable 

*  Glassington  r.  Thwaites,  1  Sim.  &  St.  124,  aud  the  Reporter's  note  (a). 
{Stockdale  v.  Ullery,  37  Penn.  St.  486.} 

^  Coll.  on  P.  B.  2,  c.  3,  §5,  p.  233-236,  245,  2d<ed.;  Hood  v.  Aston,  1 
Russ.  412,413;  ante,  §  132;  Jervis  r.  White,  7  Ves.  414;  Gow  on  P.  c.  2, 
§  4,  p.  108,  109,  3d  ed. ;  Littlewood  v.  Caldwell,  11  Price,  97;  1  Story,  Eq. 
Jur.§667,  669. —In  Hood  w.  Aston,  1  Russ.  412,  415,  Lord  Eldon  said:  "The 
mere  circumstance,  that  a  partner  gives  a  partnership  bill  for  his  separate  debt, 
may,  or  may  not,  lay  a  ground  for  the  issuing  of  an  injunction  against  its  ne- 
gotiation ;  for  the  person  who  takes  it  may  or  may  not  have  some  reason  for 
supposing  that  his  debtor  had  a  right  or  authority  so  to  use  the  partnership 
name.  But  where  it  appears,  that  an  individual  partner  indebted  to  the  part- 
nership, being  unable  to  pay  his  separate  bill,  holden  by  his  bankers,  substi- 
tutes for  it,  by  a  negotiation  with  them,  a  partnership  security,  made  and 
given  without  the  consent  or  knowledge  of  his  copartners,  and  the  bankers 
are  aware,  that  it  is  so  given  without  their  consent  or  knowledge  ;  —  that  is  a 
case,  which  comes  within  the  principle,  upon  which  the  Court  has  always  been 
in  the  habit  of  interfering  by  injunction."  Where  a  partnership  negotiable 
security  has  been  misapplied  by  a  partner,  if  it  is  in  the  hands  of  a  third  per- 
son as  holder,  and  relief  is  sought  against  him,  he  also,  as  well  as  the  oilending 
partner,  should  be  made  a  party  to  the  bill.  See  Coll.  on  P.  B.  2,  c.  3,  §  7, 
p.  245,  246,  2d  ed. 


374  PARTNERSHIP.  [CHAP.  XI. 

result  of  its  interposition  will  be  the  destruction  of 
the  trade.  Nor  will  a  receiver  be  appointed  upon  a 
summary  application,  where  there  is  a  covenant  to  refer, 
and  no  attempt  has  been  made  to  submit  the  matter  in 
dispute  to  arbitration.  But  if,  in  the  ordinary  course 
of  the  trade,  any  of  the  partners  seek  to  exclude 
another  from  taking  that  part  in  the  concern,  which  he 
is  entitled  to  take,  the  Court  will  grant  a  receiver ; 
because  such  conduct  will  warrant  a  dissolution.  The 
principle,  indeed,  upon  which  the  Court  of  Chancery 
interferes  between  partners,  by  appointing  a  receiver, 
is  merely  with  a  view  to  the  proper  relief,  by  winding 
up  and  disposing  of  the  concern,  and  dividing  the 
produce,  and  not  for  the  purpose  of  carrying  on  the 
partnership.^ 

§  229.  But  in  all  cases  of  this  sort,  where  an  injunc- 
tion is  sought  to  restrain  improper  acts  by  a  partner,  a 
very  serious  question  may  arise,  whether  the  Court 
will  interfere,  unless  the  bill  not  only  asks  for  an  in- 
junction, but  also  for  a  dissolution  of  the  partnership. 
Indeed,  it  has  been  a  matter  of  no  small  diversity  of 
judicial  opinion,  how  far  a  Court  of  Equity  ought  to 
interfere  in  such  cases,  unless  for  the  purpose  of  dis- 
solving the  partnership  and  winding  up  the  whole  con- 
cern ;  since  it  may  involve  the  Court  in  perpetual  con- 
troversies to  enforce  the  observance  of  the  articles,  as 
often  as,  during  the  long  continuance  of  a  partnership, 

'  Gow  on  P.  c.  2,  §  4,  p.  114,  3d  ed.  —  I  have  cited  almost  the  \ery  lan- 
guage of  Mr.  Gow  on  this  occasion.  He  cites  Oliver  v.  Hamilton,  2  Anst. 
453  ;  Milbank  v.  Revett,  2  Mer.  405  ;  Waters  v.  Taylor,  15  Ves.  10 ;  Wilson 
V.  Greenwood,  1  Swans.  471,  481;  Charlton  v.  Poulter,  19  Ves.  148,  note; 
and  Wallworth  v.  Holt,  4  Myl.  &  C.  619,  635,  639.  [See  .also  Bailey  v.  Ford, 
13  Sim.  495;  Whitewright  v.  Stimpson,  2  Barb.  379;  Wolbert  r.  Harris,  3 
Halst.  Ch.  605  ;  Blakeney  v.  Dufaur,  15  Beav.  40 ;  s.  c.  15  Eng.  L.  &Eq.  76  ; 
ParkhurstiJ.  Muir,  SHalst.  Ch.  307  ;  Speights  v.  Peters,  9  Gill,  472]  ;  {§231, 
330.  { 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  375 

any  specific  breach  may  occur ;  which  is  a  species  of 
jurisdiction,  which  Courts  of  Equity  are  not  at  all  dis- 
posed to  entertain.^     It  is  very  certain,  however,  that, 

>  Marshall  v.  Colman,  2  Jac.  &  AV.  266;  Gow  on  P.  c.  2,  §  4,  p.  111- 
113,  3d  ed. ;  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  236-238,  2d  ed. ;  Goodman  v. 
Whitcomb,  1  Jac.  &  W.  589,  592  ;  Loscombe  v.  Russell,  4  Sim.  8  ;  Knebell 
V.  White,  2  You.  &C.  Ex.  15  ;  Bentleyr.  Bates,  4  Jur.  552  ;  Gow  on  P.  Suppl. 
1841,  p.  24,  25  ;  1  Story,  Eq.  Jur.  §  671.  —  On  this  point  Mr.  Gow  (Gow  on 
p.  c.  2,  §  4,  p.  Ill,  112,  3d  ed.)  says :  "  Courts  of  Equity  will  liliewise  in- 
terfere, where  a  breach  of  any  of  the  covenants,  contained  in  the  articles  of 
partnership,  has  been  committed,  if  the  breach  be  so  important  in  its  conse- 
quences as  to  authorize  the  party  complaining  to  call  for  a  dissolution  of  the 
partnership.  One  case  of  constant  occurrence,  falling  under  this  head  of 
equitable  relief,  is  that  of  a  partner  raising  money  for  his  private  use  on  the 
credit  of  the  partnership  firm.  In  a  case  so  circumstanced,  the  Court  inter- 
poses, because  there  is  a  ground  for  dissolving  the  partnership.  But  then 
the  impending  danger  must  be  such,  there  must  be  that  abuse  of  good  faith 
between  the  members  of  the  partnership,  that  the  Court  will  try  the  ques- 
tion, whether  the  partnership  should  not  be  dissolved  inconsequence.  Thus, 
where  it  has  been  covenanted,  that  all  contracts  entered  into  by  any  of  the 
firm,  and  all  checks,  bills,  and  receipts  for  money,  should  be  signed  in  the 
joint  names  of  all  the  partners,  a  Court  of  Equity  will  restrain  one  partner 
from  entering  into  any  engagement  in  the  name  of  '  himself  and  company,' 
or  '  himself  and  partners,'  or  will  dissolve  the  partnership.  Were  the  Court 
not  to  lay  down  this  rule  for  its  guidance,  separate  suits  might  be  successively 
instituted,  praying  for  perpetual  injunctions  in  respect  of  the  breach  of  each 
particular  covenant,  which  is  a  species  of  jurisdiction  the  Court  has  never 
decidedly  entertained.  So,  if  one  partner  exclude  another  from  the  benefits 
of  the  concern,  the  Court  will  interfere  and  dissolve  the  partnership ;  and 
it  assumes  a  jurisdiction  on  this  ground,  that  if  the  partners  will  not  allow 
the  partnership  to  be  carried  on  in  the  manner  in  which  it  ought  to  be,  it  is 
a  reason  for  putting  an  end  to  it  altogether.  I^Teither  will  a  Court  of  Equity 
assist  in  the  management  of  the  affairs  of  a  company  during  its  existence ; 
but  if  a  sufficient  case  is  made  out  to  justify  its  interposition,  it  will  ap^Joint 
a  manager  in  the  interim,  for  the  purpose  of  winding  up  and  putting  an  end 
to  the  concern.  But  although  the  general  principle  of  the  Court  is  not  to 
interfere  in  a  partnership  concern,  unless  the  bill  prays  a  dissolution ;  yet 
there  are  cases  of  partnership  for  a  term  of  years,  in  which  it  has  been  said 
the  Court  will  interpose  during  the  term,  notwithstanding  a  dissolution  be 
not  prayed.  Thus,  where  some  of  the  members  of  a  partnership  or  com- 
pany seek  to  embark  one  of  their  body  in  a  business,  which  was  not  origi- 
nally part  of  the  partnership  concern,  and  they  are  unable  to  show  that  such 
partner  either  expressly  or  tacitly  acquiesced  in  the  proposed  extension  of 
the  concern,  a  Court  of  Equity  would,  it  is  apprehended,  restrain  them  from 
proceeding  in  the  execution  of  their  intention,  without  dissolving  the  part- 


376  PARTNERSHIP.  [CHAP.  XI. 

pending  the  partnership,  Courts  of  Equity  will  not  inter- 
fere to  settle  accounts  and  set  right  the  balance  between 

nership  or  company.  So,  -where  a  member  of  a  firm  neglected  to  enter  the 
receipt  of  partnership  money  in  the  books,  and  did  not  leave  the  books  open 
for  the  inspection  of  the  other  partners,  equity  interfered  without  dis- 
solving the  partnership.  So,  where  there  has  been  a  studied,  intentional, 
prolonged,  and  continued  inattention  to  the  application  of  one  partner  call- 
ing upon  the  other  to  observe  the  contract  of  partnership,  the  Court  will 
grant  an  injunction  against  the  breach  of  it.  And,  in  general,  circum- 
stances of  the  latter  description  must  be  disclosed,  to  induce  a  judicial  inter- 
ference on  a  breach  of  the  articles  of  partnership,  unless  a  dissolution  be 
prayed."' 

Mr.  Collyer  (Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  236)  says:  "It  seems 
clear,  that  a  Court  of  Equitj'  will  sometimes  award  an  injunction  against 
one  partner,  without  dissolving  the  partnership ;  perhaps  even  where  the 
delinquency  of  that  partner  is  not  sufficient  to  warrant  a  dissolution.  At 
any  rate,  it  certainly  seems  to  have  been  held,  that  a  Court  of  Equity  will 
restrain  the  gross  personal  misconduct  of  a  partner,  without  compelling  a 
dissolution  of  the  partnership  before  the  expiration  of  the  term.  In  Charlton 
V.  Poulter,  19  Yes.  148,  n.,  a  bill  was  filed  by  Richard  Charlton,  senior, 
and  junior,  partners  in  a  brewery,  charging  great  misconduct  by  the  de- 
fendant, the  third  partner,  in  disobliging  and  turning  away  the  customers, 
prevailing  on  the  servants  to  leave  the  brewhouse,  assaulting  and  obstruct- 
ing them,  causing  them  to  quit  their  service,  locking  up  the  books,  retaining 
as  servants  (without  the  plaintiff's  consent)  bruisers  and  boxers,  who  ob- 
structed the  trade,  threatening  to  ruin  the  trade,  and  refusing  to  account. 
The  bill  prayed,  that,  at  the  end  of  the  partnership,  the  stock  and 
utensils  might  be  valued,  and  that  the  defendant  might  be  compelled  to 
receive  one  third  part  of  the  value,  and  for  an  injunction  resti-aining  the 
defendant  from  any  act  to  the  obstruction  or  the  damage  of  the  trade.  On 
motion,  after  answer,  for  an  injunction,  it  was  ordered,  that  the  defendant 
be  restrained  from  using  force,  either  by  himself  or  any  other  person  or 
persons,  to  the  obstruction  or  interruption  of  the  brewing  trade  in  question, 
and  from  removing  or  displacing  any  of  the  servants  hired  or  employed  by 
the  partners,  or  the  major  part  of  them,  in  carrying  on  the  trade,  without 
leave  of  the  Court ;  and  from  carrying  away  or  removing  out  of  the  count- 
ing-house belonging  to  the  partnership  any  partnership  books  or  papers 
relating  to  the  said  trade ;  and  upon  the  plaintiff's  submission,  it  was  further 
ordered,  that  the  plaintiffs  be  restrained  in  like  manner.  The  opinion,  that 
a  partner's  misconduct  may  be  restrained  by  injunction,  without  the  neces- 
sity of  a  dissolution,  is  sanctioned  by  Lord  Eldon  in  the  case  of  Goodman  v. 
Whitcomb,  1  Jac.  &  W.  589.  The  parties  in  that  case  being  partners 
in  the  business  of  carpet  manufacturers,  the  bill  was  filed  for  a  dissolution 
of  the  partnership,  and  the  usual  accounts.  One  of  the  grievances  stated  in 
the  Ijill  was,  that  the  delondant  had  sold  goods  at  an  under  price,  and  ex- 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  377 

the  partners,  but  await  the  reguhar  wmding  up  of  the 


changed  others  for  household  furniture,  •which  he  had  appropriated  to  his 
own  use.  Lord  Eldon  said,  that  trifling  circumstances  of  conduct  were  not 
sufficient  to  authorize  the  Court  to  award  a  dissolution.  It  was  stated,  that 
the  defendant  had  exchanged  carpets  for  household  furniture  ;  that,  perhaps, 
might  be  an  improper  act ;  but  still  there  might  be  a  thousand  reasons  why 
the  Court  should  not  do  more  than  restrain  him  in  future  from  so  doing; 
more  particularly,  as  it  was  stated  by  the  answer,  that  he  did  it,  because  he 
thought  it  the  best  thing  that  could  be  done.  A  Court  of  Equity,  however, 
will  be  reluctant  to  award  an  injunction  against  a  partner,  unless  there 
be  grounds  for  a  dissolution  ;  and  in  many  cases  such  a  course  would  be 
attended  with  obvious  inconvenience  to  the  parties.  Marshall  v.  Colman, 
2  Jac.  &  W.  266.  And  cases  may  arise  where  an  injunction  cannot  with 
propriety  be  granted,  whether  the  parties  do,  or  do  not,  contemplate  a 
dissolution  of  the  partnership,  and  even  though  the  party,  against  whom 
the  injunction  is  sought,  may  have  acted  contrary  to  the  spirit  of  the  part- 
nership arrangements.  Thus,  two  persons  agreed  to  work  a  coach  from 
Bristol  to  London,  one  providing  horses  for  a  part  of  the  road,  and  the 
other  for  the  remainder.  In  consequence  of  the  horses  of  one  having 
been  taken  in  execution,  the  other  provided  horses  for  that  part  which 
had  been  undertaken  by  the  first.  He  afterwards  persisted  in  providing 
horses  for  the  whole  journey,  and  claimed  the  whole  profits.  Upon  a 
motion  for  an  injunction  to  restrain  him  from  so  working  the  coaches, 
Lord  Eldon  refused  the  injunction.  'It  is  difficult,' said  his  Lordship,  'to 
understand  how  such  a  case  can  be  the  proper  subject  of  the  jurisdiction 
of  this  Court  by  injunction.  If  I  enjoin  the  defendant  from  bringing 
horses  to  convey  the  coaches  between  the  limits  in  question,  I  must  enjoin 
the  plaintiff  from  not  bringing  horses  there.  I  cannot  restrain  the  defend- 
ant, unless  I  have  the  means  of  assuring  him  that  he  shall  find  the  plain- 
tiff's horses  ready.  I  should  otherwise  enjoin  him  from  doing  that,  which 
if  he  omits  to  do,  he  will  be  liable  to  actions  by  every  person  whom  he 
has  undertaken  to  convey  from  Bristol  to  London.'  Smith  v.  Fromont,  2 
Swans.  330.  In  this  case  Lord  Eldon  said,  that  a  question  might  arise, 
whether  the  plaintiff,  showing  that  his  horses  were  always  ready,  would  not 
be  entitled  to  the  same  profit,  as  if  they  were  used."  See  also  Wilson  v. 
Greenwood,  1  Swans.  471,  where  Lord  Eldon  said,  that  in  the  ordinary 
course  of  trade,  if  any  one  partner  seek  to  exclude  another  from  taking  that 
part  in  the  concern,  which  he  is  entitled  to  take,  the  Court  will  grant  a 
receiver.  Mr.  CoUyer  understands  this  declaration  as  applicable  to  cases 
where  a  dissolution  is  not  sought.     Coll.  on  P.  B.  2,  c.  3,  §  6,  p.  240,  241, 


'  Richardson  v.  Bank  of  England,  4  Myl.  &  C.  165,  172,  173 ;  post, 
§  348  a.  u. 


378  PARTNERSHIP.  [cHAP.  XI. 

§  230.  The  Roman  law  contained  doctrine,  which  in 
some   measure   proceeded   upon  similar  considerations. 

2d  ed.     [But  this  was  shown  not  to  be  the  true  construction  of  that  case,  by 
the  Lord  Chancellor  in  Hall  v.  Hall,  3  Macn.  &  G.  79.] 

In  the  case  of  Loscombe  v.  Russell,  4  Sim.  8,  the  Vice-Chancellor 
(Sir  L.  Shadwell)  said:  "I  take  this  to  be  a  bill,  which  purposelj^  avoids 
the  prayer  for  a  dissolution  ;  and  that  it  was  not  in  the  contemplation  of  the 
plaintiff',  that  the  partnership  should  be  put  an  end  to.  It  would,  therefore, 
be  a  surprise  upon  the  parties  to  this  record,  if  I  were  to  deal  with  it,  as  if 
a  dissolution  were  sought.  Here  the  partnership  is  still  subsisting  ;  and  the 
bill  is  filed  for  an  account  merely  of  the  dealings  and  transactions  of  the 
partnership.  With  respect  to  the  law  of  this  Court  upon  this  subject,  there 
is  no  instance  of  an  account  being  decreed  of  the  profits  of  a  partnership,  on 
a  bill  which  does  not  pray  a  dissolution,  but  contemplates  the  subsistence  of 
the  partnership.  The  opinion  of  Lord  Eldon  upon  this  subject  has  been, 
from  time  to  time,  expressed  both  before  and  since  the  decision  of  Harrison 
V.  Armitage.  Suppose  that  the  Court  would  entertain  a  bill  like  the  pres- 
ent, and  direct  an  account  to  be  taken  of  the  dealings  of  a  partnership,  and 
that  it  appeared,  by  the  Master's  report,  that  a  balance  was  due  from  the 
defendant  to  the  plaintiff";  then,  ujion  further  directions,  the  plaintiff"  would 
ask  for  an  order,  that  the  balance  might  be  paid  to  him  ;  it  would,  however, 
be  competent  to  the  defendant  to  file  a  supplemental  bill,  in  order  to  show, 
that,  since  the  account  was  taken,  a  balance  had  become  due  to  him  from 
the  plaintiff",  after  giving  the  plaintiff"  credit  for  the  amount  found  due  to  him 
by  the  Master ;  and  thus  the  matter  might  be  pursued  with  endless  changes, 
and  supplemental  bills  might  be  filed  every  year,  that  the  partnership  con- 
tinued, and  a  balance  would  never  be  ascertained  until  the  partnership  ex- 
pired, or  the  Court  put  an  end  to  it.  This  Court  will  not  always  interfere 
to  enforce  the  contracts  of  parties ;  but  will,  in  some  instances,  leave  them 
to  their  remedy  at  law;  as  in  the  cases  of  agreements  for  the  purchase  of 
stock,  or  for  the  building  of  houses.  With  respect  to  occasional  breaches  of 
agreements  between  partners,  when  they  are  not  of  so  grievous  a  nature,  as 
to  make  it  impossible  that  the  partnership  should  continue,  the  Court  stands 
neuter.  But  when  it  finds,  that  the  acts  complained  of  are  of  such  a  char- 
acter as  to  show,  that  the  parties  cannot  continue  partners,  and  that  relief 
cannot  be  given  but  by  a  dissolution,  the  Court  will  decree  it,  although  it  is 
not  specifically  asked.  Here  a  dissolution  is  not  prayed  for ;  and,  if  the 
Court  were  to  do  what  is  asked,  it  would  not  be  final.  Having  regard,  then, 
to  the  opinion  expressed  by  Lord  P^ldon,  both  before  and  aff;er  the  decision 
in  Harrison  v.  Armitage,  my  settled  opinion  is,  that  this  bill  cannot  be  main- 
tained ;  and,  therefore,  the  demurrer  must  be  allowed."  In  the  recent  case 
of  Miles  V.  Thomas,  9  Sim.  606,  609,  the  same  learned  judge  said:  "I 
am  of  opinion,  that  the  Court  ought  to  interfere  between  copartners,  when- 
ever the  act  comjilained  of  is  one  that  tends  to  the  destruction  of  the  part- 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  379 

Ordinarily  the  action  2^'^^o  socio  did  not  lie  to  enforce  a 
right  to  a  general  account  between  partners  until  after 

nersliip  property,  notwithstanding  a  dissolution  of  the  partnership  may  not 
be  prayed." 

Lord  Cottenliam  in  the  recent  case  of  Wallworth  v.  Holt,  4  Myl.  &  C. 
619,  635,  639,  said:  "When  it  is  said  that  the  Court  cannot  give  relief  of 
this  limited  kind,  it  is,  I  presume,  meant  that  the  bill  ought  to  have  prayed 
a  dissolution,  and  a  final  winding  up  of  the  affairs  of  the  company.  How 
far  this  Court  will  interfere  between  partners,  except  in  cases  of  dissolution, 
has  been  the  subject  of  much  difference  of  opinion,  upon  which  it  is  not  my 
purpose  to  say  any  thing  beyond  what  is  necessary  for  the  decision  of  this 
case ;  but  there  are  strong  authorities  for  holding  that  to  a  bill  praying  a 
dissolution  all  the  partners  must  be  parties  ;  and  this  bill  alleges  that  they 
are  so  numerous  as  to  make  that  impossible.  The  result,  therefore,  of  these 
two  rules  would  be,  —  the  one  binding  the  Court  to  withhold  its  jurisdiction 
except  upon  bills  praying  a  dissolution,  and  the  other  requiring  that  all  the 
partners  should  be  parties  to  a  bill  praying  it,  — that  the  door  of  this  Court 
would  be  shut  in  all  cases  in  which  the  partners  or  shareholders  are  too  nu- 
merous to  be  made  parties,  which  in  the  present  state  of  the  transactions  of 
mankind,  would  be  an  absolute  denial  of  justice  to  a  large  portion  of  the 
subjects  of  the  realm,  in  some  of  the  most  important  of  their  affairs.  This 
result  is  quite  sufficient  to  show  that  such  cannot  be  the  law ;  for,  as  I  have 
said  upon  other  occasions,  I  think  it  the  duty  of  this  Court  to  adapt  its  prac- 
tice and  course  of  proceeding  to  the  existing  state  of  society,  and  not  by  too 
strict  an  adherence  to  forms  and  rules,  established  under  diffei-ent  circum- 
stances, to  decline  to  administer  justice,  and  to  enforce  rights  for  which  there 
is  no  other  remedy.  This  has  always  been  the  principle  of  this  Court,  though 
not  at  all  times  sufficiently  attended  to.  It  is  the  ground  upon  which  the 
Court  has,  in  many  cases,  dispensed  with  the  presence  of  the  parties  who 
would,  accoi'ding  to  the  general  practice,  have  been  necessary  parties.  In 
Cockburn  v.  Thompson,  Lord  Eldon  says,  '  A  general  rule,  established  for 
the  convenient  administration  of  justice,  must  not  be  adhered  to  in  cases  in 
which,  consistently  with  practical  convenience,  it  is  incapable  of  application ; ' 
and  again,  '  The  difficulty  must  be  overcome  upon  this  principle,  that  it  is 
better  to  go  as  far  as  jiossible  towards  justice  than  to  deny  it  altogether.'  If, 
therefore,  it  were  necessary  to  go  much  further  than  it  is,  in  opposition  to 
some  highly  sanctioned  opinions,  in  order  to  open  the  door  of  justice  in  this 
Court  to  those  who  cannot  obtain  it  elsewhere,  I  should  not  shrink  from  the 
responsibility  of  doing  so  ;  but  in  this  particular  case,  notwithstanding  the 
opinions  to  which  I  have  referred,  it  will  be  found  that  there  is  much  more 
of  authority  in  support  of  the  equity  claimed  by  this  bill  than  tliere  is  against 
it.  It  is  true  that  the  bill  does  not  pray  for  a  dissolution,  and  that  it  states 
the  company  to  be  still  subsisting ;  but  it  does  not  pray  for  an  account  of 
partnership  dealings  and  transactions,  for  the  purpose  of  obtaining  the  share 
of  profits  due  to  the  plaintiffs,  which  seems  to  be  the  case  contenqilated  in 


380  PARTNERSHIP.  [cHAP. 


XI. 


a  dissolution  of  the  partnership.     But  in  special  cases, 
as,  for  example,  in  cases  where  the  partnership  was  for 

the  opinions  to  which  I  have  referred ;  but  its  object  is  to  have  the  common 
assets  realized  and  applied  to  their  legitimate  purpose,  in  order  that  the  plain- 
tiffs may  be  relieved  from  the  responsibility  to  which  they  are  exposed,  and 
which  is  contrary  to  the  provisions  of  their  common  contract,  and  to  every 
principle  of  justice.  But  whether  the  interest  of  the  plaintiffs,  in  right  of 
which  they  sue,  arises  from  such  responsibility  or  from  any  other  cause,  can- 
not be  material ;  the  question  being,  whether  some  partners,  having  an  inter- 
est in  the  application  of  the  partnership  property,  are  entitled,  on  behalf  of 
themselves  and  the  other  partners,  except  the  defendants,  to  sue  such  re- 
maining partners  in  this  Court  for  that  purpose,  pending  the  subsistence  of 
the  partnership ;  and  if  it  shall  appear  that  such  a  suit  may  be  maintained 
by  some  partners  on  behalf  of  themselves  and  others  similarly  circumstanced 
against  other  persons,  whether  trustees  and  agents  for  the  company,  or  stran- 
gers being  possessed  of  property  of  the  company,  it  may  be  asked  why  the 
same  right  of  suit  should  not  exist  when  the  party  in  possession  of  such  prop- 
erty happens  also  to  be  a  partner  or  shareholder  ?  In  Chancey  v.  May,  the 
defendants  were  partners.  In  the  Widows'  Case,  before  Lord  Thurlow,  cited 
by  Lord  Eldon,  the  bill  was  on  behalf  of  the  plaintiffs  and  all  others  in  the 
same  interest,  and  sought  to  provide  funds  for  a  subsisting  establishment.  In 
Knowles  v.  Houghton,  11th  July,  1805,  reported  in  Yesey,  but  more  fully 
in  Collyer  on  the  Law  of  Partnership,  the  bill  prayed  an  account  of  part- 
nership transactions,  and  that  the  partnership  might  be  established ;  and  the 
decree  directed  an  account  of  the  brokerage  business,  and  to  ascertain  what, 
if  any  thing,  was  due  to  the  plaintiff  in  respect  thereof;  and  the  Master  was 
to  inquire  whether  the  partnership  between  the  plaintiff  and  the  defendant 
had  at  any  time,  and  when,  been  dissolved ;  showing  that  the  Court  did  not 
consider  the  dissolution  of  the  partnership  as  a  preliminary  necessary  before 
directing  the  account.  In  Cockburn  v.  Thompson,  the  bill  prayed  a  disso- 
lution ;  but  it  was  filed  by  certain  proprietors  on  behalf  of  themselves  and 
others,  and  Lord  Eldon  overruled  the  objection  that  the  others  were  not 
parties.  In  Hichens  v.  Congreve,  the  bill  was  on  behalf  of  the  plaintiff  and 
the  other  shareholders,  against  other  shareholders  who  were  also  directors, 
not  praying  a  dissolution,  but  seeking  only  the  repayment  to  the  company  of 
certain  funds  alleged  to  have  been  improperly  abstracted  from  the  partner- 
ship property  by  the  defendants ;  and  Sir  Anthony  Hart  overruled  a  de- 
murrer, and  his  decision  was  affirmed  by  Lord  Lyndhurst.  In  Walbum  v. 
Ingilby,  the  bill  did  not  pray  a  dissolution  of  partnership,  and  Lord  Brough- 
am, in  allowing  the  demurrer  upon  other  grounds,  stated  that  it  could  not  be 
supported  upon  the  ground  of  want  of  parties,  because  a  dissolution  was  not 
prayed.  In  Taylor  v.  Salmon  the  suit  was  by  some  shareholders,  on  behalf 
of  themselves  and  others,  against  Salmon,  also  a  shareholder,  to  recover 
property  claimed  by  the  company,  which  he  had  appropriated  to  himself; 
and  the  Vice-Chancellor  decreed  for  the  plaintiff,  which  was  affirmed  on  ap- 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  381 

the  collection  of  the  public  revenue  (causa  vectifjaViwn), 
which  partnership  was  held,  on  grounds  of  public  pol- 

peal.  The  bill  did  not  pray  a  dissolution,  and  the  company  was  a  subsisting 
and  continuing  partnership.  That  case  and  Hiehens  v.  Congreve  differ  from 
the  present  in  this  only,  that  in  those  cases  the  partnerships  were  flourish- 
ing and  likely  to  continue,  whereas  in  the  present,  though  not  dissolved, 
it  is.  unable  to  carry  on  the  purpose  for  which  it  was  formed,  an  inability 
to  be  attributed  in  part  to  the  withholding  that  property  which  this  bill 
seeks  to  recover.  So  far  this  case  approximates  to  those  in  which  the 
partnership  has  been  dissolved ;  as  to  which  it  is  admitted  that  this  Court 
exercises  its  jurisdiction.  This  case  also  differs  from  the  two  last-men- 
tioned cases  in  this,  that  the  difficulty  in  which  the  plaintiffs  are  placed, 
and  the  consequent  necessity  for  the  assistance  of  this  Court,  is  greater  in 
tiis  case;  —  no  reason,  certainly,  for  withholding  that  assistance.  How 
far  the  principle  upon  which  these  cases  have  proceeded  is  consistent  with 
the  doctrine  in  Loscombe  v.  Russell,  '  that  in  occasional  breaches  of  con- 
tract between  partners,  when  they  are  not  of  so  grievous  a  nature  as  to 
make  it  impossible  that  the  partnership  should  continue,  the  Court  stands 
neuter,  will  be  to  be  considered  if  the  case  should  ai'ise.  It  is  not  neces- 
sary to  express  any  opinion  as  to  that  in  the  present  case ;  but  it  may  be 
suggested  that  the  supposed  rule,  that  the  Court  will  not  direct  an  account 
of  partnership  dealings  and  transactions,  except  as  consequent  upon  a  disso- 
lution, though  true  in  some  cases,  and  to  a  certain  extent,  has  been  supposed 
to  be  more  generally  applicable  than  it  is  upon  authority,  or  ought  to  be 
upon  principle.  It  is,  however,  certain,  that  this  supposed  rule  is  directly 
opposed  to  the  decision  of  Sir  J.  Leach,  in  Harrison  r.  Armitage,  and  Rich- 
ards V.  Davies.  Having  referred  to  so  many  cases,  in  which  suits  similar  to 
the  present  have  been  maintained  by  some  partners  on  behalf  of  themselves 
and  others,  it  is  scarcely  necessary  to  say  any  thing  as  to  the  objection  for 
want  of  parties;  and  as  to  the  assignees  of  those  shareholders  who  have  be- 
come bankrupts,  those  assigriees  are  now  shareholders  in  their  places,  for 
the  purpose  of  any  interest  they  have  in  the  property  of  the  company  ;  and, 
as  such,  are  included  in  the  number  of  those  on  whose  behalf  the  suit  is 
instituted.  A  similar  objection  was  raised  and  overruled,  in  Taylor  v.  Sal- 
mon, as  to  the  shares  of  Salmon.  Upon  the  authority  of  the  cases  to  which 
I  have  referred,  and  of  the  principle  to  which  I  have  alluded,  if  it  be  neces- 
sary to  resort  to  it,  I  am  of  opinion  that  the  demurrer  cannot  be  supported ; 
and  that  the  usual  order,  overruling  a  demurrer,  must  be  substituted  for 
that  pronounced  by  the  Yice-Chancellor."  [See  this  case  explained  in  Ilall 
V.  Hall,  3  Macn.  &  G.  79.] 

In  Fairthorne  v.  Weston,  3  Hare,  387,  391,  Yice-Chancellor  Wigram 
said  :  "  The  argument  for  the  defendant  turned  wholly  upon  the  proposition, 
that  a  bill  praying  a  particular  account  is  demurrable,  unless  the  bill  seeks 
and  prays  a  dissolution  of  the  partnership  ;  in  support  of  which,  the  case  of 
Loscombe  v.  Russell,  and  the  cases   there   cited,  were   relied   upon.     That 


382  PARTNERSHIP.  [CHAP.  XI. 

icy,  not  to  be  dissolved,  even  by  the  death  of  one  part- 
ner, contrary  to  the  common  rule  of  that  law,  as  to 
general  partnerships,^  an  action  jjro  socio  lay  for  an  ac- 
count during  the  existence  of  the  partnership.  Nonnun- 
quam  necessarium  est,  et  nianente  societate,  agi  pro 
socio.  Veluti  cum  societas,  vectigalium  causa  coit 
est  (projpterque  vcanos  contractus  neutri  expediat  rece- 
dere  a  societate),  nee  refertur  in  medium,  quod  ad  al- 
terum  j^erveneint.^ 

§  231.  Independently  of  the  relief  which  Courts  of 
Equity  are  thus  disposed  to  grant  by  way  of  injunction, 
in  order  to  prevent,  suppress,  or  redress  acts  of  miscon- 
duct, and  breaches  of  duty,  and  positive  engagements 
by  any  one  partner,  during  the  continuance  of  the 
partnership,  there  is  another  auxiliary  authority,  which 
is  sometimes  granted,  and  which,  indeed,  in  many  cases, 

there  may  be  cases  to  which  the  rule  there  laid  down  is  applicable,  I  am  not 
prepared  to  deny,  but  the  law  as  laid  down  in  that  case  was  never  admitted 
to  be  a  rule  of  universal  application.  Harrison  v.  Armitage  ;  Richards  v. 
Davies.  And  the  unequivocal  expression  of  the  opinion  of  Lord  Cotten- 
ham,  in  Taylor  v.  Davies  and  Walworth  t\  Holt,  of  the  Vice-Chancellor  of 
England,  in  Miles  v.  Thomas,  and  of  Lord  Langdale,  in  Richardson  v. 
Hastings,  shows  that  there  is  no  such  universal  rule  at  the  present  day; 
and  I  cannot  but  add,  that  it  is  essential  to  justice  that  no  such  universal 
rule  should  be  sustained.  If  that  were  the  rule  of  the  Court,  — if  a  bill  in 
no  case  would  lie  to  compel  a  man  to  observe  the  covenants  of  a  partner- 
ship deed,  —  it  is  obvious  that  a  person  fraudulently  inclined  might  of  his 
mere  will  and  pleasure,  compel  his  copartner  to  submit  to  the  alternative  of 
dissolving  a  partnership,  or  ruin  him  by  a  continued  violation  of  the  part- 
nership contract."  See  also  1  Story,  Eq.  Jur.  §  667-672.  {"Whatever 
doubt  there  may  formerly  have  been  upon  the  subject,  it  is  clear  that  an 
injunction  will  not  be  refused  simply  because  no  dissolution  of  partnership 
is  sought."  Lind.  on  P.  840.  In  Anon.  Z.  v.  X.  2  Kay.  &  J.  441,  an  injunc- 
tion Avas  granted  against  partners,  resti-aining  them  from  preventing  a  co- 
partner, who  had  recovered  from  a  temporary  attack  of  insanity,  from  tran- 
sacting the  business  of  the  firm.  In  England  v.  Curling,  8  i>eav.  129,  and 
Hall  V.  Hall,  12  Beav.  414,  s.  c.  3  Macn.  &  G.  79,  injunctions  were 
granted,  though  no  dissolution  was  sought.  See  §  231,  note.} 

'  D.  17,  2,  65,  9;  Id.  17,  2,  59;  Poth.  Pand.  17,  2,  n.  56,  57. 

2  D.   17,  2,  65,   15;  Poth.  Pand.   17,   2,  n.  33;  ante,  §  182,  221,  note. 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  383 

is  indispensable  to  the  complete  protection  and  security 
of  the  other  partners,  and  that  is,  by  the  appointment 
of  a  receiver  to  collect  the  debts  and  receive  the  assets 
of  the  partnership.^  But  this  course  is  rarely  advisable, 
and  indeed  is  never  granted  by  Courts  of  Equity,  un- 
less where  a  case  is  made  out  of  such  gross  abuse,  and 
misconduct  on  the  part  of  one  partner,  that  a  dissolu- 
tion ought  to  be  decreed,  and  the  affairs  of  the  partner- 
ship wound  up.^ 

'  Coll.  on  P.  B.  2,  c.  3,  §  6,  p.  240-244,  2d  ed. ;  ante,  §  228,  229.  [See 
Bailey  v.  Ford,  13  Sim.  495.] 

2  Coll.  on  P.  B.  2,  c.  3,  §  6,  p.  240-243,  2d  ed. ;  Gow  on  P.  c.  2,  §  4, 
p.  114,  3d  ed.  {See  §  228,  330.} — Mr.  Gow  has  well  summed  up  the 
leading  doctrines  upon  this  subject,  in  a  passage,  a  part  of  which  has  been 
already  cited  (ante,  §  228).  He  says:  "Independently  of  the  administra- 
tion of  relief  by  a  Court  of  Equity,  in  the  cases  to  which  we  have  alluded, 
it  will,  it  seems,  in  some  instances,  interpose ;  and,  during  the  continuance 
of  a  partnership,  appoint  a  receiver  of  the  joint  effects.  But  to  authorize 
a  party  to  call  for  the  appointment  of  a  receiver  of  the  stock  of  a  subsisting 
partnership,  he  must  be  prepared  to  show  a  case  of  the  grossest  abuse,  and 
of  the  strongest  misconduct,  on  the  part  of  the  managing  partner ;  for,  ex- 
cept under  such  circumstances,  the  Court  will  not  interfere,  inasmuch  as  the 
probable  result  of  its  interposition  is  the  destruction  of  the  trade.  Oliver  v. 
Hamilton,  2  Anst.  453 ;  Milbank  v.  Revett,  2  Mer.  405.  In  a  note  to  the 
case  of  Glassington  r.  Thwaites,  1  Sim.  &  St.  124,  129,  it  is  questioned  by  the 
learned  reporters,  whether  the  Court  will  ever  interfere  on  an  interlocutory- 
application  for  a  receiver  or  injunction,  in  the  case  of  a  partnership,  occa- 
sioned by  the  acts  of  the  parties,  unless  on  circumstances  clearly  established, 
of  fraud,  entire  exclusion,  or  gross  misconduct.  Nor  will  a  receiver  be 
appointed  upon  a  summary  application,  where  there  is  a  covenant  to  refer, 
and  no  attempt  has  been  made  to  submit  the  matter  in  dispute  to  arbitration. 
Waters  v.  Taylor,  15  Ves.  10.  But  if,  in  the  ordinary  course  of  trade,  any 
of  the  partners  seek  to  exclude  another  from  taking  that  part  in  the  concern 
wliich  he  is  entitled  to  take,  the  Court  will  grant  a  receiver,  because  such 
conduct  warrants  a  dissolution.  Wilson  v.  Greenwood,  1  Swans.  471 ;  s.  c. 
1  Wils.  Ch.  223.  See  also  Read  v.  Bowers,  4  Bro.  Ch.  441;  Charl- 
ton V.  Poulter,  19  Ves.  148,  n.  The  principle,  indeed,  upon  which  the 
Court  of  Cliancery  interferes  between  partners,  by  appointing  a  receiver, 
is  merely  with  a  view  to  the  relief,  by  winding  up  and  disposing  of  the  con- 
cern, and  dividing  the  jJroduct,  but  not  for  the  purpose  of  carrying  on  the 
partnership.  Waters  v.  Taylor,  15  Ves.  10.  Therefore,  a  receiver  of  a 
partnership  Avill  not  be  appointed  upon  motion,  unless  it  appear  that  the 
plaintifi'  will  be  entitled  to  a  dissolution  at  the  hearing ;  for  otherwise  the 


384  PARTNERSHIP.  [cHAP.  XI. 

§  232.  To  the  foregoing  enumeration  of  cases  of  reme- 
dial justice,  administered  by  Courts  of  Equity  between 

Court  might  make  itself  the  manager  of  every  trade  In  the  kingdom.  Good- 
man V.  Whitcomb,  1  Jac.  &  W.  589  ;  Chapman  v.  Beach,  Id.  594  ;  Harrison 
V.  Armitage,  4  Madd.  143.  And  where  it  seems  absokitely  necessary  that 
a  receiver  should  be  appointed  of  partnership  property,  the  Court  will 
always  pause  before  it  takes  a  step  likely  to  be  so  ruinous  to  the  p.arties. 
Waters  v.  Taylor,  15  Ves.  10 ;  Peacock  v.  Peacock,  16  Ves.  49,  57.  A  Court 
of  Equity,  on  an  application  properly  substantiated,  will  appoint  a  receiver 
of  a  mine  or  colliery,  as  well  as  of  an  ordinary  partnership  in  trade ;  be- 
cause where  persons  have  different  interests  in  such  a  subject,  and  manufacture 
and  bring  to  market  the  produce  of  the  land  as  one  common  fund,  to  be 
sold  for  their  common  benefit,  it  is  to  be  regarded  rather  as  a  species  of 
trade  or  partnership,  than  as  a  mere  tenancy  in  common  in  the  land.  Jef- 
ferys  v.  Smith,  1  Jac.  &  W.  298 ;  Story  v.  Lord  Windsor,  2  Atk.  630 ; 
Crawshay?;.  Maule,  1  Swans.  495,  518;  s.  c.  1  Wils.  Ch.  181 ;  Williams  v. 
Attenborough,  Turn.  &  R.  70  ;  Fereday  v.  Wightwick,  Taml.  250.  But  if  the 
claimant  to  an  equitable  interest,  in  such  a  concern,  knowingly  suffers  great 
expense  and  risk  to  be  incurred  before  he  asserts  his  equitable  right,  and, 
keeping  aloof  while  the  undertaking  is  hazardous,  seeks  the  intei'position  of 
the  Court  only  when  it  is  attended  with  a  profitable  result,  the  Court  will  not 
interfere  by  appointing  a  receiver,  on  motion,  and  it  is  doubtful  whether  it 
would  interpose  in  such  a  case,  even  by  decree.  Norway  v.  Rowe,  19  Ves. 
144;  Senhouse  v.  Christian,  cited  Id.  157.  In  particular  cases,  equity  will 
restrain  the  improper  conduct  of  a  partner  without  appointing  a  receiver. 
Seeley  v.  Boehm,  2  Madd.  176  ;  but  see  Smith  v.  Fromont,  2  Swans.  330, 
and  Glassington  v.  Thwaites,  1  Sim.  &  St.  124.  Where,  by  the  partnership 
agreement,  the  concern  was  to  be  managed  by  a  committee,  the  share  of 
each  proprietor  dying  or  retiring,  to  be  first  offered  to  the  committee,  to  be 
purchased  for  the  general  body,  it  was  held,  that  the  whole  concern  could 
not  be  sold  but  with  the  consent  of  all ;  and  that,  where  all  but  two  out  of 
thirty-one  had  agreed,  and  sold  the  concern,  such  sale  did  not  pass  the  share 
of  such  two ;  but  in  such  a  case  there  need  be  no  previous  offer  to  the  com- 
mittee. Chappie  V.  Cadell,  Jac.  537;"  Gow  on  P.  c.  2,  §4,  p.  114-116, 
3d  ed.  See  also  Peacock  v.  Peacock,  16  Ves.  49 ;  Oliver  v.  Hamilton,  2 
Anst.  453;  Richards  v.  Davies,  2  Russ.  &  M.  347;  {§  228,  330;  Lind.  on 
P.  849.  A  receiver  will  not  be  appointed  unless  with  the  view  of  dissolving 
a  partnership.  Hall  v.  Hall,  3  Macn.  &  G.  79  ;  Roberts  v.  Eberhardt,  Kay, 
148;  Smith  v.  Jeyes,  4  Beav.  503;  Henn  v.  Walsh,  2  Edw.  Ch.  129; 
Walker  v.  House,  4  Md.  Ch.  39.  It  Is  not  necessary,  however,  that  the 
plaintiff's  bill  should  expressly  pray  for  a  dissolution,  if  the  object  of  the 
suit  is  to  wind  up  tlie  partnership  afQiirs.  Shepperd  v.  Oxenford,  1  Kay  &  J. 
491.  See  Madgwick  «.  Wimble,  6  Beav.  495.  Sloan  f.  Moore,  37  Penn. 
St.  217.  "  In  granting  or  refusing  an  order  for  a  receiver,  the  court  does 
not  act  on  the  same  principles  as  when  it  grants  or  r(;fuses  an  injunction  ;   it 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  385 

partners,  during  the  partnership,  or  in  contemphition  of 
the  dissohition  thereof,  may  be  added  the  cases,  in  which 
rehef  will  be  granted,  where  the  partnership  has  been 
entered  into  by  one  partner,  under  circumstances  of 
gross  fraud  or  gross  misrepresentation  by  the  others  ; 
for  in  such  cases  Courts  of  Equity  will  not  only  decree 
the  same  to  be  void,  but  will  also  interpose  and  restore 
the  injured  party  to  his  original  rights  and  property,  as 
far  as  is  practicable.^  In  cases  of  this  sort,  Courts  of 
Equity  proceed  upon  the  same  general  ground,  as  in 
other  cases  where  a  fraud  has  been  perpetrated  upon  an 
innocent  partner  ;  as,  for  example,  in  the  case  already 
suggested,  where  one  partner  sold  out  to  the  other  for 
an  inadequate  consideration,  in  consequence  of  the 
fraudulent  concealment  by  the  latter  of  the  real  state 
of  the  funds  ;  ^  for  fraud  will  infect  with  a  fatal  taint 
every  transaction,  however  solemn ;  and  good  faith  and 
confidence,   and  frank   and   honorable  dealing    are,   or 

being  one  thing  to  manage  the  affairs  of  a  partnership  oneself,  and  anotli^r 
to  prevent  a  person  who  has  already  misconducted  himself  from  interfering 
further  with  the  partnership  concerns.  See  Hall  v.  Hall, .3  Macn.  &  G.  79,  85. 
Another  reason  for  drawing  a  distinction  between  an  injunction  and  a 
receiver  is,  that  whilst  the  former  excludes  only  the  person  against  whom  it 
is  granted,  the  latter  excludes  all  the  partners  from  taking  part  in  the  man- 
agement of  the  concern.  It,  therefore,  does  not  follow  that  because  the 
court  will  grant  an  injunction,  it  will  also  appoint  a  receiver,  or  that  because 
it  refuses  to  appoint  a  receiver,  it  will  also  decline  to  interfere  by  injunction. 
Although  an  injunction  was  granted,  a  receiver  was  refused,  in  Read  v. 
Bowers,  4  Bro.  Ch.  441 ;  Hartz  v.  Schrader,  8  Ves.  317 ;  Hall  v.  Hall, 
12  Beav.  414,  and  3  Macn.  &  G.  79."  Lind.  on  P.  851.  And  see  Garretson 
tj.  Weaver,  3  Edw.  Ch.  385,  and  §  229,  note.} 

>  Coll.  on  P.  B.  2,  c.  3,  §  7,  p.  244,  245,  2d  ed. ;  Gow  on  P.  c.  2,  §  4,  p. 
107,  3d  ed.;  Tattersall  v.  Groote,  2  B.  &  P.  131  ;  Ex  parte  Broome,  1  Rose, 
69;  Hamil  v.  Stokes,  4  Price,  161;  s.  c.  Daniell,  20;  Oldaker  v.  Lavender, 
6  Sim.  239 ;  Green  v.  Barrett,  1  Sim.  45 ;  Jones  v.  Yates,  9  B.  &  C.  532. 
{Rawlins  v.  Wickham,  3  De  G.  &  J.  304.}  — If  third  persons  are  interested 
and  connected  with  such  frauds,  they  also  should  be  parties  to  the  bill,  as 
well  as  the  offending  partners.  Coll.  on  P.  B.  3,  c.  2,  §  7,  p.  2-15,  246,  2d 
ed. ;  Fawcett  r.  Wliitehouse,  1  Russ.  &  M.  132. 

2  Ante,  §  172;  Blain  v.  Agar,  2  Sim.  289  ;  1  Story,  Eq.  Jur.  §  220. 

25 


386  PARTNERSHIP.  [CHAP.  XI. 

ought  to  be,  emphatically  the  groundwork  of  all  part- 
nership engagements. 

§  233.  Upon  similar  grounds,  Courts  of  Equity^  will 
hold  each  partner  responsible  to  the  other  for  all  losses 
and  injuries,  sustained  by  his  past  misconduct,  or  negli- 
gences or  misapplication  of  the  partnership  funds  or 
credit.^  Hence,  if  any  partner  has  withdrawn,  or  used 
the  partnership  funds  or  credit  in  his  own  private  trade, 
or  private  speculations,  he  will  be  held  accountable,  not 
only  for  the  interest  of  the  funds  so  withdrawn,  or  credit 
misapplied,  but  also  for  all  the  profits  which  he  has 
made  thereby.^  On  the  other  hand,  if  there  are  any 
losses  incurred  by  him  thereby,  they  must  be  borne  ex- 
clusively by  himself.^ 

^   [But  not  courts  of  law.     Capen  v.  Barrows,  1  Gray,  3  76,  382.] 

'  Caldwell  r.  Leiber,  7  Paige,  483.  [Compensation  will  be  jjiven,  substan- 
tially in  the  nature  of  unliquidated  damages.    Bury  v.  Allen,  1  Coll.  589,  604.] 

3  Stoughton  V.  Lynch,  1  Johns.  Ch.  46  7;  s.  c.  2  Johns.  Ch.  209;  Brown 
V.  Litton,  1  P.  Wms.  140;  Crawshay  v.  Collins,  15  Ves.  218;  Somerville  v, 
Mackay,  16  Ves.  382,  387,  389  ;  1  Story,  Eq.  Jur.  §  667  ;   Story  on  Ag.  §  207. 

''  [The  Statute  of  Limitations  strictly  bars  only  legal  remedies ;  but  Courts 
of  Equity,  by  their  own  rules,  independently  of  any  statute,  give  great  effect 
to  length  of  time,  and  refer  frequently  to  the  Statute  of  Limitations  as  fur- 
nishing a  convenient  measure  for  an  equitable  bar.  Beckford  v.  Wade,  17 
Ves.  87,  96  ;  Coll,  on  P.  B.  2,  c.  3,  §  374,  p.  339,  Perkins's  ed.  In  analogy  to  the 
statute,  they  have  adopted  in  many  cases  the  limit  of  si.x  years.  Sterndale 
V.  Hankinson,  1  Sim.  393 ;  Acherley  v.  Roe,  5  Ves.  565,  note  b,  and  cases 
cited,  Sumner's  ed.  Though  in  cases  of  direct  trust,  no  length  of  time  bars 
the  claim  between  the  trustee  and  ceMui  que  trust;  yet  where  there  is  a  trust 
by  implication,  it  must  be  pursued  within  a  reasonable  time.  Ex  parte  Has- 
ell,  3  You.  &  C.  617  ;  Edwards  v.  University,  1  Dev.  &  Bat.  Eq.  325.  See 
Townshendj;.  Townshend,  1  Bro.  Ch.  550,  554,  and  notes,  Perkins's  ed. ;  Beck- 
ford  V.  Wade,  17  Ves,  87,  and  note,  Sumner's  ed.  And  there  is  high 
authority  for  a  proposition  that  a  Court  of  Equity  will  not,  after  six  years' 
acquiescence,  une.xplained  by  circumstances,  nor  countervailed  by  acknowl- 
edgment, decree  an  account  between  a  surviving  partner  and  the  estate  of  a 
deceased  partner.  Tatam  v.  Williams,  3  Hare,  347,  358 ;  Barber  v.  Barber,  18 
Ves.  286  ;  Ault  v.  Goodrich,  4  Russ.  430;  Bridges  v.  Mitchell,  Gilb.  Eq.  224  ; 
Martin  v.  Heathcote,  2  Eden,  169.  But  see  Robinson  v.  Alexander,  8  Bligh, 
.  N.  s.  352;  s.  c.  2  CI.  &  Ein.  717,  The  cases,  arising  under  the  e.xception  of 
Merchants'  Accounts,  in  the  Statute  of  Limitations,  have  been  supposed  to 


CHAP.  XI.]  REMEDIES    BETWEEN    PARTNERS.  387 

afford  an  analogy  on  questions  between  partner  and  partner.  Tatam  v. 
Williams,  3  Hare,  347.  But  It  is  doubtful  whether  this  exception  applies  at 
law,  where  all  dealings  have  ceased  more  than  six  years.  Inglis  v.  Haigh, 
8  M.  &  W.  769  ;  Cottam  v.  Partridge,  4  Man.  &  G.  271 ;  Spring  v.  Gray,  5 
Mason,  505;  Coster  v.  Murray,  5  Johns.  Ch.  522;  Bass  v.  Bass,  6  Pick.  362; 
S.  c.  8  Pick.  187  ;  Union  Bank  v.  Knapp,  3  Pick.  96  ;  Coll.  on  P.  B.  2,  c.  3, 
§  3  76,  note,  Perkins's  ed.]  {See,  in  addition  to  the  cases  cited  in  this  note, 
Foster  v.  Hodgson,  19  Ves.  180;  Scott  v.  Milne,  5  Beav.  215;  Whitley  v. 
Lowe,  25  Beav.  421;  s.  c.  2  De  G.  &  J.  704;  Bispham  v.  Price,  15  How. 
162;  King  v.  Wartelle,  14  La.  Ann.  740;  Massey  i;.  Tingle,  29  Mo.  437; 
Lind.  on  P.  760.} 


388  PARTNERSHIP.  [cHAP.  XII. 


CHAPTER   XII. 

REMEDIES    BY    PARTNERS    AGAINST    THIRD    PERSONS. 

{  §  234.  No  action  lies  between  firms  which  have  a  common  partner. 

235.  This  rule  confined  to  the  common  law. 

236.  Jacaud  v.  French,  12  East,  317. 

237.  A  partnershijj  cannot  sue  on  a  bill  on  which  one  partner  is  liable. 

238.  A  partnership  cannot  sue   on   a   bill  obtained  by  the  fraud  of  a 

partner. 

239.  Whether  husband  and  wife,  partners  abroad,  can  sue  in  England. 

240.  A  partnership  cannot  sue  if  one  partner  be  an  alien  enemy. 

241.  Joining  of  dormant  and  of  nominal  j^artners. 

242.  In  the  case  of  written  instruments. 

243.  Partnership  contracts  in  the  name  of  one  partner. 

244.  Who  must  sue  when  the  firm  has  been  changed. 

245-248.  A  surety  or  guarantor  for  advances  by  a  firm  discharged  by 
change  in  the  firm. 

249.  Continuing  contracts  terminated  by  a  change. 

250.  Bonds  given  to  a  firm  for  good  conduct  of  its  agents. 

251.  Guaranty  for  a  firm  discharged  by  change. 

252.  Extension  or  release  of  a  debt  by  one  partner  binds  the  firm. 

253.  When  dealing  with  a  new  firm  discharges  a  debt  to  the  old  firm. 

254.  Debt  not  assignable  to  a  new  firm,  without  the  debtors'  consent. 

255.  Suit,  how  brought,  when  an  infant  partner  has  disclaimed. 
256-258.  Actions  by  partnership's  for  torts. 

259.  Suits  in  equity  by  partners. 

260.  Levy  on  separate  property  for  partnership  debts. 
261-263.  Levy  on  partnership  property  for  separate  debts. 
264.  Injunction  of  sale  by  the  sherifi".     Trustee  process.} 

§  234.  We  come,  in  the  next  place,  to  the  remedies 
which  belong  to  partners  in  their  collective  capacity, 
against  third  persons  ;  and  this  will  detain  us  but  for 
a  very  short  time.  And  here,  it  may  be  laid  down  as 
a  general  rule,  that,  at  law,  partners  in  their  collective 
capacity  are  entitled  to  the  same  remedies,  to  be  ad- 
ministered  in    the  same  way,  as   individuals  have   for 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  389 

the  assertion  of  tlieir  rights,  and  the  redress  of  their 
wrongs.^  There  are,  however,  some  few  exceptions, 
one  of  which  is  a  remarkable  exception,  and  is  j)urely 
technical,  and  stands  upon  grounds  peculiar  to  the 
common  law.  It  is,  where  the  suit  is  between  the 
firm  and  one  of  its  partners,  or  between  one  firm  and 
another  firm,  in  each  of  which  one  and  the  same  per- 
son is  a  partner.  In  cases  of  this  sort  the  common 
law  requires,  that  all  the  persons  jointly  interested  in 
the  contract,  or  the  wrong,  should  be  made  parties  ; 
and  it  is  treated  as  an  unjustifiable  anomaly,  if  not  as 
an  absurdity,  that  one  and  the  same  person  should,  in 
the  same  suit,  at  once  sustain  the  twofold  character  of 
plaintifi"  and  of  defendant,  to  enforce  a  right  or  re- 
dress a  wrong,  arising  either  from  the  contract,  or  act, 
or  misconduct  of  those  with  Avhom  he  is  jointly  con- 
cerned, or  jointly  interested.^  It  will  make  no  differ- 
ence, in  case;^  of  this  sort,  whether  the  suit  is  brought 
in  the  lifetime  of  all  the  partners,  or  after  the  death 
of  one  of  them ;  because,  in  contemplation  of  law,  no 
valid  legal  contract  ever  existed  between  the  partners ; 
and  therefore  the  death  of  any  one  of  them  cannot 
make  the  contract  available  at  law.^ 

§  235.  We  have  had  already  occasion  to  take  notice, 
that  this  exception  is  peculiar  to  Courts  of  Common 
Law,  and  has  no  recognition  whatsoever  in  Courts  of 

'  Gow  on  P.  c.  3,  §  1,  p.  117,  118,  3d  ed. ;  Coll.  on  P.  B.  2,  c.  3,  §  2,  p. 
177,  188-193,  2d  ed. ;  Id.  B.  3,  c.  5,  p.  457. 

2*  Gow  on  P.  c.  3,  §  1,  p.  118,  119,  3d  ed. ;  ante,  §  221  ;  Coll.  on  P.  B.  2, 
c.  3,§  2,p.  177,  188-193,  2d  ed. ;  Id.  B.  3,  c.  5,  p.  457  ;  Jones  v.  Yates,  9  B. 
&  C.  532;  Bosanquet  v.  Wray,  6  Taunt.  597;  Moffatt  v.  Van  Millinp;en,  2 
B.  &  P.  124  n. ;  De  Tastet  v.  Shaw,  1  B.  &  Aid.  664  ;  Teague  v.  Hubbard,  8  B. 
&  C.  345;  Harvey  v.  Kay,  9  B.  &  C.  356;  Neale  v.  Turton,  4  Bing.  149  ; 
[Denny  v.  Metcalf,  28  Me.  389  ;   Green  r.  Chapman,  27  Vt.  236.] 

5  Gow  on  P.  c.  3,  §l,p.  119,  120,  3d  ed. ;  Bosanquet  v.  Wray,  6  Taunt. 
597.     See  Bailey  v.  Bancker,  3  Hill,  (N.  Y.)  188. 


390  PARTNERSHIP.  [cHAP.  XII. 

Equity.^  In  the  latter  Courts,  indeed,  all  the  parties 
in  interest  must  join,  and  be  joined  in  the  suit ;  but 
it  is  sufficient  that  all  of  them  are  on  one  side  or  the 
other  side  of  the  record ;  and  they  need  not  be  all 
plamtifFs  or  all  defendants  in  the  same  suit,  even  Avhere 
the  controversy  is  between  two  firms,  in  each  of  -which 
some  of  them  are  partners.^  We  have  also  had  occa- 
sion to  see,  that  no  such  objection  was  recognized  in 
the  Roman  jurisprudence ;  and  that  it  is  unknown  to 
the  jurisprudence  of  Scotland  and  of  France,  and 
probably  also  of  most,  if  not  of  all,  of  the  commercial 
nations  of  continental  Europe.^ 

§  236.  Analogous  in  principle  to  the  case  already 
stated  at  the  common  law,  is  that  of  one  firm,  partly 
composed  of  a  common  partner  in  another  firm,  which 
seeks  by  a  suit  to  enforce  a  security  against  a  stranger, 
after  satisfaction  of  that  security  has  been  obtained 
from  the  latter  firm.  In  such  a  case,  the  money  re- 
ceived by  the  one  firm  being  paid,  and  accepted  in 
satisfaction  of  the  security,  the  common  partner  in 
each  firm  Mill  not  be  permitted  to  contravene  the 
receipt  thereof  for  that  purpose,  nor  will  he  be  allowed 
to  sue  upon  such  security,  as  one  of  the  firm,  although 
he  is  personally  ignorant  of  the  circumstances  which 
constitute  the  satisfaction.^     This  turns  upon  the  gen- 

1  Ante,  §  221,  note;  §  222. 

2  Ante,  §  221  and  note,  §  222  ;  1  Story,  Eq.  Jur.  §  666-674. 

3  D.  17,  2,  Go,  15;  Id.  17,  2,  52;  Poth.  Pand.  17,  2,  n.  33  ;  2  Bell.  Comm.  B. 
7,  p.  619,  620,  5th  ed. ;  Poth.  de  Soc.  n.  135,  136. — Mr.  Bell,  in  the  passage 
already  cited  (ante,  §  221,  note  (1),  2  Bell.  Comm.  620,  oth  ed.),says:.  "In 
Scotland,  debts  between  companies,  in  -which  the  same  individual  is  a  partner, 
are  every  day  sustained,  as  quite  unexceptionable."  It  is  to  be  lamented  that 
the  like  rule  has  not  been  incorporated  into  the  common  law,  treating  the 
firm,  for  the  purposes  of  the  suit,  as  an  artificial  body,  or  quasi  corporation. 
It  would  be  highly  convenient,  and  certainly  conformable  to  the  common 
sense  of  the  commercial  world. 

*  Gow  on  P.  c.  3,  §  1,  p.  120,  121,  3d  ed.  See  Bailey  v.  Bancker,  3  Hill, 
(N.  Y.)  183. 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  391 

eral  principle,  that  the  receipt  of  a  partnership  debt  by 
one  partner  is  a  full  discharge  thereof  against  the  firm ; 
for  each  partner  is,  sui  juris,  competent  to  receive  it  on 
behalf  of  all,  and  duly  to  release  and  discharge  the 
debtor.^  And  when  once  payment  or  satisfaction  has 
been  made  to  one  partner,  it  can  be  of  no  consequence 
that  he  is  connected  with  another  firm  ;  for  this  does 
not  enable  him  to  contravene  his  own  act ;  and  if  he 
has  no  personal  knowledge  thereof,  the  receipt  by  his 
partners  is  treated,  in  construction  of  law,  as  his  own 
receipt,  and  his  assent  is  bound  up  in  theirs.^  There- 
fore, where  A.  was  a  partner  with  13.,  in  one  mercantile 
house,  and  with  C.  in  another,  and,  after  the  former 
house  had  indorsed  a  bill  of  exchange  to  the  latter,  B., 
acting  for  the  firm  of  A.  and  B.,  received  securities  to 
a  large  amount  from  the  drawer  of  the  bill,  upon  an 
agreement  by  B.,  that  the  bill  should  be  taken  up  and 
liquidated  by  B.'s  house  ;  and,  if  not  paid  by  the  ac- 
ceptors when  due,  it  should  be  returned  to  the  drawer ; 
the  Court  of  King's  Bench  held,  that  the  deposited 
securities  being  paid,  and  the  money,  therefore,  being 
received  by  B.  in  satisfaction  of  the  bill,  A.  was  bound 
by  this  act  of  his  partner  B.,  in  all  respects  ;  and,  there- 
fore, he  could  not,  in  conjunction  with  C,  his  partner 
in  the  other  house,  maintain  an  action,  as  indorsees  and 
holders  of  the  bill,  against  the  acceptors,  after  such 
satisfaction  received  through  the  medium  of,  and  by 
agreement  with  B.,  in  discharge  of  the  same.^ 

§  237.  Upon  a  similar  ground,  if  a  partnership  be- 
come possessed  of  a  negotiable  security,  whicli  has 
been  procured  by  one  partner,  upon  the  understanding, 
that  he  will  punctually  provide  for  the  payment  thereof 

1  Ante,  §  114,  120,  131. 

2  Jaoaud  r.  French,  12  East,  317. 
»  Ibid. 


392  PARTNERSHIP.  [cHAP.  XII. 

at  its  maturity,  the  partnership  cannot  sue  upon  such 
security ;  because  the  same  partner  must  be  made  one 
of  the  plaintiffs,  and,  as  it  is  clear  in  sucl:^  a  case,  that  he 
could  not  maintain  any  suit  in  his  own  name  thereon, 
the  same  objections  will  avail  against  him,  as  a  co- 
plaintiff.  Thus,  where  one  partner  in  a  banking  house 
drew  a  bill  in  his  own  name  upon  a  third  person,  who 
accepted  the  same,  upon  the  condition  that  the  partner 
would  provide  funds  for  the  payment  thereof  at  its 
maturity;  and  the  bill  was  afterwards  indorsed  to  the 
partnership,  and  a  suit  was  thereupon  brought  by  all 
the  partners  against  the  acceptor ;  it  was  held,  that  the 
action  was  not  maintainable  ;  because  all  the  partners 
were  bound  by  the  acts  of  that  partner,  and  as  between 
him  and  the  acceptor,  there  was  no  pretence  of  any 
right  to  recover.^  So,  also,  a  partner  holding  a  security 
of  the  firm,  by  indorsement  from  the  payee  or  other 
indorser,  cannot  sue  the  indorser  thereon.^ 

§  238.  The  same  principle  will  apply  to  a  case  where 
all  the  partners  sue  upon  an  acceptance,  or  other 
security,  procured  fraudulently  by  one  partner,  without 
any  participation  or  knowledge  of  the  fraud  by  the 
other  partners ;  for  he  must  still  be  made  a  party  plain- 
tiff in  the  suit;  and  his  fraud  not  only  binds  himself, 
but  his  innocent  partners  in  that  suit;  for,  unless  all 
the  plaintiffs  are  entitled  to  recover,  the  suit  must  fail.^ 
The  case  may  even  be  put  still  more  strongly;  for  if 
the  security  be  a  fraudulent  contrivance  between  the 
guilty  partner  and  the  third  person,  in  fraud  of  the 
partnership,  there  can  be  no  suit  against  such  third  per- 

'   SpaiTOw  V.  Chisman,  9  B.  &  C.  241. 

«  Bailey  v.  Bancker,  3  Hill,  (N.  Y.)  183. 

3  CJowon  P.  c.  3,  §  1,  p.  120,  3d  ed. ;  Richmond  v.  Heapy,  1  Stark.  202, 
204:  Johnson  V.  Peek,  3  Stark.  66;  {Weavers.  Rogers,  44  N.  H.  112;  John- 
son V.  Byerly,  3  Head,  194.} 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  393 

son  at  law,  founded  thereon,  since  the  guilty  partner  is 
at  law  a  necessary  plaintiff  in  every  such  suit.^ 

1  Jones  V.  Yates,  9  B.  &  C.  532  ;  Kilby  v.  AVilson,  Ry.  &  Mood.  1 78  ;  [Fel- 
lows V.  Wyman,  33  N.  H.  351,  358  ;  Homer  v.  Wood,  11  Cush.  62,  in  which  the 
subject  is  very  clearly  presented  by  Bigelow,  J.]  { Wallace  v.  Kelsall,  7  M. 
&  W.  264  ;  Greeley  v.  Wyeth,  10  N.  H.  15;  Miller  v.  Price,  20  Wis.  117.} 
Lord  Tenterden,  in  delivering  the  judgment  of  the  Court,  in  the  case  of 
Jones  V.  Yates,  went  fully  into  the  reasoning,  on  which  this  doctrine  of  the 
common  law  is  founded ;  and,  therefore,  although  somewhat  long,  the  pas- 
sage is  here  inserted :  ''  These  were  two  actions  brought  by  the  plaintiffs,  as 
assignees  of  Sykes  &  Bury.  The  first  was  an  action  of  trover  to  recover  the 
value  of  three  bills  of  exchange,  which  belonged  to  Sykes  &  Bury,  and 
which  Sykes  had  indorsed  to  the  defendants,  with  whom  he  had  been  in  part- 
nership, in  part  payment  of  a  demand,  due  from  him  to  the  partnership  of 
Sykes,  Yates,  &  Young,  and  by  liim  again  immediately  indorsed  in  the  name 
of  that  partnership  to  Alzedo,  who  was  a  creditor  of  the  firm.  The  second  ac- 
tion was  to  recover  money,  drawn  by  Sykes  from  the  funds  of  himself  and 
Bury,  and  paid  into  the  hands  of  Yates,  in  further  discharge  of  the  balance 
before  mentioned,  without  the  knowledge  of  Bury.  Both  the  transactions  were 
frauds  by  Sykes,  on  his  partner,  Bury,  and  it  must  be  taken,  that  Yates  (at 
least  when  the  bills  were  indorsed  and  the  money  paid)  knew  the  bills  and 
money  came  from  the  funds  of  Sykes  &  Bury,  without  the  knowledge  of 
Bury.  It  may  be  doubtful,  whether  Young  was  actually  privy  to  either  tran- 
saction ;  but  in  our  view  of  the  case,  that  point  is  not  material.  On  behalf 
of  the  defendant,  it  was  contended,  that  Sykes  &  Bury  could  not  (if  they  had 
continued  solvent)  have  maintained  any  action  against  Yates  &  Young,  in  re- 
spect of  either  of  these  transactions ;  and  that,  if  that  were  so,  the  plaintiffs, 
their  assignees,  could  not  sue,  they  having  no  better  remedy  at  law  than  Sykes 
&  Bury  would  have  had.  And  we  are  of  this  opinion.  It  is  unnecessary,  there- 
fore, to  advert  to  any  of  the  other  points,  raised  in  argument  at  the  bar. 
We  are  not  aware  of  any  instance,  in  which  a  person  has  been  allowed,  as 
plaintiff  in  a  court  of  law,  to  rescind  his  own  act,  on  the  ground,  that  such  act 
was  a  fraud  on  some  other  person  ;  whether  the  party  seeking  to  do  this  has 
sued  in  his  own  name  only,  or  jointly  with  such  other  person.  It  was  well 
observed  on  behalf  of  the  defendants,  that  where  one  of  two  persons,  who 
have  a  joint  right  of  action,  dies,  the  right  then  vests  in  the  survivor.  So 
that,  in  this  case  (if  it  be  held  that  Sykes  and  Bury  may  sue),  if  Bury  had 
died  before  Sykes,  Sykes  might  have  sued  alone,  and  thus  for  his  own  benefit 
have  avoided  his  own  act,  by  alleging  his  own  misconduct.  The  defrauded 
partner  may  perhaps  have  a  remedy  in  equity,  by  a  suit  in  his  own  name 
against  his  partner,  and  the  person  with  wiiom  the  fraud  was  committed. 
Such  a  suit  is  free  from  the  inconsistency  of  a  party  suing  on  the  "^round  of 
his  own  misconduct.  There  is  a  great  dilference  between  this  case  and  that 
of  an  action  brought  against  two  or  more  partners  on  a  bill  of  exchange, 
fraudulently  made  or  accepted  by  one  partner  in  the  name  of  the  others,  and 


394  PARTNERSHIP.  [CHAP.  XII. 

§  239.  Another  exception  may  arige  from  the  incom- 
petency of  one  of  the  partners  to  maintain  the  suit,  from 
his  or  her  own  pecuhar  national  or  other  character  ;  for 
in  all  cases  of  suits  brought  by  partners,  all  of  the  firm 
must  be  competent  to  sue.  Thus,  for  example,  it  has 
been  said  by  a  learned  writer,  that,  although  the  hus- 
band and  wife   are   partners   in  a  foreign   country,  by 

de  ivered  by  such  partner  to  a  plaintiff  in  discharge  of  his  OAvn  private  debt. 
In  the  latter  ease,  the  defence  is  not  the  defence  of  the  fraudulent  party,  but 
of  the  defrauded  and  injured  party.  The  latter  may,  without  any  inconsist- 
ency, be  permitted  to  say  in  a  court  of  law,  that  although  the  partner  may  for 
many  purposes  bind  him,  yet,  that  he  has  no  authority  to  do  so  by  accepting 
a  bill  in  the  name  of  the  firm  for  his  own  private  debt.  The  party  to  a  fraud, 
he  who  profits  by  it,  shall  not  be  allowed  to  create  an  obligation  in  another, 
by  his  own  misconduct,  and  make  that  misconduct  the  foundation  of  an  ac- 
tion at  law.  Then,  if  Sykes  &  Bury  could  not  sue,  how  could  the  plaintiffs, 
who  represent  them  here  ?  It  was  said  in  support  of  the  argument,  that  the 
property  did  not  pass  from  Sykes  by  his  wrongful  act,  but  remained  in  Sykes 
&  Bury.  This  was  ingeniously  and  plausibly  put ;  but  as  against  Sykes  the 
property  did  pass  at  law,  and  there  was  no  remedy  at  law  for  Bury  to  recov- 
er it  back  again.  He  could  not  do  so  without  making  Sykes  a  party.  Fur- 
ther, the  right  of  the  assignees  to  sue  in  this  case  was  said  to  be  analogous 
to  the  right  of  assignees  to  sue  for,  and  recover  back,  property  voluntarily 
given  by  a  bankrupt  to  a  particular  creditor,  in  contemplation  of  his  bank- 
ruptcy, in  favor  of  such  creditor,  and  in  preference  to  him,  in  which  case  the 
bankrupt  could  not  have  sued,  if  no  commission  had  issued,  yet  the  assign- 
ees are  allowed  to  do  so.  That  is  a  case,  where  the  representatives  could, 
where  the  party  represented  could  not,  sue,  and  it  is  the  only  instance  of  the 
kind  mentioned  at  the  bar,  that  has  occurred  to  us.  But,  if  we  attend  to  the 
principle  on  which  the  assignees  are  allowed  to  sue,  we  shall  find  there  is  no 
analogy  between  that  case  and  the  case  before  the  Court ;  for  the  principle, 
on  which  assignees  have  been  held  entitled  to  recover  in  such  cases,  is  not  on 
the  ground  of  fraud  on  any  particular  person,  but  on  the  ground  that  there 
has  been  fraud  on  the  bankrupt  laws,  which  are  made  for  the  purpose  of  ef- 
fecting an  equal  distribution  of  the  insolvent's  estate  among  all  the  creditors, 
and  which  purpose  would  be  defeated,  if  a  party  on  the  eve  of  a  bankruptcy, 
and  with  a  view  to  it,  could  distribute  his  effects  according  to  his  own  jjleasure 
among  some  favorite  creditors,  to  the  total  exclusion  of  the  others.  This  is 
mentioned  by  Lord  Mansfield,  as  the  principle  of  the  decisions  in  the  early 
cases  on  this  subject ;  Alderson  v.  Temple,  4  Burr.  2235  ;  Harman  v.  Fishar, 
Id.  •2237  ;  s.  C.  Cowp.  117.  For  these  reasons,  we  think  the  plaintiffs  are  not 
entitled  to  recover."  But  see  Longman  v.  Pole,  1  Mood.  &  Malk.  223.  Is  this 
latter  case  distinguishable  upon  the  ground  that  it  was  case  for  a  tort  V 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  395 

whose  laws  they  are  competent  to  carry  on  partnership 
business  with  each  other  ;  yet  that  they  are  incompe- 
tent to  sue  in  an  Enghsh  Court  of  justice,  as  partners  ; 
since  the  law  of  England  does  not  recognize  their 
capacity  so  to  engage  in  trade,  and  enter  into  a  com- 
mercial partnership.^  The  doctrine  here  laid  down  is 
certainly  not  maintainable,  as  a  doctrine  of  public  law; 
and  the  authority  cited  to  support  it  by  no  means  bears 
it  out  in  its  full  latitude." 

§  24.0.  A  case  far  more  unexceptionable,  to  illustrate 
the  principle  of  this  exception,  is  that  of  a  partnership 
in  a  belligerent,  or  in  a  neutral  country,  where  the  suit 
is  brought,  which  is  composed  in  part  of  one  or  more 
partners  domiciled  in  an  enemy's  country ;  for,  under 
such  circumstances,  during  the  war,  no  suit  can  be 
brought  there  to  enforce  any  contract  whatever  in  favor 
of  the  partnership.  A  state  of  war  suspends  all  com- 
mercial intercourse  between  the  belligerents,  and  shuts 
their  Courts  against  all  suits  and  proceedings,  and  all 
claims  of  persons,  who  have  acquired  and  retain  a  hos- 
tile character.^ 

§  2-il.  Subject,  however,  to  exceptions  of  this  or  a 
similar  nature,  which  all  stand  upon  peculiar  grounds, 
the  general  rule  is,  as  has  been  already  mentioned,  that 
partners,  in  their  collective  or  social  capacity,  may  bring 
any  *suits,  Avhicli  it  would  be  competent  for  any  indi- 
vidual to  bring.     It  is  also  a   general  rule,  that  in  all 

>  Coll.  on  P.  B.  3,  c.  5,  p.  459,  2d  ed.,  citing  Cosio  v.  De  Bernales,  Ry.  & 
Mood.  102.     It  is  also  reported  in  C.  &  P.  266. 

*  All  that  Lord  Tenterden  decided  in  the  case,  was,  that  he  would  not 
presume  that  a  feme  covert  in  a  foreign  country  could  engage  in  a  partnership 
with  her  husband,  without  some  proof  that  such  was  the  law  of  the  foreign 
country  ;  and  no  such  proof  being  given,  the  plaintiffs  were  nonsuited.  There 
seems  nothing  objectionable  or  inconvenient  in  this  doctrine. 

*  Gow  on  P.  c.  3,  §  1,  p.  120;  M'Connell  v.  Hector,  3  B.  &  P.  113 ;  Gris- 
wold  r.  Waddington,  16  Johns.  438  ;  The  Julia,  8  Cranch,  181  ;  Albretcht  v. 
Sussmann,  2  Ves.  &  B.  323  ;  {§  315,  316.} 


396  PARTNERSHIP.  [cHAP.  XII. 

such  suits  at  law  all  the  partners  should  join.^  The 
rule,  however,  undergoes,  or  may  undergo,  an  exception 
in  cases  of  dormant  partners ;  for  it  is  at  the  option  of 
the  plaintiffs  in  such  cases,  either  to  join  the  dormant 
partner  in  the  suit,  or  to  omit  him  (as  in  the  correspond- 
ing case  of  the  partners'  being  sued  as  defendants,  it  is 
at  the  option  of  the  plaintiff  to  join  the  dormant  part- 
ner or  not),  and  the  joinder  or  non-joinder  will  not  con- 
stitute any  objection  to  the  maintenance  of  the  suit  in 
any  manner  whatsoever.^  The  same  exception  applies  a 
fortiori,  where  a  man  is  merely  a  nominal  partner ;  for, 
as  he  has  no  real  interest,  there  seems  no  necessity  of 
his  joining,  as  a  party,  in  any  partnership  suit,^  although 
there  is  no  doubt  that  he  may  so  join.^ 

»  Gow  on  P.  c.  3,  §  1,  p.  127,  128,  3d  ed. ;   [Gage  v.  Rollins,  10  Met.  348.] 

2  Gow  on  P.  c.  3,  §  1,  p.  128,  3d  ed. ;  Skinner  v.  Stocks,  4  B.  &  Aid.  437 ; 
Lloyd  V.  Archbowle,  2  Taunt.  324  ;  Brassington  v.  Ault,  2  Bing.  177;  Wilson 
V.  Wallace,  8  S.  &  R.  53  ;  Clarkson  v.  Carter,  3  Cowen,  84  ;  Lord  v.  Baldwin,  6 
Pick.  348, 352 ;  Leveck  v.  Shaftoe,  2  Esp.  468 ;  Ross  v.  Decy,  2  Esp.  470,  note ; 
Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  465  ;  Id.  p.  468-470,  2d  ed. ;  Mawman  v.  Gillett, 
2  Taunt.  325,  note ;  Alexander  v.  Barker,  2  Cr.  &  J.  133 ;  [Wood  v.  O'Kelley, 
8  Cush.  406  ;  Jackson  v.  Alexander,  8  Tex.  109  ;  Page  v.  Brant,  18  111.  37]  ; 
Cothay  r.  Fennell,  10  B.  &  C.  6  71.  —  The  authorities  here  cited  are  not  all 
exactly  agreed  upon  this  point,  where  the  dormant  partner  is  a  party  jilain- 
tifF;  but  they  all  agree  as  to  the  jjoint  where  such  a  partner  is  a  party 
defendant.  [And  in'  Secor  v.  Keller,  4  Duer,  416,  it  was  held  that  a  dormant 
partner  must  join  with  his  active  partner  as  plaintiffs  in  a  suit  by  them  for 
work  and  labor  done  for  the  firm]  It  seems  exceedingly  difficult  to  state 
any  reasonable  distinction  between  the  cases;  and  the  text  contaiijs  what 
seems  to  me  the  true  doctrine,  founded  upon  the  weight  of  authority.  { That 
a  dormant  partner  need  not  join  as  plaintiff,  see  Waite  v.  Dodge,  34  Vt.  181  ; 
Wood  V.  O'Kelley,  8  Cush.  406  ;  Rogers  v.  Kichline,  36  Penn.  St.  293.  That  he 
need  not  be  joined  as  defendant,  see  Chase  v.  Deming,  42  N.  H.  274 ;  Brown  v. 
Birdsall,  29  Barb.  549;  North  v.  Bloss,  30  N.  Y.  374;  Hopkins  v.  Kent,  17 
Md.  72. { 

«  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  470,  2d  ed. ;  Gow  on  P.  c.  3,  §  1,  p.  128, 
129,  3d  ed. ;  Parsons  v.  Crosby,  5  Esp.  199  ;  Davenport  v.  Rackstrow,  1  C.  &, 
P.  89;  Glossop  V.  Colman,  1  Stark.  25;  Teed  v.  Elworthy,  14  East,  210; 
KcU  V.  Nalnby,  10  B.  &  C.  20 ;  {Hatch  v.  Wood,  43  N.  H.  633.  See  Bishop 
V.  Hall,  9  Gray,  430.}  But  see  Guidon  v.  Robson,  2  Camp.  302;  Kieran 
V.  Sandars,  6  Ad.  &  E.  515. 

■*  Guidon  v.  Robson,  2  Camp.  302.     { Guidon  v.  Robson  was  a  suit  on  a 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  397 

§  242.  In  this  respect,  perhaps,  there  may  be  ground 
for  a  distmction  between  the  cases  of  common  unwritten 
contracts,  and  cases  where  a  written  instrument  is  made 
payable  to  certain  persons  by  name,  although  one  of 
them  is  but  a  nominal  partner.  For  it  may  well  be 
said,  that,  in  the  latter  case,  as  the  promise  is  made  to 
all,  the  suit  thereon  may  and  should  be  brought  in  the 
name  of  all,  as  proper  parties  to  the  contract.^  There 
can  be  no  doubt,  that,  in  a  case  of  this  sort,  all  the  per- 
sons named  may  join  in  the  suit ;  ^  but  it  is  quite  a  dif- 
ferent question,  whether  all  must  so  join,  when  all  have 
not  an  interest  in  the  contract.^  We  all  know,  that 
there  are  many  cases  of  written  contracts,  as  for  exam- 
ple, of  policies  of  insurance,  procured  to  be  under- 
written by  agents  or  brokers  in  their  own  names,  in 
which,  nevertheless,  the  suit  for  a  breach  thereof  may 
be  brought  either  in  the  name  of  the  principal,  or  of 
the  agents  or  brokers.'*  Why  the  same  rule  might  not 
well  apply  in  other  analogous  cases  of  written  contracts, 
it  is  not  easy  to  say.^  It  is  proper,  however,  to  add, 
that  there  is  some  apparent  conflict  in  the  authorities 
on  this  point. "^ 

written  contract.  Mr.  Lindley  is  of  opinion  that  where  a  nominal  partner 
need  not  join,  he  ought  not  to  join.  Lind.  on  P.  391.  See  Waite  i:  Dodge, 
34  Vt.»I81.| 

'  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  465,  470,  2d  ed. 

*  Kell  V.  Nainby,  10  B.  &  C.  20. 

«  Gow  on  P.  c.  3,  §  1,  p.  122,  123,  3d  ed. 

•«  Story  on  Ag.  §  160-162. 

5  Coll.  on  P.  B.  3,  c.  5,  §_  1,  p.  465-468,  2d  ed. ;  Grove  v.  Dubois,  1  T.  R. 
112  ;  Cumming  v.  Forester,  1  M.  &  S.  494  ;  Hagedorn  v.  Oliverson,  2  M.  & 
S.  485  ;  Garrett  v.  Handley,  4  B.  &  C.  664  ;  Lucena  v.  Craufurd,  3  B.  &  P. 
75  ;  Gow  on  P.  c.  3,  §  1,  p.  122,  123,  3d  ed. ;  Bell  v.  Ansley,  16  East,  141 ; 
Skinner  t\  Stocks,  4  B.  &  Aid.  437  ;  Alexander  v.  Barker,  2  Cr.  &  J.  133, 
138  ;   Atkinson  v.  Laing,  1  Dow.  &  11.  N.  P.  16. 

®  Guidon  v.  Kobson,  2  Camp.  302.  —  On  this  occasion,  the  case  being  an 
action  by  Guidon  alone  against  llobson,  upon  a  bill  of  exchange,  drawn  iu 
the  name  of  Guidon  &  Hughes  (the  latter  being  a  mere  clerk  of  Guidon)  on 


398  PARTNERSHIP.  [cHAP.  XII. 

§  243.  And  this  naturally  conducts  us  to  the  more 
enlarged  consideration,  in  what  cases,  and  under  what 
circumstances  contracts  are  to  be  treated  as  partnership 
contracts,  of  which  the  firm  may  avail  itself  by  way  of 
suit.  We  have  already  seen,^  that,  in  order  to  bind  the 
partnership  in  any  contract  with  third  persons,  it  is  or- 
dinarily necessary  that  it  should  be  made  in  the  firm 
name  ;  and  that,  if  made  by  one  partner  in  his  own 
name  only,  it  will  ordinarily  be  binding  only  upon 
himself,  and  not  upon  the  partnership."  There  are, 
however,  exceptions  to  this  rule,  where  the  contract 
is  made  by  one  partner  in  his  own  name,  for  and  on 
behalf  of  the  partnership,  or  for  the  benefit  thereof, 
and  yet  the  firm  will  be  bound  thereby.^     There  is  a 

Robson,  and  accepted  by  him,  Lord  Ellenborough  said  :  "  There  being  such 
a  person  as  Hughes,  I  am  clearly  of  opinion  that  he  ought  to  have  been 
joined  as  a  partner.  He  is  to  be  considered  in  all  respects  a  partner,  as 
between  himself  and  the  rest  of  the  world.  Persons  in  trade  had  better 
be  very  cautious  how  they  add  a  fictitious  name  to  their  firm  for  the  pur- 
pose of  gaining  credit.  But,  where  the  name  of  a  real  person  is  inserted 
with  his  own  consent,  it  matters  not  what  agreement  there  may  be  between 
him  and  those  who  share  the  profit  and  loss.  They  are  equally  responsible, 
and  the  contract  of  one  is  the  contract  of  all.  In  this  case  the  declaration 
states  that  the  defendant  promised  to  pay  the  money  specified  in  the  bill 
to  the  plaintiff  only,  whereas  she  promised  to  pay  it  to  the  plaintiff  jointly 
with  another  person.  The  variance  is  fatal."  But  see  Kell  v.  Nainby,  10 
B.  &  C.  20  ;  Hall  v.  Smith,  1  B.  &  C.  407  ;  Marchington  v.  Vernon,  1  B.  & 
P.  101,  n. ;  Marsh  v.  Robinson,  4  Esp.  98  ;  Walton  v.  Dodson,  3  C.  &  P. 
162;  Skinner  v.  Stocks,  4  B.  &  Aid.  437;  Cothay  v.  Fennell,  10  B.  &  C. 
671.  In  Alexander  v.  Barker,  2  Cr.  &  J.  133,  138,  Baron  Bayley  said: 
"I  am  the  less  surprised,  that  the  learned  judge  should  have  considered 
D.  Alexander  as  the  person  with  whom  the  defendant  contracted,  and  who 
alone  could  maintain  the  action,  because  I  remember  that  it  was  at  one 
period  the  impression  of  Lord  Ellenborough,  that  where  money  was  lent 
by  a  partner,  the  action  must,  in  all  cases,  be  brought  by  the  individual  with 
whom  the  contract  was  made.  But  he  was  afterwards  convinced  of  what  is 
doubtless  the  true  rule,  viz.,  that,  where  a  contract  is  made  by  one  on  behalf 
of  others,  the  action  may  be  brought  in  the  name  of  the  principals." 

>  Ante,  §  102,  136,  142. 

2  Ante,  §  102,  136,  142;  Faith  v.  Richmond,  11  Ad.  &  E.  339. 

'  Ante,  §  102  and  note,  §  142 ;   [Burnley  v.  Rice,  18  Tex.  481.] 


CHAP.  XII. j       REMEDIES    AGAINST    THIRD    PERSONS.  399 

like  enlargement  of  obligation  in  many  other  cases  of 
written  and  unwritten  contracts,  where  the  same  doc- 
trine will  reciprocally  apply  in  favor  of  the  partnership, 
as  in  the  converse  case  is  applied  against  it.  Thus,  for 
example,  if  a  contract  of  guaranty  should  be  entered 
into  apparently  with  one  partner,  but  in  reality  it  should 
be  intended  to  be  for  the  indemnity  of  the  firm  for  ad- 
vances to  be  made  by  the  firm  ;  an  action  might  be 
maintained  by  all  the  partners,  as  upon  a  joint  contract 
therewith,  although  the  written  papers,  containing  the 
guaranty,  should  be  addressed  to  one  partner,  and  he 
alone  should  conduct  the  negotiation.^     The  same  rule 

'  Gow  on  P.  c.  3,  §  1,  p.  121-123,  3d  ed. ;  Coll.  on  P.  B.  3,  c.  4,  §  1, 
p.  446,  447,  2d  ed. ;  Id.  e.  5,  §  1,  p.  464,  465 ;  Garrett  v.  Handler,  3  B.  & 
C.  462;  s.  c.  4  B.  &  C.  664;  Walton  v.  Dodson,  3  C.  &  P.  162.  — Mr. 
Gow  has  summed  up  the  authorities  on  this  point  as  follows.  "Partners 
sometimes  seek  to  enforce  a  guaranty,  given  to  secure  the  repayment  of  an 
advance  to  be  made  by  the  firm.  In  such  a  case  the  action  must  necessarily 
be  brought  by  all  the  partners  to  whom  the  guaranty  is  given,  and  by  whom 
the  advance  is  made.  And  where  a  contract  of  that  description  is  apparently 
entered  into  in  favor  of  one  partner  only,  yet  in  fact  if  it  be  intended  as  an 
indemnity  to  the  firm,  in  respect  of  an  advance  to  be  made  by  them,  a  joint 
action  may  be  maintained.  Thus,  in  the  late  case  of  Garrett  v.  Handley,  4 
B.  &  C.  664,  which  was  an  action  on  a  guaranty  by  two,  as  the  survivors 
of  a  firm  of  three  partners,  it  appeared  that  the  guaranty  was  addressed  to 
one  of  the  partners  only ;  but  evidence  Avas  produced,  which  established  that 
the  advance  to  secure  which  the  guaranty  was  entered  into,  was  made  by 
the  firm,  and  that  the  guaranty  was  given  for  their  joint  benefit,  and  not  to 
indemnify  the  single  partner  only.  It  was  objected  at  nisi  prius,  and  after- 
wards insisted  upon  on  a  motion  to  enter  a  nonsuit,  that  there  was  a  misjoin- 
der ;  for,  as  the  guaranty  was  in  terms  given  to  one  partner,  to  whom  alone 
the  promise  could  be  construed  to  have  been  made,  the  action  should  have 
been  brought  by  him  only.  But  the  Court  of  King's  Bench  held,  that  as  the 
guaranty  was  proved  to  have  been  intended  for  the  benefit  of  the  firm,  the 
action  was  properly  brought  by  the  surviving  partners ;  and,  under  such 
circumstances,  it  is  not  competent  to  the  partner,  to  whom  the  guaranty 
may  have  been  addressed,  to  treat  the  advance  as  one  made  by  himself,  on 
his  individual  account,  and  in  that  character  to  support  a  separate  action. 
This  was  determined  in  a  previous  action  on  the  same  guaranty,  and  in 
which  the  plaintiff  declared,  that  in  consideration  that  he  would  advance  a 
sum  of  money  to  A.  B.,  tbe  defendant  promised  that  provision  should  be 
made  for  paying  the  plaintill".     At  the  trial  it  appeared,  that  the  delendant 


400  PARTNERSHIP.  [CHAP.  XII. 

would  apply  to  a  loan  made  by  one  partner  in  a  bank- 
ing establishment,  out  of  the  banking  fund,  although 
the  whole  negotiation  should  be  conducted  by  and  in 
the  name  of  that  partner  only.^ 

had  given  to  the  phiintifF  the  guaranty  stated  in  the  declaration,  and  that 
the  latter  was  a  partner  with  two  other  persons  in  a  banking-house,  and 
that  the  firm  had  advanced  the  money,  and  charged  A.  B.  in  account  with 
the  same ;  and  it  was  held,  that  the  averment  in  the  declaration,  that  the 
plaintiff  had  advanced  the  money,  was  not  sustained  by  the  proof,  there 
being  no  evidence  to  show  that  the  money  had  been  advanced  to  the  plain- 
tiff by  the  firm,  and  by  him  to  A.  B.  It  is  not  to  be  collected  from  either 
of  the  two  preceding  cases,  nor  was  it  in  fact  necessary  to  determine, 
whether  the  partner  to  whom  the  guaranty  was  actually  given,  could  have 
maintained  a  separate  action  upon  it,  provided  his  declaration  so  truly  and 
correctly  stated  the  facts,  as  not  to  have  been  open  to  the  objection  of  a 
variance  between  the  allegation  and  the  proof.  But  judging  from  analogy 
to  the  rule,  applicable  to  a  policy  of  insurance,  which  allows  the  action  to 
be  brought,  either  by  the  party  for  whose  benefit  it  was  effected,  or  in  the 
name  of  him  who  effected  it,  it  would  seem,  that  that  partner,  as  being  the 
party  with  whom  the  contract  was  made,  might  have  supported  such  an 
action."     Gow  on  P.  c.  3,  §  1,  p.  121-123. 

^  Alexander  v.  Barker,  2  Cr.  &  J.  133,  138.  See  Robson  v.  Drum- 
mond,  2  B.  «&  Ad.  303.  — In  Alexander  v.  Barker,  Baron  Bayley  said  :  "  I 
have  no  doubt  in  this  case,  but  that  this  action  is  maintainable  by  the  plain- 
tiffs ;  and  in  that  opinion  I  am  fortified  by  the  case  of  Garrett  v.  Handley, 
Here  D.  Alexander  stood  in  the  double  capacity  of  an  individual  and  a 
member  of  the  firm.  Barker  wanted  an  advance  of  money,  and  to  him  it 
was  quite  immaterial  by  whom  the  advance  was  made,  whether  by  D.  Alex- 
ander alone,  or  by  the  house  of  which  he  was  a  member.  He  applies  to  D. 
Alexander  to  make  the  advance.  He  does  not  qualify  that  application,  and 
say,  you  may  be  a  member  of  a  firm,  and  I  will  deal  with  you  only,  and  will 
not  be  answerable  to  other  persons ;  but  he  makes  his  application  without 
any  qualification.  By  thus  applying  generally,  he  entitles  D.  Alexander,  if 
he  makes  the  advance,  to  place  him  in  the  situation  of  being  answerable  to 
him  in  either  of  his  capacities,  according  to  that  in  which  he  makes  the  ad- 
vance. From  the  testimony  it  appears,  that  the  advance  was  made  by  D. 
Alexander,  not  individually,  but  with  the  money  of  the  firm.  He  accepted, 
therefore,  the  application  for  the  advance,  not  as  an  individual,  but  in  his 
capacity  as  a  member  of  the  firm.  In  Garrett  v.  Handley,  the  contracting 
partner  first  brought  the  action  in  his  own  name  ;  but  it  appeared  that  the 
advance  was  made  by  the  house,  and  the  Court  said,  you  did  not  make  the 
advance,  and  cannot  maintain  the  action.  Another  action  was  then  brought 
in  the  name  of  the  firm,  and  the  Court  being  of  opinion  that  the  guaranty 
was  intended  to  apply  to  advances  made  by  the  firm,  thought  that  the  action 
was  maintainable.     The  language  of  that  guaranty  was  much  more  pointed 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  401 

§  244.  In  the  course  of  partnerships  it  not  infre- 
quently happens,  that  new  partners  are  admitted,  or  old 
partners  retire,  without  any  change  of  the  firm  name  ; 
and  upon  such  a  change  the  contracts  and  effects  and 
securities  of  the  existing  partnership  are  agreed  to  re- 
main, and  become  a  part  of  the  funds  of  the  new  firm. 
But  in  all  such  cases  the  contracts  and  securities  must 
be  sued  for  in  the  names  of  the  original  firm,  unless, 
indeed,  they  are  negotiable  securities,  and  are  indorsed 
over  by  the  old  fii'm  to  the  new  firm ;  in  which  latter 
case  the  new  firm  may  sue  thereon  in  their  own  names, 
like  any  other  holders ;  for  in  all  other  cases  no  persons 
are  permitted  to  sue  thereupon  at  law,  except  the  part- 
ners, who  originally  made  the  contract,  or  had  an  inter- 
est therein.^  A  fortiori,  the  same  rule  will  be  applied 
with  more  strictness,  in  cases  where  the  contract  is  un- 
der seal ;  for,  then,  ordinarily,  the  parties  to  the  deed, 
and  none  others,  can  sue,  or  be  sued  thereon.^  In 
equity,  the  case  may  be  far  otherwise ;  for  assignees  of 

than  this  letter.  It  was  addressed  to  an  mdividual,  and  was  to  this  effect:  — 
'  I  understand  from  Mr.  G.,  that  you  have  had  the  goodness  to  advance 
£550,  &c.,  upon  my  assurance,  which  I  hereby  give,  that  provision  shall  be 
made  for  repaying  you  this  sum,'  &c.  But  the  advance  was  not  made  by 
the  individual  alone  ;  and  it  was  holden,  that  the  firm  by  whom  the  advance 
was  made  ought  to  sue.  It  appears  to  me,  therefore,  that  the  plaintiffs 
were  the  persons  wlio  might  and  ought  to  sue  in  this  case."  See  also  Co- 
thay  V.  Feunell,  10  B.  &  C.  671 ;  Coll.  on  P.  B.  3,  c.  4,  §  1,  p.  446-448, 
2d  ed. ;  Id.  c.  5,  §  1,  p.  465.  {A  partner  had  an  account  at  a  bank  in  his 
own  name,  but  there  was  evidence  that  it  was  known  to  the  bankers  to  be  a 
partnership  account ;  it  was  held  that  the  firm  might  sue  the  bankers  for  not 
paying  a  check  drawn  on  them  by  one  partner  for  partnership  pur^joses. 
Cooke  V.  Seeley,  2  Exch.  746.} 

*  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  461-463,  465,  466,  2d  ed. ;  Osborne  v. 
Harper,  5  East,  225 ;  Wilsford  v.  Wood,  1  Esp.  182 ;  Pease  v.  Hirst,  10  B. 
&C.  122,  127;  Innesu.  Dunlop,  8  T.  R.  595;  Ord  v.  Portal,  3  Camp. 
239  ;  Robson  v.  Drummond,  2  B.  &  Ad.  303  ;  Radenhurst  v.  Bates,  3  Bing. 
463,  470. 

"  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  463,  464,  2d  ed. ;  Metcalfe  v.  Rycroft,  6 
M.  &  S.  75.     See  also  Pease  v.  Hirst,  10  B.  &  C.  122,  127. 

26 


402  PARTNERSHIP.  [cHAP.  XII. 

equities  and  equitable  interests  are  competent  to  sue  in 
equity  in  their  own  names,  to  enforce  payment  of  the 
assigned  debts,  or  other  choses  in  action,  although  they 
may  not  be  competent  at  law.^ 

§  245.  Questions,  also,  of  a  very  delicate  nature  may 
arise  out  of  contracts  and  obligations  by  third  persons, 
with  a  partnership,  where  the  contracts  or  obligations 
are  of  a  continuing  nature,  as  to  what  is  their  true  ex- 
tent and  operation,  when  there  has  been  any  change  of 
the  partners  by  the  retirement  of  an  old  partner,  or  the 
admission  of  a  new  one.  Thus,  for  example,  a  guaranty 
for  advances  to  be  made,  or  credits  to  be  given,  from 
time  to  time,  by  a  firm  to  a  third  person ;  and  some 
new  advances  or  credits  may  have  occurred,  after  a 
change  of  the  original  partners,  in  the  manner  above 
suggested.  Under  such  circumstances,  the  question 
w^ould  arise,  whether  the  guarantor  would  be  liable, 
either  to  the  old  firm,  or  to  the  new  firm,  for  any  such 
advances  or  credits,  after  any  such  change.  It  has  been 
held,  that  the  guarantor  would  not  be  liable  therefor  ; 
and  that  no  such  guaranty  ought  to  be  extended  be- 
yond the  actual  import  of  its  terms ;  but  that  it  ought 
to  be  limited  to  advances  and  credits  made  by  the  orig- 
inal firm  only.^ 

'  2  Storv,  Eq.  Jur.  §  1039,  1040 ;  Tiernan  v.  Jacobs,  5  Pet.  580,  597. 
—  If,  after  an  assignment,  the  debtor  should  promise  the  assignees  to  pay 
them,  a  suit  might  then  and  upon  that  promise  be  maintained  by  the  assign- 
ees against  the  debtor  in  a  Court  of  Law.  Coll.  on  P.  B.  3,  c.  5,  §  1,  p. 
462,  463,  2d  ed. ;  Wilslbrd  v.  Wood,  1  Esp.  182 ;  Moor  v.  Hill,  2  Peake, 
10 ;  Innes  v.  Dunlop,  8  T.  R.  595.  There  may  be  cases,  also,  where,  after 
the  contract  is  made  with  partners,  a  severance  may  be  made  by  the  con- 
sent of  all  the  parties  in  interest,  and  then  each  may  sue  for  his  own  share. 
See  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  467,  468,  2d  ed. 

2  Coll.  on  P.  B.  3,  c.  4,  §  1,  p.  443,  444,  2d  ed.  ;  Myers  v.  Edge,  7  T.  R. 
254,  256 ;  Cremer  v.  Higginson,  1  Mason,  323 ;  Gow  on  P.  c.  3,  §  1,  p.  123, 
124,  3d  ed. ;  Spiers  v.  Houston,  4  Bligh,  N.  s.  515  ;  Ex  parte  Kensington,  2 
Ves.  &  B.  79  ;  Dry  v.  Davy,  10  Ad.  &  E.  30  ;  s.  c.  2  Per.  &  Dav.  249.  { But  see 
Pariente  v.  Lubbock,  8  De  G.  M.  &  G.  5.} 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  403 

§  246.  The  same  doctrine  will  apply  to  more  formal 
instruments,  such  as  a  bond  given  by  a  principal  and 
surety  to  a  firm,  to  secure  advances  made  by  the  firm 
to  the  principal ;  for,  upon  such  a  bond  the  surety  will 
not  be  liable  for  any  advances  made  after  the  with- 
drawal or  death  of  one  of  the  partners.^  ]^or  is  there, 
in  this  respect,  any  real  difi"erence  between  the  decisions 
of  Courts  of  Law,  and  those  of  Courts  of  Equity,  as  to 
the  construction  or  extent  of  the  terms  of  the  instru- 
ment. In  each  Court,  the  interpretation,  put  upon  the 
terms  of  the  contract,  has  precisely  the  same  extent,  and 
the  same  limitations.^ 

§  247.  These  decisions  may,  at  first  view,  be  deemed 
somewhat  rigid,  if  not  inequitable.  But,  in  reality,  they 
stand  upon  grounds  capable  of  an  entirely  satisfactory 
and  solid  vindication.     In  the  first  place,  it  can  never 

^  Stranger.  Lee,  3  East,  484;  Pemberton  i:  Oakes,  4  Russ.  154,  1G7; 
{Chapman  v.  Beckinton,  3  Q.  B.  703}  ;  Weston  v.  Barton,  4  Taunt.  673,  682. 
—  In  this  last  case.  Sir  James  Mansfield,  in  delivering  the  opinion  of  the 
Court,  said  :  "  It  is  not  necessary  now  to  enter  into  the  reasons  of  those  de- 
cisions ;  but  there  may  be  very  good  reasons  for  such  a  construction.  It  is 
very  probable,  that  sureties  may  be  induced  to  enter  into  such  a  security  by 
a  confidence  which  they  repose  in  the  integrity,  diligence,  caution,  and  accu- 
racy of  one  or  two  of  the  partners.  In  the  nature  of  things  there  cannot  be 
a  partnership  consisting  of  several  persons,  in  which  there  are  not  some  per- 
sons possessing  these  qualities  in  a  greater  degree  than  the  rest ;  and  it  may 
be,  that  the  partner  dying,  or  going  out,  may  be  the  very  person  on  whom  the 
sureties  relied.  It  would,  therefore,  be  very  unreasonable  to  hold  the  surety 
to  his  contract,  after  such  change.  And  though  the  sum  here  is  limited,  that 
circumstance  does  not  alter  the  case ;  for  although  the  amount  of  the  indem- 
nity is  not  indefinite,  yet  £3,000  is  a  large  sum ;  and  even  if  it  were  only 
£1,000,  the  same  ground  in  a  degi-ee  holds;  for  there  may  be  a  great  deal  of 
difference  in  the  measure  of  caution  or  discretion,  with  which  different  per- 
sons would  advance  even  a  thousand  pounds.  Some  would  permit  one  who 
was  almost  a  beggar,  to  extend  his  credit  to  that  sum  ;  others  would  exercise 
a  due  degree  of  caution  for  the  safety  of  the  surety.  And,  therefore,  we 
are  of  opinion,  that  as  to  such  sums  only,  which  were  advanced  before  the 
decease  of  Golding,  can  an  indcnmity  be  recovered  by  the  plaintiffs ;  and  as 
to  the  sums  claimed  for  debts  incurred  since  his  decease,  the  judgment  must 
be  for  the  defendant." 

^  Pemberton  v.  Oakes,  4  Russ.  154. 


404  PARTNERSHIP.  [CHAP.  XII. 

be  said  with  truth  or  justice,  that  a  guaranty  or  surety- 
ship for  advances,  to  be  made  by  A.,  B.,  &  C,  does  prop- 
erly extend  to  any  advances  made  by  A.  &  B.,  or  by  A., 
B.,  &  D. ;  and  therefore  the  guarantor,  or  surety,  may, 
with  all  good  faith  and  correctness,  say,  Non  in  hcec 
foedera  veui.  Besides,  as  has  been  well  observed,  the 
guarantor  or  surety  may  have  very  good  reasons,  why 
he  might  be  willing  to  enter  into  an  engagement  with 
a  fixed  reliance  upon  the  vigilance,  fidelity,  discretion, 
and  skill  of  a  particular  partner,  when  he  would  not,  if 
that  partner  w^ere  to  withdraw,  be  willing  to  enter  into, 
or  to  prolong  any  such  engagement.^ 

§  248.  It  has  been  said,  that  guaranties  for  the  pay- 
ment of  the  debts  of  third  persons  are  not  in  general  in- 
struments under  seal,  and  that  there  is  no  technical  rule, 
which,  as  to  them,  prevents  a  Court  of  Law  from  look- 
ing at  the  real  justice  and  merits  of  the  case.~     This  is 

^  Weston  V.  Barton,  4  Taunt.  673,  682;  Simson  v.  Cooke,  1  Bing.  452. 
See  also  Russell  v.  Perkins,  1  Mason,  368  ;  Strange  v.  Lee,  3  East,  484,  490. 
—  Lord  Ellenborough,  in  delivering  the  opinion  of  the  Court  in  this  last  case, 
said :  "  The  Court  will,  no  doubt,  construe  the  words  of  the  obligation  accord- 
ing to  the  intent  of  the  parties  to  be  collected  from  them;  but  the 
question  is,  what  that  intent  was.  The  defendant's  obligation  is  to  pay  all 
sums  due  to  them,  on  account  of  their  advances  to  Blyth.  Now  who  are 
'  them,'  but  the  persons  before  named,  amongst  whom  is  James  Walwyn,  who 
then  constituted  the  banking  house,  and  with  whom  the  defendant  contracted  ? 
The  words  will  admit  of  no  other  meaning.  And,  indeed,  with  respect  to 
any  intent  which  parties  entering  into  contracts  of  this  nature  may  be  sup- 
posed to  have,  it  may  make  a  very  material  difference  in  the  view  of  the 
obligor,  as  to  the  persons  constituting  the  house,  at  the  time  of  entering  into 
the  obligation,  and  by  whom  the  advances  ai-e  to  be  made  to  the  party  for 
whom  he  is  surety.  For  a  man  may  very  well  agree  to  make  good  such 
advances,  knowing  that  one  of  the  partners,  on  whose  prudence  he  relies, 
will  not  agree  to  advance  money  imijrovidently.  The  characters,  therefore, 
of  the  several  partners  may  form  a  material  ingredient  in  the  judgment  of  the 
obligor  upon  entering  into  such  an  engagement."  See  Dry  v.  Davy,  2  Per.  & 
Dav.  249  ;  s.  c.  10  Ad.  &  E.  30. 

^  Coll.  on  P.  B.  3,  c.  4,  §  1,  p.  445,  446,  2d  ed. ;  and  the  observations  of  Mr. 
J.  Park,  in  Ilargrave  v.  Smee,  3  Moo.  &  P.  573  ;  s.  c.  6  Bing.  244  ;  and  of 
Lord  Tenterden,  in  Davey  v.  Prendergrass,  5  B.  &  Aid.  187 ;  Pease  v.  Hirst, 
10  B.  &  C.  122  ;  Dry  v.  Davy,  10  Ad.  &  E.  30  ;  s.  c.  2  Per.  &  Dav.  249. 


CHAP.  XII.]       REMEDIES    AGAINST   THIRD    PERSONS.  405 

true.  But  it  is  equally  true,  that  the  language  in  every 
case  is  to  be  construed  according  to  its  fair  and  reason- 
able meaning,  and  is  not  to  be  strained  to  reach  cases 
unforeseen  or  unprovided  for ;  for  that  would  be  to 
make,  and  not  merely  to  construe,  contracts.  And  in- 
deed, in  all  cases  of  this  sort,  the  guarantor  or  surety 
has  a  right  to  insist,  that  he  shall  not  be  presumed  to 
enter  into  engagements  for  events,  which  were  never  so 
submitted  to  his  consideration  or  contemplation,  and 
which,  if  considered  or  contemplated,  might  have  in- 
duced him  altogether  to  abstain  from  any  engagement 
whatsoever. 

§  249.  The  same  reasoning  is  equally  applicable  to 
another  class  of  cases,  where  there  is  a  continuing  con- 
tract with  a  partnership,  such  as  a  contract  to  buy  goods, 
or  to  hu'e  them  of  the  partnership  from  year  to  year, 
for  a  term  of  years  ;  for  such  a  contract  could  hardly 
be  entered  into  without  some  reference  to  the  character, 
skill,  and  honesty  of  the  existing  partners ;  and  it  is 
scarcely  presumable,  that  any  man  would  be  willing  to 
have  his  contract,  or  his  patronage,  assigned  over  from 
time  to  time  to  mere  strangers,  of  whom  he  knew  noth- 
ing, and  of  whose  competence  and  ability  and  fidelity 
he  might  have  no  adequate  means  of  inquiry.^ 

§  250.     But  the  most  striking,  as  well  as  the  most 

'  Robson  V.  Drummond,  2  B.  &  Ad.  303.  —  Qucere,  -whether  it  -svould  make 
any  difference,  that  the  retiring  partner  was  a  dormant  partner ;  and  that  the 
ostensible  partner  still  remained  in  the  firm.  See  Dry  v.  Dav}-,  2  Per.  &  Dav. 
249  ;  s.  c.  10  Ad.  &  E.  30  ;  Robson  i:  Drummond,  2  B.  &  Ad.  303.  {In  Ste- 
vens V.  Benning,  1  Kay  &  J.  168  ;  s.  c.  6  De  G.  M.  &  G.  223,  it  was  held 
that  an  author  was  discharged  from  his  contract  with  a  firm  of  publishers,  by  a 
change  in  the  firm  and  an  assignment  of  the  contract  to  persons  of  whom  the 
author  knew  nothing.  In  Tasker  v.  Shepherd,  6  H.  &  N.  57§,  a  contract  be- 
tween A.  and  a  firm  of  stone  merchants  that  the  firm  would  employ  A.  as 
their  London  agent  for  four  years,  was  held  to  have  been  terminated  by  the 
death  of  one  member  of  the  firm  within  the  four  years,  To  the  same  effect  is 
Stewart  i:  Rogers,  19  Md.  98.  See  Pariente  v.  Lubbock,  8  De  G.  M.  &  G.  5.} 


406  PARTNERSHIP.  [chap.  XII. 

usual,  illustration  of  this  doctrine,  which  occurs  in  actual 
practice,  is,  where  bonds  are  given  by  sureties  to  part- 
ners, for  the  fidelity  and  good  conduct  of  clerks,  and 
other  officers  and  agents,  in  the  service  and  employment 
of  the  partnership.  In  all  cases  of  this  sort,  the  uniform 
rule  of  construction  of  the  bond  is,  unless  some  clear 
language  to  the  contrary  is  inserted,  that  the  bond  does 
not  apply  as  a  security,  after  any  change  of  the  mem- 
bers of  the  partnership  by  death,  or  otherwise.^  But 
language  may  be  used  in  a  bond,  which  shall  clearly  im- 
port a  continuing  liability,  notwithstanding  any  change 
of  the  firm ;  and  if  it  does,  there  can  be  no  question, 
that  it  will,  both  at  law  and  in  equity,  have  the  most 
complete  operation.^ 

§  251.  The  like  doctrine  equally  applies  to  cases, 
where  a  guaranty  is  given  by  a  firm  on  behalf  of  one 
person,  or  by  one  person  on  behalf  of  a  firm,  and  after- 
wards another  person  is  introduced  into  the  business 
of  that  person,  or  a  material  change  takes  place  in  the 
firm  ;  for  the  guarantor  or  guarantors  will  not  be  liable 
thereon  for  any  subsequent  advances,  made  to  such  a 
person  or  firm,  with  a  knowledge  of  the  change.^ 

»  Coll.  on  P.  B.  3,c.  4,  §  1,  p.  435-442,  2d  ed. ;  Gow  on  P.  c.  3,  §  1,  p.  123- 
125,  3d  ed. ;  Wright  v.  Russell,  3  Wils.  530 ;  s.  c.  2  W.  Bl,  934  ;  Dance  v. 
(jirdler,  4  B.  &  P.  34  ;  Strange  v.  Lee,  3  East,  484 ;  Arlington  i*.  Merricke,  2 
Saund.  411  ;  University  of  Cambridge  i:  Baldwin,  5  M.  &W.  580  ;  Simson  v. 
Cooke,  1  Bing.  452,461. 

'  Metcalf  V.  Bruin,  12  East,  400  ;  Simson  v.  Ingham,  2  B.  &  C.  65  ;  Moller 
V.  Lambert,  2  Camp.  548.  — Barclays.  Lucas,  1  T.  R.  291,  was  a  case,  which 
was  supposed  to  contain  language,  importing  a  provision  of  this  character ;  but 
great  doubts  may  well  be  entertained,  whether  the  case  can  be  maintained  upon 
any  such  interpretation.  See  Coll.  on  P.  B.  3,  c.  4,  §  1,  p.  436,  437,  441,  2d  ed. ; 
Barker  v.  Parker,  1  T.  R.  287  ;  Strange  v.  Lee,  3  East,  484 ;  Gow  on  P.  c.  3, 
§  1,  p.  124,  3d  ed. ;  Simson  v.  Cooke,  1  Bing.  452. 

3  Gow  on  P.c.  3,§l,p.  123-1 25,  3d  ed. ;  Coll.  on  P.  B.  3,  c.4,  §1,  p.  438, 
442, 443,  2d  ed. ;  Wright  v.  Russell,  3  Wils.  530  ;  s.  c.  2  W.  Bl.  934  ;  Bellairs 
V.  Ebsworth,  3  Camp.  53  ;  Ex  parte  Watson,  19  Ves.  459;  Simson  v.  Cooke, 
1  Bing.  452,461  ;  ante,  §  245-247.     {Separate  property  pledged  by  one  part- 


CHAP.  XII.]       REMEDIES    AGAINST   THIRD    PERSONS.  407 

§  252.  Hitherto  we  have  been  speaking  of  the  orig- 
inal rights  of  partners  against  third  persons,  arising 
under  general  contracts,  or  special  engagements  with 
them,  and  the  proper  limitations  and  qualifications 
thereof.  But  many  circumstances  may  subsequently 
occur,  which  will  suspend,  or  defeat,  or  extinguish  or 
vary  these  rights,  of  some  of  which  it  seems  proper  to 
take  notice,  in  this  connection.  In  the  first  place,  if 
one  of  the  partners  should  take  an  acceptance,  or  other 
security  for  any  debt,  payable  at  a  future  day,  this  will 
be  construed  to  be  an  agreement  to  give  time  to  the 
debtor,  so  as  to  suspend  the  right  of  action  of  the  firm 
for  the  original  debt,  until  such  security  shall  be  dis- 
honored or  shall  become  due.^  We  have  already  had 
occasion  to  take  notice  of  the  case  of  a  security  given 
to  one  firm,  of  which  satisfaction  has  been  obtained  by 
another  firm,  each  firm  having  one  and  the  same  com- 
mon partner,  which  will  operate  as  an  extinguishment 
of  any  further  right  of  recovery  upon  such  security.^ 
A  fortiori,  a  release  of  a  debt  by  one  partner,  at  least 
if  it  be  not  a  fraud,  will  amount  to  an  extinction  of 
the  debt  against  the  partnership.^ 

§  253.  In  the  next  place,  subsequent  dealings  with 
a  new  firm  will  in  many  cases,  diminish,  or  discharge, 

ner  for  future  advances  to  be  made  to  tlie  firm,  is  not  liable  for  advances  made 
to  the  firm  after  the  partner's  death.  Bank  of  Scotland  r.  Christie,  8  CI.  & 
Fin.  214.  A  surety  for  the  conduct  of  A.,  as  agent,  is  not  liable  for  the  joint 
acts  of  A.  andB.,  partners,  as  agents,  A.  and  B.  having  always  been  employed 
as  partners  in  the  capacity  of  agents,  and  never  A.  alone.  London  Assurance 
Co.  y.  Bold,  6  Q.  B.  514.'} 

>  Coll.  on  P.  B.  3,  c.  4,  §  2,  p.  453,  2d  ed. ;  Tomlin  v.  Lawrence,  3  Moo.  & 
P.  555. 

"  Ante,  §  236  ;  Jacaud  v.  French,  12  East,  317. 

»  Coll.  on  P.  B.  3,  c.  4,§  2,  p.  453,  2d  ed. ;  Id.  B.  3,  c.  2,  §  1,  p.  311,312; 
Id.  c.  5,  §  5,  p.  485  ;  Wats,  on  P.  p.  225,  2d  ed. ;  Perry  v.  Jackson,  4  T.  R.  516, 
519  ;  Hawkshaw  v.  Parkins,  2  Swans.  539  ;  Barker  v.  Richardson,  1  You.  & 
J.  362,  365,  366 ;  Gow  on  P.  c.  2,  §  2,  p.  60,  61 ;  ante,  §  115. 


408  PARTNERSHIP.  [CHAP.  XII. 

or  satisfy  a  debt,  due  to  the  old  firm  by  mere  intend- 
ment and  operation  of  law.  Thus,  for  example,  if  one 
of  several  partners  should  die,  or  retire  from  the  firm, 
and  a  balance  should  then  be  due  to  the  firm,  such 
balance  will  be  gradually  diminished,  and  may  be  ex- 
tinguished, by  sums  subsequently  paid  to  the  remain- 
ing partners,  unless  such  sums  shall  be  otherwise  spe- 
cifically appropriated  at  the  time  of  the  payment.^     It 

1  {See  §  157.}  [Allcott  v.  Strong,  9  Cush.  323  ;  Farnum  v.  Boutelle,  13 
Met.  159 ;  Morgan  v.  Tarbell,  28  Vt.  498] ;  CoU.  on  P.  B.  3,  c.  4,  §  1,  p. 
450-452,  2d  ed. ;  Id.  c.  3,  §  4,  p.  422-424 ;  Ex  parte  KendaU,  17  Ves.  514 ; 
Clajiion's  Case,  in  Devaynes  v.  Noble,  1  Mer.  529,  572 ;  Bodenham  v.  Pui*- 
chas,  2  B.  &  Aid.  39.  —  In  this  last  ease,  Mr.  Justice  Bayley  said :  "  I  can- 
not distinguish  this  in  principle  from  Clayton^s  Case.  The  decisions  in  the 
Courts  of  Law  do  not  break  in  upon  the  distinction  there  taken.  The  prin- 
ciple established  by  those  decisions  is  this,  that  where  there  are  distinct  ac- 
counts and  a  general  payment,  and  no  appropriation  made  at  the  time  of 
such  payment  by  the  debtor,  the  creditor  may  apply  such  payment  to  which 
account  he  pleases.  But  whei-e  the  accounts  are  treated  as  one  entire  ac- 
count by  all  parties,  that  rule  does  not  apjsly.  In  this  case  the  bond  was 
given  in  1801,  for  advances  made  or  to  be  made  in  Havard"s  lifetime  ;  at 
his  death,  the  balance  due  was  £4,404.  The  surviving  partners  might  then 
have  called  for  payment  of  that  sum,  or  they  might  have  treated  it  as  an 
insulated  transaction,  and  kept  that  as  a  distinct  and  separate  account. 
But  instead  of  that,  they  blend  it  with  the  subsequent  transactions  ;  for  in 
the  first  account  delivered  after  Havard's  death,  are  included,  several 
items,  down  to  the  30th  of  June,  and  the  payments  after  his  death  reduce 
the  balance,  at  that  time,  to  £1,420.  They  might  even  then  have  treated 
this  balance  as  a  distinct  account,  and  as  money  due  on  the  bond,  if  they 
had  so  chosen.  Do  they  do  so  ?  Look  to  the  next  account ;  the  parties 
balance  their  accounts  every  three  months ;  and  in  the  next  quarterly 
account,  they  bring  forward  the  balance  of  £1,420,  and  make  it  an  item  in 
one  entire  account  subsisting  between  these  parties.  The  account  goes  on 
from  1810  till  1813 ;  and  the  then  balance  is  treated  as  one  entire  balance 
of  one  entire  account,  as  the  result  of  all  the  transactions  between  the 
parties  in  the  intermediate  time.  The  plaintiffs  were  not  bound  to  have  so 
treated  it  at  Havard's  death ;  but  having  done  so,  there  is  not  any  authority 
for  saying,  that  they  are  now  at  liberty  to  apply  the  several  payments  in 
reduction  of  the  debt  incurred  by  the  subsequent  advances,  to  the  exclu- 
sion of  the  bond  debt.  It  certainly  seems  most  consistent  with  reason, 
that  where  payments  are  made  upon  one  entire  account,  such  pajTnents 
should  be  considered  as  payments  in  discharge  of  the  earlier  items.  Clay- 
ton's Case,  where  all  the  authorities  were  fully  considered  by  the  Master 


I 


CHAP.  XII.]       REMEDIES    AGAINST   THIRD    PERSONS.  409 

has  been  supposed,  that  the  same  doctrme  will  apply 
m  the  case  of  an  account  current  between  a  new  firm, 
composed  of  the  remaining  partners  of  the  old  firm, 
and  a  new  partner ;  ^  but  perhaps  this  may,  in  the 
present  state  of  the  authorities,  be  thought  to  admit  of 
doubt,  unless  the  balance  is,  with  the  consent  of  all  the 
parties  in  interest,  carried  to  the  debit  of  the  new  firm  ; 
for  then  the  ordinary  rule  as  to  the  appropriation  of 
payments  will  apply.-     But  the  mere  fact,  that  a  cred- 

of  the  Rolls,  is  directly  against  the  plaintiff's  right  to  make  any  such 
approjjriatiou  as  he  desires.  That  case  does  not  break  in  upon  any  of  the 
cases  at  laAv,  and  ought  to  govern  our  decision  in  the  present  instance ; 
and  I  am  therefore  of  opinion,  that  there  ought  to  be  judgment  for  the 
defendant." 

*  Pemberton  v.  Oakes,  4  Russ.  154,  168. 

^  Gow  on  P.  c.  0,  §  2,  p.  244-246,  3d  ed. ;  Clayton's  Case,  in  Devaynes 
V.  Noble,  1  Mer.  572.  See  Copland  v.  Toulmin,  1  "West,  H.  L.  164 ;  s.  c. 
7  CI.  &  Fin.  349.  In  Pemberton  v.  Oakes,  4  Russ.  154,  168,  Lord  Lynd- 
hurst  said:  '*  The  third  question  is,  Whether  the  balance,  due  from  Stokes 
to  the  bank  at  the  time  of  Harding's  death,  has  been  discharged  by  his 
subsequent  payments  ;  and  that  point  is  decided  by  Clayton's  Case,  and  Bo- 
denham  v.  Purchas.  It  is  true,  that  the  facts  here  are  not,  in  every  respect, 
precisely  the  same  with  the  circumstances  of  these  two  cases.  But  the 
decisions  in  them  proceeded  on  a  broad  general  principle,  equally  applica- 
ble to  the  state  of  circumstances  existing  here.  Where  divers  debts  are  due 
from  a  person,  and  he  pays  money  to  his  creditor,  the  debtor  may,  if  he 
pleases,  appropriate  the  payment  to  the  discharge  of  any  one  or  other  of 
those  debts ;  if  he  does  not  appropriate  it,  the  creditor  may  make  an  appro- 
priation ;  but  if  there  is  no  appi'opriation  by  either  party,  and  there  is  a  cur- 
rent account  between  them,  as  between  banker  and  customer,  the  law  makes 
an  appropriation,  according  to  the  order  of  the  items  of  the  account,  the 
first  item  on  the  debit  side  of  the  account  being  the  item  discharged  or 
reduced  by  the  first  item  on  the  credit  side.  Here  it  is  not  pretended  that  any 
distinct  appropriation  of  the  payments  was  made  by  the  parties.  It  was  the 
practice  oi'  the  bank  to  settle  their  accounts  with  Stokes  quarterly ;  transfer- 
ring, at  the  end  of  each  quarter,  the  balance  then  due  from  him  to  the  account 
of  the  next  quarter.  Harding  died  in  the  middle  of  a  quarter ;  but,  on  that 
occasion,  no  change  took  place  in  the  mode  of  settling  the  accounts.  At  the 
end  of  the  then  current  quarter,  the  balance  was  struck  exactly  as  if  Harding 
had  been  alive,  and  no  notice  was  taken  of  his  death.  There  being  no  distinct 
appropriation  of  the  payments,  either  by  the  one  party  or  the  other,  the  law 
makes  the  apiiropi-iation  with  reference  to  the  order  of  the  items  of  the  ac- 
count.   If  so,  the  debt  which  Stokes  owed  to  the  bank  at  the  time  of  Hard- 


410  PARTNERSHIP.  [cHAP.  XII. 

itor  of  the  firm,  knowing  of  the  death  of  one  of  the 
firm,  continues  to  deal  as  before  with  the  survivors  for 
any  length  of  time,  without  requiring  payment  of  the 
balance  due  to  him  from  the  firm  at  the  time  of  the 
death,  will  not  deprive  such  creditor  of  the  remedy 
which  he  has  in  equity  against  the  assets  of  the  de- 
ceased partner  for  the  debt ;  but  there  must  be  other 
concurring  circumstances  establishing  an  abandonment 
of  his  claim  against  the  deceased,  and  adopting  the 
responsibility  of  the  survivors  for  the  debt  instead 
thereof.^ 

ing's  death,  has  been  discharged  by  the  subsequent  payments.  In  Bodenham 
V.  Purchas,  a  Court  of  Law  confirmed  the  nile,  which  Sir  William  Grant 
had  laid  down  in  a  Court  of  Equity.  The  point  was  again  brought  into 
discussion  in  Simson  v.  Ingham,  2  B.  &  C.  65 ;  and  the  principle  was  again 
confirmed,  though  the  particular  circumstances  of  the  transaction  produced 
a  different  decision.  In  that  case,  two  accounts  were  formed  by  a  London 
bank  at  the  death  of  one  of  the  partners  in  a  country  bank,  which  dealt 
with  them  —  the  one  was  styled  the  old  account  —  the  other,  the  new ;  and 
in  the  latter,  the  London  bank  entered  all  the  payments,  made  to  them  by 
the  country  bank,  after  the  death  of  that  partner  ;  so  that  a  distinct  appropri- 
ation was  made.  The  same  question  arose  in  Brooke  v.  Enderby,  before 
the  Common  Pleas ;  and  there,  too,  the  principle  of  Clayton's  Case  was 
adopted.  Feeling  myself  bound  by  the  force  and  authority  of  these  de- 
cisions, and  acquiescing  completely  in  the  reasoning  of  Sir  William 
Grant,  I  must  decide  that  there  was  no  debt  due  to  Oakes  and  Willington 
under  the  indenture  of  the  4th  of  January,  1802,  a,t  the  time  when  the 
memorandum  was  indorsed  on  the  bond."  A  somewhat  different  view 
seems  to  have  been  taken  by  Lord  Abinger,  in  Jones  v.  Maund,  3  You.  &  ■ 
C.  347. 

'  {§  157,  158};  Winter  v.  Innes,  4  Myl.  &  C.  101,  108,  109.  In 
this  case  Lord  Cottenham  said:  "The  question,  therefore,  is,  Whether 
a  creditor  of  a  firm,  who,  knowing  of  the  death  of  one  of  the  firm,  con- 
tinues to  deal,  as  before,  with  the  survivor  for  any  length  of  time,  with- 
out requiring  payment  of  the  balance  due  to  him  from  the  firm  at  the 
time  of  the  death,  thereby  loses  the  remedy  which  he  had  in  equity 
against  the  estate  of  the  deceased  partner; — particularly  in  a  case  in 
which  there  is  not  only  no  evidence  of  any  intention  to  abandon  such 
claim,  and  to  adopt  the  individual  responsibility  of  the  surviving  pai'tner 
in  its  stead,  but  the  total  absence  of  any  object  or  consideration  for  so 
doing,  and  conclusive  evidence  that  the  principal  object  of  the  forbear- 
ance was   not  to  press  upon  or  prejudice  the  estate  of  the  deceased,  of 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  411 

§  254.  Indeed,  it  may  be  laid  down,  as  a  general  rule, 
that,  when  a  debt  is  once  contracted  by  a  third  person 

whose  will  the  creditor  was  himself  a  trustee  and  executor,  though  he  did 
not  prove.  It  would,  I  think,  be  extraordinary,  if  there  were  authorities  to 
be  found  in  support  of  the  affirmative  of  this  proposition.  I  will  shortly  refer 
to  some  of  the  principal  cases  at  law  and  in  equity  which  bear  upon  this 
subject.  The  cases  at  law  have  necessarily  arisen  where  the  dissolution  of 
the  partnership  has  taken  place  by  arrangement  between  the  partners,  and 
not  by  death.  It  will  be  found  that  in  some,  even  where  it  was  clear  that 
the  creditor  intended  to  take  the  separate  security  of  the  continuing  partner 
in  lieu  of  the  joint  liability  of  the  dissolved  firm,  the  retired  partner  Avas  held 
not  to  be  discharged,  as  in  David  v.  Ellice,  and  Lodge  v.  DIcas,  in  which  the 
creditor,  with  a  knowledge  that  the  continuing  partner  had  agreed  to  pay  all 
the  debts,  took  his  personal  security  for  the  debt ;  but  it  was  held  that  he 
had  not  thereby  released  the  retiring  partner,  upon  the  ground  of  want  of 
consideration  for  his  so  doing.  These  decisions  have  been  considered  as  car- 
rying the  doctrine  very  far,  and  undoubtedly  they  do  ;  and  the  true  ground 
ajipears  to  me  to  have  been  acted  upon  in  Bedford  v.  Deakin,  and  Thomp- 
son V.  Percival.  In  the  former,  it  is  laid  down,  that  to  discharge  the  retiring 
partner,  it  must  ajjpear,  that  the  creditor  accepted  the  separate  security  of 
the  continuing  partner,  in  discharge  of  the  joint  debt ;  and  in  the  latter  case, 
although  the  creditor  knew  that  the  continuing  partner  had  agreed  to  pay 
all  debts,  and  with  that  knowledge  had  taken  a  bill  from  him,  for  the  pay- 
ment of  which,  when  due,  he  afterwards  allowed  two  months,  yet  the  Court, 
upon  a  motion  for  a  new  trial,  ordered  it,  that  it  might  be  put  to  the  jury 
whether  the  plaintiff"  had  agreed  to  take,  and  did  take,  the  bill  in  satisfiiction 
of  the  joint  debt.  If,  therefore,  the  cases  in  equity  of  claims  against  the  es- 
tates of  deceased  partners  are  to  be  regulated  by  the  same  principle,  there 
can  be  no  doubt  of  the  right  conclusion  in  the  present  case,  for  there  was  no 
new  security  given ;  and  instead  of  an  intention  appearing,  or  any  agree- 
ment being  proved,  to  release  the  estate  of  Mr.  Winter,  all  the  evidence 
proves  directly  the  reverse.  It  cannot  be  disputed  now  that  the  estate  of  a 
deceased  partner  is  liable  in  equity  to  the  creditors  of  the  firm,  although  the 
legal  remedy  exists  only  against  the  sui-vivors.  When  and  by  what  means 
is  that  liability  to  terminate  ?  Sir  William  Grant,  in  VuUiamy  v.  Noble 
(and  he  had  much  considered  the  question  in  Sleech's  Case  in  Devaynes  v. 
Noble),  has  answered  the  question.  He  says,  'The  deceased  partner's  es- 
tate must  remain  liable  in  equity  until  the  debts  which  affected  him  at  the 
time  of  his  death  have  been  fully  discharged.  There  are  various  ways  in 
which  the  discharge  may  take  place,  but  discharged  they  must  be  before  his 
liability  ceases.'  The  discharge  may  be  by  direct  payment,  or  by  dealings 
with  the  continuing  partner  operating  as  payment  of  the  joint  debt,  or,  in 
the  terms  of  Thompson  v.  Percival,  the  dealings  may  arise  from  the  credi- 
tor's having  agreed  to  take,  and  taking  the  security  of  the  survivor  in  satis- 
faction of  the  joint  debt ;  or  there  may  be  an  equitable  bar  to  the  remedy. 


412  PARTNERSHIP.  [cHAP.  XII. 

with  a  partnership  (it  not  being  by  a  negotiable  secu- 
rity), no  mere  private  agreement  between  the  partners 
will  vary  their  rights  against  such  third  person,  un- 
less it  is  assented  to  by  the  latter.^  Thus,  for  example, 
if  upon  any  change  of  the  firm,  the  existing  partnership 
debts  should  be  assigned  over  to  the  new  firm,  that 
alone  would  not  give  any  title  to  the  new  firm  at  law 
to  sue  the  debtors  therefor.  But  if  in  such  a  case,  after 
such  an  assignment,  and  with  full  knowledge  thereof, 
the  debtors  should  assent  thereto,  and  promise  payment 
to  the  new  firm,  that  would  amount,  by  operation  of 
law,  to  an  extinguishment  of  the  liability  to  the  old 
firm,  and  to  a  transfer  of  the  debts  to  the  new  firm  ;  so 
that  the  old  firm  would  no  longer  be  entitled  to  sue 
therefor ;  but  the  right  would  be  exclusively  vested  in 
the  new  firm.- 

for  (as  Lord  Eldon  expresses  it  in  Ex  pcoie  Kendall) ,  '  As  the  right  stands 
only  upon  equitable  grounds,  if  the  dealing  of  the  creditor  with  the  surviv- 
ing partners  has  been  such  as  to  make  it  inequitable  that  he  should  go  against 
the  assets  of  the  deceased  partner,  he  will  not  upon  general  rules  and  prin- 
ciples be  entitled  to  the  benefit  of  the  demand.'  In  the  present  case  there 
is  a  total  absence  of  any  such  equitable  defence  to  the  claim  upon  the  estate 
of  Mr.  Winter,  as  there  is  of  any  intention  or  conti-act  to  abandon  it.  The 
more  modern  cases  of  Cowell  v.  Sikes,  Wilkinson  v.  Henderson,  and  Braith- 
waite  V.  Britain,  in  addition  to  the  former  authorities,  leave  no  doubt  that  in 
this  case  nothing  has  taken  place  which  can  bar  Mr.  Baillie's  claim  (admitted 
to  have  at  one  time  existed),  to  compel  payment  of  so  much  of  the  debt  due 
to  him  from  the  firm  as  remains  unpaid." 

'  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  466,  467,  3d  ed. ;  Radenhurst  v.  Bates, 
3  Bing.  463;  Wilsford  v.  Wood,  1  Esp.  182.  {Armsby  v.  Farnam,  16 
Pick.  318 ;  Gushing  v.  Marston,  12  Cush.  431 ;  Richards  r.  Fisher,  2  All. 
527  ;  Stewart  v.  Rogers,  19  Md.  98. } 

2  See  2  Story,  Eq.  Jur.  §  1041-1046  ;  Williams  v.  Everett,  14  East,  582  ; 
Yates  V.  Bell,  3  B.  &  Aid.  643;  Grant  r.  Austen,  3  Price,  oS;  Tiernan  i'. 
Jackson,  5  Pet.  580,  597-601 ;  Evans  v.  Silverlock,  1  Peake,  21 ;  M'Lanahan  v. 
Ellery,  3  Mason,  269;  Harris  v.  Lindsay,  4  Wash.  C.  C.  271;  {Wood  v. 
Rutland  Ins.  Co.,  31  Vt.  552.}  See  Gow  on  P.  c.  3,  §  1,  p.  129,  130,  3d 
ed.  —  The  case  of  King  v.  Smith,  4  C.  &  P.  108,  turned  upon  other  dis- 
tinct considerations.  There  it  was  agreed,  upon  a  dissolution  of  the  part- 
nership, that  A.  (one  of  the  partners)  should  receive  all  the  debts  due  to 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  413 

§  255.  In  like  manner,  where  a  contract,  originally 
made  with  a  firm,  is,  by  the  consent  of  all  the  parties 
thereto,  severed,  and  become  a  several  contract  with 
one  of  the  parties,  or,  by  assignment  and  consent  of  all 
the  parties  thereto,  has  been  transferred  by  way  of  sub- 
stitntion  to  a  third  person,  there  would  seem  to  be  no 
doubt,  that  the  liability  to  the  partnership  is  extin- 
guished by  mere  operation  of  law.^  Why,  in  the  case 
of  an  infant  partner,  who,  before  any  action  brought 
against  a  debtor  to  the  firm,  has  disaffirmed  his  original 
connection  with  the  firm,  the  contract  should  not,  upon 
principle,  be  thereafter  treated  as  a  several  contract 
with  the  remaining  partners,  it  is  not  easy  to  say ;  for 
thereby  the  contract  would  seem,  as  to  the  infant,  to  be 
void  ah  initio.  But,  upon  the  footing  of  authority,  the 
point  does  not  seem  entirely  free  from  difficulty.^ 

§  256.  Hitherto,  we  have  been  considering  the  rights 
of  action  and  remedies  at  law,  which  partners  may  have 
against  third  persons,  founded  upon  contracts  made  with 
the  firm  ;  and  the  manner  in  which  the  same  may  be 
qualified,  suspended,  severed,  or  extinguished,  by  the 
subsequent  acts  of  one  or  all  of  the  partners.  Let  us 
now  proceed  to  the  consideration  of  the  rights  of  action 
and  remedies,   which   partners   may  have   against   third 

the  firm;  and  afterwards  B.,  the  other  partner,  drew  a  bill  on  C,  a  debtor 
of  the  firm,  for  the  debt  due  to  the  firm,  who  accepted  it ;  and  it  was  held  to 
be  no  defence  to  a  suit  by  B.  against  C.  on  the  acceptance,  that  there  was 
the  above  stipulation  on  the  dissolution ;  for,  notwithstanding  such  stipula- 
tion, either  partner  might  release  or  collect  the  debts  due  to  tlie  firm.  But 
it  would  have  been  otherwise,  if  all  the  debts  of  the  firm  had  been  assigned 
to  A.,  and  in  consideration  thereof,  C.  had  promised  to  pay  the  debt  to  A., 
and  then  B.  had  sued  for  the  same  in  the  partnership  name. 

'  See  Thompson  v.  Percival,  5  B.  &  Ad.  925.  See  M'Lanahan  i\  Ellery, 
3  Mason,  269;  Ilosack  v.  Rogers,  8  Paige,  229. 

^  The  authorities  on  this  subject  are  not  easily  reconcilable  with  each 
other.  See  Teed  v.  Elworthy,  14  East,  210;  Goode  v.  Harrison,  5  B.  & 
Aid.  147;  Thornton  v.  lUingworth,  2  B.  &  C.  824;  Whitney  i\  Dutch,  14 
Mass.  457  ;  Tucker  v.  Moreland,  10  Pet.  58;  Kell  v.  Xainby,  10  B.  &  C.  20. 


414  PARTNERSHIP.  [CHAP.  XII. 

persons,  founded  upon  the  torts  of  the  latter.  And, 
here,  it  may  be  laid  down  as  a  general  doctrine,  that 
whenever  a  joint  injury  or  damage  is  done  to  the  prop- 
erty, or  rights,  or  interests  of  the  partnership  by  third 
persons,  whether  it  be  misfeasance,  or  malfeasance,  or 
negligence,  or  omission  of  duty,  or  by  positive  conver- 
sion of  their  property,  an  action  will  lie  at  law,  by  all 
the  partners  (and,  indeed  in  such  an  action  they  ought 
all  regularly  to  join),  to  obtain  due  recompense  and  re- 
dress in  damages.^  Where,  indeed,  the  injury  is  done 
to  some,  and  not  to  all  of  the  partners,  they  alone,  who 
are  injured,  may  bring  an  action  therefor  without  join- 
ing the  others  ;  for  torts  are,  or  at  least  may  be,  in  their 
nature,  joint,  as  well  as  several ;  and,  therefore,  in  con- 
templation of  law,  the  rights  of  the  parties  vary  accord- 
ingly." Hence,  if  a  third  person  should  fraudulently 
collude  with  one  partner  to  injure  the  others,  even 
though  the  act  might  in  other  respects  be  an  injury  to 
the  partnership ;  yet  an  action  will  lie  by  the  other 
partners  alone  against  such  third  person,  so  colluding, 
for  the  special  damage  occasioned  thereby  to  them- 
selves.^ So,  where  words,  which  impute  insolvency  in 
trade,  are  spoken  of  one  of  the  partners  in  a  firm 
(which  cannot  fail  in  many  cases  to  have  some  tendency 
to  impair  the  credit  of  the  firm  itself),  the  injured 
partner  may  maintain  a  several  action  for  the  slander ; 
and  it  is  not  necessarily  to  be  considered  as  an  injury,  for 
which  a  joint  action  only  can  be  maintained  by  the  firm.'* 

1  Coll  on  P.  B.  3,  c.  6,  §  2,  p.  473,  474,  2d  ed.  See  also  Addison  v. 
Overend,  G  T.  R.  766 ;  Bloxam  v.  Hubbard,  5  East,  407 ;  Sedgworth  v. 
Overend,  7  T.  R.  279 ;  Gow  on  P.  c.  3,  §  1,  p.  133,  3d  ed. ;  Id.  p.  136. 

2  Ibid. 

3  Longman  v.  Pole,  1  Moo.  &  Malk.  223.  {See  Fox  v.  Rose,  10  U.  C.  Q. 
B.  Rep.  16.} 

■•  Harris  v.  Bevington,  8  C.  &  P.  708.  {See  Robinson  v.  Marcbant,  7 
Q.  B.  918.} 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  415 

§  257.  On  the  other  hand,  there  is  not  the  slightest 
doubt,  that  a  joint  action  may  be  maintained  by  the 
firm  for  any  defamation  of  the  firm,  or  for  any  libel 
upon  the  firm ;  for  this  is,  justly  and  properly  speak- 
ing, a  joint  tort  and  injury,  applicable  to  their  collective 
rights  and  interests.^     But  in  such  a  case  the  damages 

'  Coll.  on  P.  B.  3,  c.  5,  §  2,  p.  473,  2d  ed. ;  Cook  v.  Batcbellor,  3  B.  &  P. 
150;  Haythorn  v.  Lawson,  3  C.  &  P.  196.  See  Williams's  note  to  Coryton 
V.  Lithebye,  2  Saiind.  112, 117,  a. ;  {Le  Fanu?;.  Malcomson,  1  H.  L.  Cas.  637  ; 
Taylor  v.  Church,  1  E.  D.  Smith,  279  ;  s.  c.  4  Seld.  452  ;  Lewis  v.  Chapman, 
19  Barb.  252.  In  Metropolitan  Saloon  Omnibus  Co.  v.  Hawkins,  4  H.  &  N^. 
87,  it  was  held,  that  an  incorporated  joint  stock  company  might  sue  a  share- 
holder for  a  libel,  and  Martin  &  Watson,  B  B.,  intimate  that  a  suit  against  one 
jjartner  who  had  libelled  the  firm  might  be  maintained  by  the  other  partners. } 
Forster  v.  Lawson,  3  Bing.  452.  —  In  this  latter  case  Lord  Chief  Justice 
Best  said :  "  An  objection  has  been  made  to  the  declaration  in  this  case ; 
namely,  that  the  action  has  been  brought  by  three  persons  jointly,  and  that 
they  could  not  properly  join  in  such  an  action.  The  general  rule  of  law  is, 
as  laid  down  in  the  case  of  Smith  v.  Cooker,  Cro.  Car.  512;  namely,  that 
where  several  persons  are  charged  with  being  jointly  concerned  in  a  murder, 
each  of  them  must  bring  a  separate  action  for  it ;  and  the  reason  is,  that  they 
have  no  joint  interest  to  be  affected  by  the  slander.  Where,  however,  two 
persons  have  a  joint  interest  affected  by  the  slander,  they  may  sue  jointly ; 
and  the  case  of  Cook  v.  Batchellor  is  not  the  first  case  which  has  determined 
this  point.  In  the  note  in  Saunders,  to  which  the  Court  has  been  referred, 
the  learned  editor  states,  that  two  joint  tenants  or  coparceners  might  join  in 
an  action  for  slander  of  the  title  to  their  estate  ;  and  the  form  of  the  declara- 
tion in  such  an  action  is  to  be  found  in  Brownlow.  This  doctrine  has  also 
been  recently  considered  and  confirmed  in  the  case  of  Collins  v.  Barrett,  in 
which  it  was  holden,  that  two  persons  might  bring  a  joint  action  for  a  mali- 
ciously holding  them  to  bail,  if  the  comjjlaint  in  the  declaration  was  con- 
fined to  the  expenses  which  they  were  jointly  put  to  in  procuring  their 
liberty.  It  has  been  said,  that,  notwithstanding  the  judgment  against  the  de- 
fendants in  this  action,  if  either  of  the  plaintiffs  has  sustained  any  separate 
damage,  he  may  still  maintain  a  separate  action.  I  cannot  see  how  there 
can  be  any  separate  damage.  The  business  injured  is  the  joint  business,  and 
the  libel  only  affects  the  plaintiffs  through  their  business.  If,  however,  a 
copartnership  be  libelled,  and  the  libel  contains  something  which  particu- 
larly affects  the  character  of  one  of  that  firm,  I  think  a  joint  action  may 
be  maintained  against  the  libeller,  who  would  have  less  reason  to  com- 
plain of  such  proceedings  than  he  would  have  if  each  partner  brought  a 
separate  action  for  the  injury  done  to  the  firm.  Another  objection  raised 
by  the  defendant's  counsel  is,  that  the  plaintiffs  have  not  stated  the  pro- 
portion of  interest,  which  each  respectively  had  in  their  joint  business.    It 


416  PARTNERSHIP.  [CHAP.  XII. 

must  be  strictly  limited  to  the  injury  sustained  by  the 
firm  in  their  jomt  trade  or  business ;  and  cannot  be  ex- 
tended to  the  injury  done  to  the  private  feelings  of  the 
individual  partners/ 

§  258.  The  same  principle  will  apply  to  any  other 
wrong,  done  by  third  persons,  affecting  the  partnership 
trade  or  business ;  such  as  obstructing  their  business 
and  employment,  seducing  persons  from  their  service, 
or  wrongfully  soliciting  and  inducing  their  customers 
to  Avithdraw  their  patronage  from  them  by  fraud,  or 
threats,  or  otherwise ;  for  in  all  such  cases,  a  joint 
damage  is  done  to  the  firm.^ 

is  not  necessary  for  them  to  do  so ;  with  their  several  proportions  the  de- 
fendant has  nothing  to  do.  Any  compensation  they  may  recover  "will 
belong  to  them  generally,  and  it  is  nothing  to  the  defendant,  how  it  may 
be  divided  among  them.  It  has  also  been  urged,  that  the  words  contained 
in  the  paragraph  are  not  actionable.  I  have  no  hesitation  in  deciding, 
that  to  say  of  any  bankers,  that  they  have  suspended  payment,  is  action- 
able. For  what  can  be  the  meaning  of  such  a  statement,  except  that  they 
are  no  longer  solvent?  Saying  that  a  banker  has  suspended  payment,  is 
saying  that  he  cannot  pay  his  debts.  A  temporary  inability  to  pay  debts 
is  insolvency.  The  charge  of  suspending  payment  is  a  charge  of  insolvency. 
Such  a  statement  will  instantly  bring  all  the  creditors  of  a  banking-house 
upon  it,  and  completely  stop  their  business  by  preventing  any  one  from 
taking  their  bills.  But  here  special  damage  is  stated,  and  I  think  correctly 
stated.  It  has  been  objected,  that  the  sj^ecial  damage  is  not  set  out  with 
sufficient  certainty.  Even  if  that  were  so,  advantage  could  be  taken  of  it 
only  by  a  sjjecial  demurrer.  In  my  opinion,  however,  the  special  damage 
is  cleai'ly  and  distinctly  set  out.  The  plaintiffs  state  that  they  had  a  number 
of  promissory  notes  outstanding  and  in  circulation,  and  that  in  consequence 
of  these  libels  they  were  called  upon  and  forced  and  obliged  to  pay  those 
notes ;  how  or  when  was  not  material,  it  being  sufficient  that  they  declare 
that  they  have  thereby  lost  all  the  benefit  and  advantage  which  would  other- 
wise have  accrued  to  them  in  their  trade  and  business,  from  the  notes  re- 
maining outstanding  and  in  circulation.  The  declaration  goes  even  further  ; 
it  states  that  the  plaintiffs  have  suffered  and  sustained  a  great  loss  in  raising 
and  procuring  sufficient  money  to  pay  and  satisfy  their  several  notes.  It 
appears  to  me,  that  the  declaration  is  unobjectionable,  and  that  the  plaintiffs 
are  entitled  to  judgment." 

'  Haythorn  v.  Lawson,  3  C.  &  P.  196.  [See  Robinson  v.  Marchant,  7 
Q.  B.  918.] 

2  Weller  r.  Baker,  2  Wils.  414,423;  Coryton  v.  Lithebye,  2  Saund.  112, 
115,  and  WilHams's  note  (2),  p.  116. 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  417 

§  259.  In  the  next  place,  as  to  remedies  in  equity  by 
partners  against  third  persons.  It  may  be  stated  as  the 
general  doctrine,  that  the  same  remedies  in  equity  will 
lie  for  the  vindication  of  the  rights,  and  the  redress  of 
the  wrongs  of  the  partnership,  as  ordinarily  belong  to 
private  individuals.^  Thus,  for  example,  if  one  partner 
should  collude  with  a  third  person  to  defraud  the  part- 
nership by  wrongfully  using  the  partnership  name,  or 
negotiating  the  securities,  or  applying  the  property 
thereof  for  improper  purposes,  a  Court  of  Equity  would, 
by  an  injunction,  restrain  him  from  so  doing. ^  So,  if  a 
third  person  should  violate  a  copyright  or  patent  right, 
belonging  to  a  partnership,  an  injunction  would,  in  like 
manner,  lie  to  restrain  him  from  such  illegal  conduct. 
So,  if  a  separate  creditor  of  one  partner  should  know- 
ingly aid  in  the  misapplication  of  the  partnership  funds 
to  the  payment  of  his  own  debts,  a  Court  of  Equity 
would  restrain  him  from  so  aiding  in  such  misconduct ; 
and,  if  he  had  so  improperly  received  the  funds  thereof, 
it  would  compel  him  to  restore  the  same  to  the  partner- 
ship.^ So,  a  Court  of  Equity  will  restrain  a  third  per- 
son by  injunction,  who  is  injuring  the  partnership  by 
vending  an  article  of  trade,  similar  to  that  manufactured 
by  the  partnership,  falsely,  under  the  name  of  the  part- 
nership, and  as  if  manufactured  by  the  same,  and  thus 
misleading  the  public,  and  diverting  the  patronage  and 
custom  from  the  partnership."*  The  same  rule  will  apply 
to  any  other  false  and  wrongful  use  of  the  partnership 
name   and  reputation,  by  deceptive  imitations    of  the 

>  Coll.  on  P.  B.  3,  c.  7,  p.  566,  2d  ed. 

^  Gow  on  P.  c.  2,  §  4,  p.  107-109,  3d  ed. ;  Coll.  on  P.  B.  2,  c.  3,  §  5,  p. 
234,  235,  2d  ed. ;  Hood  v.  Aston,  1  Russ.  412 ;  1  Story,  Eq.  Jur.  §  667,  669 ; 
2  Id.  §  930-935. 

*  Ante,  §  132,  133  ;  Gow  on  P.  c.  2,  §  4,  p.  108  ;  Coll.  on  P.  B.  2,  c.  3, 
§  5,  p.  234,  235,  2d  ed. ;  Jervis  v.  White,  7  Ves.  413. 

*  2  Story,  Eq.  Jur.  §  951. 

27 


418  PARTNERSHIP.  [CHAP.  XII. 

labels,  devices,  or  ornaments  used  by  the  partnership 
upon  their  own  manufactured  cutlery,  or  vehicles,  or 
medicinal  preparations,  or  otherwise  in  the  course  of 
their  business.^  So,  in  like  manner,  an  injunction  will 
lie  for  a  partnership  to  prevent  a  third  person  from 
publishing  a  magazine,  or  other  periodical,  in  their 
names,  after  they  have  ceased  to  have  any  connection 
with  it.^ 

§  260.  These  cases  all  stand  upon  doctrines  equally 
applicable  to  all  persons,  whether  they  are  partners,  or 
private  individuals.  But  there  is  one  case,  which  is  pe- 
culiar to  partnerships,  and  which,  therefore,  requires  a 
distinct  consideration  in  this  place ;  and  that  is,  the  case 
of  an  execution  levied  upon  the  partnership  property 
by  a  creditor,  under  a  judgment  for  a  separate  debt 
against  one  partner.  Where  there  is  a  joint  suit  and 
judgment  against  all  the  partners  for  a  partnership  debt, 
there  is  no  doubt,  at  the  common  law,  that  the  execu- 
tion issuing  thereon  may  be  levied  upon,  and  satisfaction 
had,  either  out  of  the  partnership  effects,  or  out  of  the 
separate  effects  of  either  of  the  partners  (exactly,  as  in 
the  case  of  other  joint  debtors,  not  partners) ;  ^  and  if 
one  is  compelled  to  pay  or  satisfy  the  whole  debt,  his 
remedy  for  contribution  therefor  lies  exclusively  in 
equity.'* 

§  261.  But  the  question,  as  to  the  right  of  ^seizure  of 
partnership  property  for  the  satisfaction  and  discharge 

'  2  Story,  Eq.  Jur.  §  951  ;  Motley  v.  Downman,  3  Myl.  &  C.  1,  14,  15  ; 
Millington  v.  Fox,  3  Myl.  &  C.  338  ;  Knott  v.  Morgan,  2  Keen,  213,  219  ; 
{§100.} 

2  2  Story,  Eq.  Jur.  §  951  ;  Hogg  v.  Kirby,  8  Ves.  215. 

3  Ante,  §  179,  189,  264;  Coll.  on  P.  B,  3,  c.  6,  §  10,  p.  557;  Ex  patie 
Ruffin,  6  Ves.  119,  126;  Herries  v.  Jamleson,  5  T.  R.  553,  554;  Abbot  v. 
Smith,  2  W.  Bl.  947;  Jones  v.  Clayton,  4  M.  &  S.  349;  Dutton  v.  Mor- 
rison, 17  Ves.  193,  205,  206.    {See  Randolph  v.  Daly,  16  IsT.  J.  Ch.  313.} 

••  Ibid.     {See  §  263,  note.} 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  419 

of  the  separate  debt  of  one  of  the  partners,  is  a  matter 
of  a  more  complicated  nature,  and  involves  other  con- 
flicting rights  and  equities  of  the  other  partners.  It 
seems  clear,  at  the  common  law,  that  the  sheriff",  upon 
an  execution  upon  a  judgment  against  one  partner  for 
his  separate  debt,  may  seize  in  execution  the  tangible 
property  of  the  partnership,^  In  such  case,  it  has  been 
said,  that  he  should  seize  the  whole  or  entirety  of  the 
goods,  and  not  merely  an  undivided  moiety  or  propor- 
tion thereof ;  for  if  he  should  seize  only  the  moiety,  or 
other  proportion,  the  other  partners  would  be  entitled 
to  their  moiety  or  other  proportion  thereof.^  It  would, 
perhaps,  be  more  accurate  (at  least  according  to  the 
modern  notions  on  this  subject)  to  say,  that  the  sheriff" 
may  seize,  and  should  seize,  the  interest  of  the  separate 
partner  in  the  property  of  the  partnership  ;  and  that, 
and  that  alone,  he  is  at  liberty  to  sell  upon  the  execu- 

'  [But  qucere,  whether  the  sheriff  can  take  such  goods  into  his  possession, 
to  the  exclusion  of  the  other  2>ai'tner.  See  Hill  v.  WIggin,  11  Fost.  292.] 
{It  is  undoubtedly  the  general  law  throughout  the  United  States  that  the 
sheriff  can  take  possession  of  the  goods  on  an  execution,  or  on  an  attach- 
ment on  mesne  process.  1  Am.  Lead.  Cas.  473-478,  4th  ed. ;  Reed  v.  Howard,  2 
Met.  36  ;  Read  y.  Shepardson,  2  Vt.  120 ;  Whitney  v.  Ladd,  10  Vt.  165  ;  Phillips 
V.  Cook,  24  Wend.  389  ;  Davis  v.  White,  Houst.  228  ;  Newhall  v.  Bucking- 
ham, 14  111.  405  ;  White  v.  Jones,  38  111.  159  ;  Atwood  v.  Meredith,  37  Miss. 
635  ;  Andrews  v.  Keith,  34  Ala.  722.  See  Burnell  v.  Hunt,  5  Jur.  650,  651. 
In  New  Hampshire,  however,  it  is  held  otherwise.  Gibson  v.  Stevens,  7  N.  H. 
352 ;  Morrison  v.  Blodgett,  8  N.  H.  238,  251  ;  Dow  v.  Sayward,  14  N.  H.  9  ; 
Treadwell  v.  Brown,  43  N.  H.  290.  In  Pennsylvania  the  point  seems  not  to 
have  been  directly  decided,  but  the  dicta  in  Deal  v.  Bogue,  20  Penn.  St. 
228,  and  Smith  v.  Emerson,  43  Penn.  St.  456,  render  it  doubtful  whether 
the  general  rule  would  be  there  followed.  See  Reinheimer  v.  Horaingway,  35 
Penn.  St.  432.  In  the  matter  of  Smith,  16  Johns.  102,  it  was  held,  that  the  part- 
nership property  could  not  be  taken  on  a  domestic  attachment  in  a  suit 
against  one  partner.  But  see  contra  Burgess  v.  Atkins,  5  Blackf.  337  ;  Reed 
V.  Howard,  2  Met.  36;  Read  v.  Shepardson,  2  Vt.  120;  Whitney  v.  Ladd, 
10  Vt.    165.     See  §  263,  note.} 

=  Heydon  v.  Heydon,  1  Salk.  392 ;  Chapman  v.  Koops,  3  B.  &  P.  289,  290  ; 
Jacky  V.  Butler,  2  Ld.  Raym.  871  ;  Skipp  v.  Harwood,  2  Swans.  586,  587; 
Dutton  V.  Morrison,  17  Ves.  193,  205,  206. 


420  PARTNERSHIP.  [CHAP.  XII. 

tion.^  What  that  interest  is,  or  may  be,  it  is  impossible 
to  ascertain  in  many  cases,  until  a  final  adjustment  of 
all  the  partnership  concerns."  Yet,  Courts  of  Law  have 
said,  that  the  sheriff  may  go  on  to  sell  that  interest  un- 
der the  execution,  however  inconvenient  it  may  be,  and 
the  purchaser  at  the  sale  must  be  content  to  take  such 
an  interest  therein,  as  a  tenant  in  common  with  the 
other  partners,  as  the  partner  himself  had  therein.^  For 
in  every  such  case,  the  other  partners  have  a  lien  upon 
the  partnership  property,  as  well  for  the  debts  due  by 
the  firm,  as  for  their  own  shares  and  proportions  thereof; 
and  the  judgment  creditor,  and  the  purchaser  under  him, 
must  take  it,  subject  to  all  such  claims  and  liens."* 

»  Coll.  on  P.  B.  3,  c.  6,  §  10,  p.  559-561,  2d  ed. ;  Chapman  v.  Koops,  3  B. 
&  P.  289,  290  ;  Dutton  v.  Morrison,  1 7  Ves.  193,  206.  In  the  matter  of  Wait, 
1  Jac.  &  W.  605,  608;  Rice  v.  Austin,  17  Mass.  197,  206,  207;  Wilson  i\ 
Conine,  2  Johns.  280;  [Filley  v.  Phelps,  18  Conn.  294;  Walsh  v.  Adams,  3 
Denio,  125;  Sutcliffe  v.  Dohrman,  18  Ohio,  181  ;  Deal  r.  Bogue,  20  Penn 
St.  228.] 

^  1  Story,  Eq.  Jur.  §  667;  Skipp  r.  Harwood,  2  Swans.  586;  NicoU  v. 
Mumford,  4  Johns.  Ch.  522  ;  s.  C.  20  Johns.  611. 

^  Coll.  on  P.  B.  3,  c.  6,  §  10,  p.  559-562,  2d  ed. ;  Fox  v.  Hanbury,  Cowp. 
445  ;  Skipp  v.  Harwood,  cited  in  note  to  Burton  o.  Greene,  3  C.  &  P.  309  ; 
[Haskins  v.  Everett,  4  Sneed,  531]  ;  Taylor  v.  Fields,  4  Ves.  396  ;  Pope  v. 
Haman,  Comb.  217 ;  Ex  parte  Hamper,  17  Ves.  403,  407 ;  The  matter  of 
Smith,  16  Johns.  102,  106,  and  the  Reporters  note ;  Skipp  v.  Harwood,  2 
Swans.  586  ;  s.  c.  under  the  name  of  West  v.  Skip,  1  Ves.  Sr.  239  ;  Id.  456  ; 
Chapman  v.  Koops,  3  B.  &  P.  289  ;  Holmes  v.  Mentze,  4  Ad.  &  E.  127  ;  1 
Story,  Eq.  Jur.  §  677,  678 ;  Allen  v.  Wells,  22  Pick.  450. 

*  This  subject  was  much  considered  in  the  case  of  Taylor  v.  Fields,  4  Ves. 
396.  Lord  Chief  Baron  Macdonald  on  that  occasion,  in  delivering  the  opin- 
ion of  the  Court,  said:  "The  right  of  the  separate  creditor  under  the  exe- 
cution depends  upon  the  interest  each  partner  has  in  the  joint  property. 
With  respect  to  that,  we  are  of  opinion  that  the  corpus  of  the  partnership 
effects  is  joint  property,  and  neither  partner  separately  has  any  thing  in  that 
corpus  ;  but  the  interest  of  each  is  only  his  share  of  what  remains  after  the 
partnership  accounts  are  taken.  In  Skip  v.  Harwood,  1  Ves.  Sr.  239,  by  the 
name  of  West  v.  Skip,  we  see  that  whatever  the  right  of  the  partnership  may 
be,  it  is  not  affected  by  what  may  happen  between  the  individual  partners. 
There  is  a  distinction  between  the  rights  of  the  partners  and  the  rights  of 
the  partnership.     As  between  one  partner  and  the  separate  creditors  of  the 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  421 

§  262.    Strictly,  indeed,  and  properly  speaking,  the 
sale  does  not,  at  least  in  the  view  of  a  Court  of  Equity, 

other,  they  cannot  aiFect  the  joint  stock  any  further  than  that  partner  whose 
creditor  they  are  could  have  affected  it.  In  Fox  v.  Hanbury,  Cowp.  445, 
Lord  Mansfield  was  led  to  the  consideration  of  a  point,  that  bears  much  upon 
this  case  ;  and  adverting  to  the  case  of  Skip  v.  Harwood,  he  states  a  passage 
of  Lord  Hardwicke's  judgment  from  his  own  note  rather  stronger  than  it 
appears  in  the  report :  '  If  a  creditor  of  one  partner  takes  out  execution 
against  the  partnership  effects,  he  can  only  have  the  undivided  share  of  his 
debtor :  and  must  take  it  in  the  same  manner  the  debtor  himself  had  it,  and 
subject  to  the  rights  of  the  other  partner.'  What  is  the  manner  in  which 
the  debtor  himself  had  it?  He  had  that  which  was  undivided,  and  could 
only  be  divided  by  first  delivering  the  effects  from  the  partnership  debts. 
He  who  comes  in  as  his  companion,  as  joint  tenant  with  him,  according  to 
this  doctrine  of  Lord  Hardwicke,  must  take  it  in  the  same  manner  the  debtor 
himself  had  it,  subject  to  the  rights  of  the  other  partners.  Lord  Mansfield 
having  stated  what,  according  to  the  course  of  the  common  law,  as  far  as  it 
respects  trade  between  partners,  is  the  rule,  that  a  creditor  taking  out  exe- 
cution against  a  partner,  is  directly  in  the  place  of  the  pai'tner  debtor,  pro- 
ceeds to  show  that  by  the  same  rule,  where  a  partner  becomes  bankrupt,  the 
assignees  are  put  in  the  place  of  the  partner  in  whose  right  they  come  in, 
and  by  no  means,  as  was  argued  by  Mr.  Plumer,  by  any  rule  arising  out  of 
the  bankrupt  laws ;  for  nothing  is  said  in  any  one  of  those  acts  as  to  the 
creditors  of  a  partnership,  and  the  separate  creditors  of  one  partner ;  but 
they  only  provide  for  the  case  of  mutual  debts,  and  accelerating  a  debt  upon 
a  security  payable  at  a  future  day.  But  the  same  common  law  applied  in 
the  case  where  one  partner  becomes  a  bankrupt,  provides  that  the  assignee 
of  the  bankrupt  shall  be  in  the  same  situation  as  that  in  which  a  creditor 
taking  out  execution  stood  before  those  acts.  This  introduces  all  the  cases 
of  bankruptcy  which  Mr.  Plumer  wished  to  exclude,  as  not  applicable  to  a 
case  in  Avhich  there  was  no  bankruptcy ;  and  this  case  is  to  be  considered  as 
if  no  bankruptcy  had  taken  place,  as  the  execution  was  before  the  bank- 
ruptcy. In  law  there  are  three  relations ;  first,  if  a  person  chooses  for  val- 
uable consideration  to  sell  his  interest  in  the  partnership  trade,  for  it  comes 
to  that ;  or  if  his  next  of  kin  or  executors  take  it  upon  his  death  ;  or  if  a  cred- 
itor takes  it  in  execution,  or  the  assignees  under  a  commission  of  bankrujitcy. 
The  mode  makes  no  diiference.  But  in  all  those  cases  the  application  takes 
place  of  the  rule,  that  the  party  coming  in  the  right  of  the  partner,  comes 
into  nothing  more  than  an  interest  in  the  partnei'ship,  which  cannot  be 
tangible,  cannot  be  made  available,  or  be  delivered,  but  under  an  account 
between  the  partnership  and  the  partner ;  and  it  is  an  item  in  the  account 
that  enough  must  be  left  for  the  partnership  debts.  A  great  deal  has 
been  said  of  the  inconvenience.  What  is  the  inconvenience  ?  It  is  true, 
the  individual  trusted  to  the  partnership  fund  in  his  idea  at  the  time  he 
was  lending  the  money ;  not  that  I  believe  that  is  very  conmion.     But  it 


422  PARTNERSHIP.  [CHAP.  XII. 

transfer  any  part  of  the  joint  property  to  the  purchaser, 
so  as  to  entitle  him  exckisively  to  take  it  or  withhold 

mav  be  dangerous  in  a  thousand  instances  to  have  any  thing  to  do  with  a 
trader ;  as  for  instance,  to  purchase  an  estate ;  for  an  act  of  bankruj^tcy 
may  have  been  committed  five  years  before,  which  will  reach  the  estate. 
But  look  to  the  danger  on  the  other  side ;  one  partner  giving  a  bond,  and 
the  creditors  of  the  partnership  looking  to  the  stock  itself.  It  is  said,  that 
in  this  case  the  joint  creditors  had  done  nothing;  and  this  meritorious 
creditor  has  a  right  to  be  prefeiTcd  on  account  of  his  early  diligence. 
But  what  is  that  to  which  he  is  entitled?  The  estate  of  a  partner  is 
debtor  to  him.  The  question,  therefore,  recurs  to  the  consideration,  what 
it  was  that  partner  had;  for  the  creditor  cannot  be  entitled  to  anymore. 
It  therefore  argues  nothing  to  say,  he  has  the  merit  of  diligence,  till  we 
see  upon  what  that  merit  can  attach.  If  the  partner  himself,  therefore, 
had  nothing  more  than  an  interest  in  the  surplus  beyond  the  debts  of  the 
partnership  upon  a  division,  if  it  turns  out  that  at  common  law  that  is  the 
whole  that  can  be  delivered  to,  or  taken  by,  the  assignee  of  a  partner,  the 
executor,  the  sheriff,  or  the  assignee  under  a  commission  of  bankruptcy, 
all  that  is  delivered  to  the  creditor,  taking  out  the  execution,  is  the  inter- 
est of  the  partner  in  the  condition  and  state  he  had  it ;  and  nothing  was 
due  to  this  partner  separately,  the  partnership  being  insolvent.  The  whole 
property  was  due  to  the  partuersliip  creditors,  and  not  to  either  partner." 
See  also  Dutton  v.  Morrison,  17  Ves.  193,  205,  206.  In  the  very  recent 
case  of  Allen  v.  Wells,  22  Pick.  450,  Mr.  Justice  Dewey,  in  delivering 
the  opinion  of  the  Court,  said :  "  The  conflicting  claims  of  copartnership 
and  separate  creditors  have  been  a  fruitful  source  of  litigation  in  England. 
The  questions  more  usually  have,  arisen  under  the  bankrupt  law,  and  the 
decisions  are  mostly  to  be  found  in  the  Chancery  Reports,  but  not  exclu- 
sively so.  The  great  number  of  cases  in  which  this  question  has  arisen, 
shows  very  clearly,  that  there  could  have  been  at  the  time  no  very  well 
defined  general  principles,  known  and  acknowledged  as  such,  applicable  to 
the  adjustment  of  these  conflicting  rights.  Even  as  regards  the  joint  prop- 
erty of  jjartners,  the  rule  has  varied.  By  the  rules  of  law  as  formerly  held 
in  England,  the  sheriff,  under  an  execution  against  one  of  two  copartners, 
took  the  partnership  effects  and  sold  the  moiety  of  the  debtor,  treating  the 
property  as  if  owned  by  tenants  in  common.  Heydon  v.  Heydon,  1  Salk. 
392;  Jacky  r.  Butler,  2  Ld.  Raym.  871.  But  the  principle  is  now  well 
settled  in  England,  both  at  law  and  in  equity,  that  a  separate  creditor 
can  only  take  and  sell  the  interest  of  the  debtor  in  the  partnership  prop- 
erty, being  his  share  upon  a  division  of  the  surplus,  after  discharging 
all  demands  upon  the  copartnership.  Fox  v.  Hanbury,  Cowp.  445 ;  Taylor 
V.  Fields,  4  Ves.  396.  The  same  fluctuation  in  the  rule,  as  to  partnership 
property,  has  existed  in  the  United  States.  The  rule  of  selling  the  moie- 
ty of  the  separate  debtor  in  the  partnership  property  on  an  execution  for 
his  private  debts,  formerly  prevailed  in  several  of  the  States  of  the  Union. 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  423 

it  from  the  other  partners ;  for  that  would  be  to  place 
him  in  a  better  situation  than  the  execution  partner 
himself,  in  relation  to  the  property.^  But  it  gives  him 
a  right  to  a  bill  in  equity,  calling  for  an  account  and 
settlement  of  the  partnership  concerns,  and  thus  to  en- 
title himself  to  that  interest  in  the  property,  which  upon 
the  final  adjustment  and  settlement  of  the  partnership 
concerns,  shall  be  ascertained  to  belong  to  the  execution 
partner ;  and  nothing  more.^  How  utterly  inadequate 
a  Court  of  Law  is  to  furnish  suitable  means  for  taking 
such  an  account,  needs  scarcely  to  be  suggested ;  and, 
indeed,  the  very  difficulty  of  ascertaining  what  interest 
can  be  conveyed  to  the  purchaser  before  such  an  ad- 
justment and  settlement  are  made,  has  induced  very 
learned  minds  to  doubt  whether  a  Court  of  Law  is 
competent  to  order  any  sale,  before  the  exact  amount 


But  the  latei-  decisions  have  changed  the  rule,  and  that  now  more  gener- 
ally adopted  is  in  accordance  with  the  one  prevailing  in  England,  and 
which  has  been  already  mentioned.  The  State  of  Vermont  still  adheres 
to  the  doctrine,  that  partnership  creditors  have  no  priority  over  a  creditor 
of  one  of  the  partners,  as  to  the  partnership  effects.  Reed  v.  Shepard- 
son,  2  Vt.  120.  The  rule  in  Massachusetts,  giving  a  priority  to  the  part- 
nership creditor  in  such  cases,  was  settled  in  the  case  of  Pierce  v.  Jack- 
son, 6  Mass.  242,  and  has  been  uniformly  followed  since.  The  effect  of  the 
rule  that  the  only  attachable  interest  of  one  of  the  copartners  by  a  sepa- 
rate creditor,  was  the  surplus  of  the  joint  estate  which  might  remain  after 
discharging  all  joint  demands  upon  it,  necessarily  was  to  create  a  preference 
in  favor  of  the  partnership  creditoi-s  in  the  application  of  the  partner- 
ship property ;  and  this  effect  would  be  produced,  although  the  original 
purpose  of  the  rule  might  have  been  the  securing  the  rights  of  the 
several  copartners,  as  well  as  those  of  their  joint  creditors.  Whatever  may 
have  been  the  object  of  the  rule,  the  rule  itself  is  now  to  be  considered  as 
well  settled,  as  to  the  appropriation  of  the  partnership  effects." 

'  1  Story,  Eq.  Jur.  §  667.  But  see  Burrall  v.  Acker,  23  Wend.  606.  [And 
if  he  excludes  the  other  partners  from  possession,  they  may  have  an  action 
against  him.  Newman  v.  Bean,  1  Fost.  93  ;  Page  v.  Carpenter,  ION.  H. 
77;  Morrison  v.  Blodgett,  8  N.  H.  238,  245.] 

*  1  Story,  Eq.  Jur.  §  677  ;  Chapman  r.  Koops,  3  B.  &  P.  289,  290,  291; 
Button  I'.  Morrison,  17  Ves.  193,  205,  206. 


424  PARTNERSHIP.  [CHAP.  XII. 

of  the  interest   of  the   partner  therein  is   thus  ascer- 
tained.^ 

§  263.  In  cases  of  this  sort,  therefore,  the  real  posi- 
tion of  the  parties,  relatively  to  each  other,  seems  to 
be  this.      The  partnership   property  may  be  taken  in 

^  Waters  v.  Taylor,  2  Ves.  &  B.  299,  301  ;  Dutton  v.  Morrison,  17  Ves.  193, 
206,  207  ;  In  the  matter  of  Wait,  1  Jac.  &  W.  605,  608.  — In  the  case  of 
AVaters  v.  Taylor,  Lord  Eldon  said  :  "  If  the  Courts  of  Law  have  followed 
Courts  of  Equity  in  giving  execution  against  partnership  effects,  I  desire  to  have 
it  understood  that  they  do  not  appear  to  me  to  adhere  to  the  principle,  when 
they  suppose  that  the  interest  can  be  sold  before  it  has  been  ascertained  what 
is  the  subject  of  sale  and  purchase.  According  to  the  old  law,  I  mean 
before  Lord  Mansfield's  time,  the  sheriff,  under  an  execution  against  partner- 
ship effects,  took  the  undivided  share  of  the  debtor  without  reference  to  the 
partnership  account ;  but  a  Court  of  Equity  would  have  set  that  right  by 
taking  the  account,  and  ascertaining  what  the  sheriff  ought  to  have  sold. 
The  Courts  of  Law,  however,  have  now  repeatedly  laid  down  that  they  will 
sell  the  actual  interest  of  the  partner,  professing  to  execute  the  equities  between 
the  parties ;  but  forgetting  that  a  Court  of  Equity  ascertained,  previously, 
what  was  to  be  sold.  LIow  could  a  Court  of  Law  ascertain  what  was  the  in- 
terest to  be  sold,  and  what  the  equities,  depending  upon  an  account  of  all  the 
concerns  of  the  partners  for  years  ?  "  And  again.  In  the  matter  of  Wait,  1  Jac. 
&  W.  608,  he  said:  "  In  my  long  course  of  practice,  1  have  never  been  able 
to  reconcile  all  the  decisions  which  have  taken  place  on  partnership  property 
with  resjject  to  joint  and  separate  estate ;  nor  have  I  ever  been  able  very 
clearly  to  see  my  way  in  the  application  of  the  doctrine  which  has  been 
held  in  some  of  the  late  cases  on  this  subject.  I  conceive  originally  the  law 
was,  that  if  there  was  a  separate  creditor  of  a  partner,  he  might  lay  hold  of 
any  chattels  belonging  to  the  partnershiji,  and  take  a  moiety  of  them,  or 
whatever  other  proportion  that  partner  might  be  entitled  to  in  the  effects 
of  the  partnership.  But  at  law,  somehow  or  other,  they  now  contrive  to 
take  an  account  which  ascertains  what  is  the  interest  of  the  debtor  in  the 
effects  taken  in  execution  ;  and  when  you  put  the  question,  what  is  that 
interest,  nothing  can  be  more  clear  than  that  it  is  that  which  would  result  to 
him  when  all  the  accounts  of  the  partnership  were  taken.  This  equity,  which 
has  been  transferred  into  the  proceedings  of  a  Court  of  Law,  I  apprehend, 
subsisted  here  long  before ;  a  separate  creditor  applying  for  satisfaction  of 
his  debt  out  of  the  jjartnership  estate  by  means  of  an  equitable  execution, 
must  have  taken  it  upon  equitable  terms.  There  has  been  a  great  deal  of 
reasoning  as  to  the  rights  of  partners,  with  reference  to  the  execution  of  a 
separate  creditor  ;  but  it  always  appeared  to  me  that  the  interest  of  the  in- 
dividual partner  was  all  which  a  creditor  of  that  individual  could  take,  and 
that  he  must  take  it  subject  to  all  the  partnership  dealings." 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  425 

execution  upon  a  separate  judgment  and  execution 
against  one  partner  ;  but  the  sheriff  can  only  seize  and 
sell  the  interest  and  right  of  the  judgment  partner 
therein,  subject  to  the  prior  rights  and  liens  of  the 
other  partners  and  the  joint  creditors  therein.^  By 
such  seizure  the  sheriff  acquires  a  special  property  in 
the  goods  seized ;  ^  and  the  judgment  creditor  himself 
may,  and  the  sheriff,  also,  with  the  consent  of  the  judg- 
ment creditor,  may,  file  a  bill  against  the  other  partners 
for  the  ascertainment  of  the  quantity  of  that  interest, 
before  any  sale  is  actually  made  under  the  execution.^ 
The  judgment  creditor,  however,  is  not  bound,  if  he 
does  not  choose,  to  wait  until  such  interest  is  so  ascer- 
tained; but  he  may  require  the  sheriff  immediately  to 
proceed  to  a  sale,  which  order  the  sheriff  is  bound  by 
law  to  obey.'^  In  the  event  of  a  sale,  the  purchaser 
at  the  sale  is  substituted  to  the  rights  of  the  execution 
partner,  quoad  the  property  sold,  and  becomes  a  tenant 
m  common  thereof;  and  he  may  file  a  bill,  or  a  bill 
may  be  filed  against  him  by  the  other  partners,  to  as- 
certain the  quantity  of  interest,  which  he  has  acquired 
by  the  sale.^ 

'  Taylor  v.  Fields,  4  Ves.  396;  ante,  §  261,  262;  Skipp  v.  Harwood,  2 
Swans.  586,  587;  Holmes  v.  Mentze,  4  Ad.  &  E.  127;  Hai-vey  i'.  Crickett, 
5  M.  &  S.  336  ;  Button  v.  Morrison,  17  Ves.  193,  205,  206. 

*  Wilbraham  v.  Snow,  2  Saund.  47,  and  Williams's  notes,  Ibid. 
'   {Nixon  V.  Nasli,  12  Ohio  St.  647.} 

*  Parker  v.  Pistor,  3  B.  &  P.  288;  Chapman  v.  Koops,  3  B.  &  P.  289, 
390 ;  Holmes  v.  Mentze,  4  Ad.  &  E.  127 ;  [and  he  is  not  liable  to  the  other 
2)artners  for  so  selling.     McPherson  v.  Pemberton,  1  Jones,  (N.  C.)  378.] 

^  Chapman  v.  Koops,  3  B.  &  P.  289,  290;  Ex  parte  Hamper,  17  Ves.  403, 
407;  Bevan  r.  Lewis,  1  Sim.376;  Skipp  ^^  Harwood,  2  Swans.  586,587;  Taylor 
V.  Fields,  4  Ves.  396  ;  Barker  v.  Goodair,  11  Ves.  78,  85  ;  Gow  on  P.  c.  3,  §  2, 
p.  144,  3d  ed. ;  1  Madd.  Ch.  Pr.  131  ;  Eden  on  Injunct.  31 ;  Coll.  on  P.  B.  3, 
c.  6,§  10,  p.  557-565,  2d  ed.  [And  if  he  sell  the  entire  goods,  he  is  liable  to 
a  subse(|uent  trustee  of  the  firm  for  a  moiety  of  the  goods  so  sold.  Latham 
r.  Simmons,  3  Jones,  (N.  C.)  27.]  {See  Moore  v.  Pennell,  52  (Me.  162; 
Deal  V.  Bogue,  20  Penn.  St.  228.     The  other  partners  may  purchase  at  the 


426  PARTNERSHIP.  [CHAP.  XII. 

§  264.  In  cases  of  the  seizure  of  the  jomt  property 
for  the  separate  debt  of  one  of  the  partners,  a  question 

sherifi''s  sale ;  hut  their  conduct  must  be  perfectly  fair,  or  they  will  be  held 
as  trustees  for  the  partner  whose  share  is  sold.  Perens  v.  Johnson,  3  Sm.  & 
G.  419.  See  Evans  i'.  Gibson,  29  Mo.  223.  The  purchaser  has  no  right  to 
exclusive  possession.  Andrews  v.  Keith,  34  Ala.  722.  Nor  can  he  maintain 
ejectment  for  his  interest  in  the  real  estate.  Clagett  v.  Kilbourne,  1  Black. 
346.  In  Reinheimer  v.  Hemingway,  35  Penn.  St.  432,  it  was  held,  that,  as 
against  the  purchaser  of  a  partner's  share,  the  other  partners  were  entitled  to 
exclusive  possession  of  the  partnership  property.  See  §  261,  note.}  In 
Massachusetts,  it  has  been  held,  that  an  attachment  of  j^artnershij^  goods,  on 
a  suit  against  one  partner,  is  not  valid  against  a  subsequent  attachment 
of  the  same  goods  by  a  creditor  of  the  partnership.  Pierce  v.  Jackson, 
6  Mass.  242.  On  this  occasion,  Mr.  Chief  Justice  Parsons  said:  "  At  com- 
mon law,  a  partnership  stock  belongs  to  the  partnership,  and  one  partner  has 
no  interest  in  it  but  his  share  of  what  is  remaining  after  all  the  partnership 
debts  are  paid,  he  also  accounting  for  Avhat  he  may  owe  to  the  firm.  Conse- 
quently all  the  debts  due  from  the  joint  fund  must  first  be  discharged,  before 
any  partner  can  appropriate  any  part  of  it  to  his  own  use,  or  pay  any  of 
his  private  debts ;  and  a  creditor  to  one  of  the  partners  cannot  claim  any 
interest,  but  what  belongs  to  his  debtor,  whether  his  claim  be  founded  on 
any  contract  made  with  his  debtor,  or  on  a  seizing  of  the  goods  on  execution. 
There  are  several  cases  by  which  these  principles,  so  reasonable  and  equitable, 
are  recognized  and  confirmed."  The  same  doctrine  prevails  in  New  Hampshire. 
Tappan  v.  Blaisdell,  5  N.  H.  190.  [See  Morton  v.  Blodgett,  8  N.  H.  238  ; 
Thompson  v.  Lewis,  34  Me.  167.]  The  doctrine,  however,  has  not  been 
applied  to  cases  of  mei'e  dormant  partners,  against  the  creditors  of  the 
ostensible  partners.  Lord  v.  Baldwin,  6  Pick.  348  ;  French  v.  Chase,  6 
Greenl.  166  ;  [Van  Valen  v.  Russell,  13  Barb.  590.]  See,  also,  Church  v. 
Knox,  2  Conn.  514  ;  Brewster  v.  Hammet,  4  Conn.  540  ;  Barber  v.  Hartford 
Bank,  9  Conn.  407;  Doner  v.  Stauff'er,  1  Penn.  198;  Knox  v.  Summers,  4 
Yeates,  477.  Whether  the  like  priority  would  be  allowed  at  law,  in  favor  of 
an  execution  by  a  joint  creditor,  against  the  execution  of  a  separate  creditor 
of  one  partner  in  England,  does  not  appear  to  have  been  made  a  question  for 
argument.  But  it  is  pi-obably  owing  to  the  fact,  that,  at  all  events,  in  equity 
the  priority  would  be  sustained,  where  the  partnership  is  insolvent,  in  a 
proper  bill  filed  for  the  purpose.  Could  such  a  bill  be  filed  by  the  joint 
creditor  ?  Or,  should  his  rights  be  worked  out  through  the  equities  of  the 
other  partners  ?  See  1  Story,  Eq.  Jur.  §  675  ;  ante,  §  97  ;  Ex  parte  Ruffin, 
6  Ves.  1 1 9, 1 26,  1 27  ;  Ex  parte  Williams,  1 1  Ves.  3,  5.  j  The  law  on  the  post- 
ponement of  executions  against  separate  partners  to  those  against  the  partner- 
ship is  treated  in  a  very  clear  and  original  method  in  2  Lead.  Cas.  in  Eq.  336, 
3d  Am.  ed.  "  It  is  thoroughly  well  settled,  that  while  a  sale  under  an  ex- 
ecution ibr  the  sejjarate  debt  of  a  partner,  will  only  pass  his  interest  in  the 
property,  subject  to  the  lien  of  his  copartners  and  their  equitable  i-ight  to  re- 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  427 

has  arisen,  whether  a  Court  of  Equity  ought  to  inter- 
fere, upon  a  bill  for  an  account  of  the  partnership,  to 

quire  that  all  the  property  of  the  partnership  shall  be  applied,  in  the  first  in- 
stance, to  the  payment  of  its  debts;  Christian  v.  ElHs,  1  Gratt.  396  ;  Renton  v 
Chaplain,  1  Stock.  62  ;  In  the  matter  of  Smith,  16  Johns.  102  ;  NicoU  v.  Mum- 
ford,  4  Johns.  Ch.  522  ;  Holmes  v.  Mentze,  4  Ad.  &  E.  127  ;  Garbett  v.  Veale, 
5  Q.  B.  408 ;  Johnson  v.  Evans,  7  Man.  &  G.  240  ;  1  Am.  Lead.  Cas.  473, 4th  ed. ; 
an  execution  issued  for  a  joint  debt,  will  bind  both  the  legal  and  equitable  inter- 
rest  of  all  the  partners,  and,  consequently  confer  all  the  right  and  title  of  the 
firm  on  the  purchaser,  free  from  all  claims,  either  of  the  partnership,  or  of 
the  individual  partners.  Hence,  when  a  levy  for  a  separate  debt  is  followed, 
before  a  sale,  by  an  execution  for  the  debt  of  the  firm,  an  apparent  conflict 
arises  between  two  legal  mandates,  one  of  which  binds  the  whole  right  and 
title  of  all  the  partners  against  whom  it  is  issued,  while  the  other  has  a  prior 
lien  or  hold  on  the  separate  share  or  interest  of  one.  The  proper  course, 
under  these  circumstances,  undoubtedly  is  to  sell  under  each  writ  separately, 
and  without  regard  to  the  existence  of  the  other ;  when  the  purchaser  under 
the  first  will  become  a  tenant  in  common  with  the  other  partners  at  law,  and 
be  subject  to  a  lien  for  the  partnership  debts  and  to  an  account  in  equity ; 
while  those  who  buy  under  the  second,  will  acquire  the  equities  of  the  firm, 
as  well  as,  and  in  addition  to,  the  separate  shares  or  interests  of  the  partners, 
with  the  exception  of  the  share  of  the  partner  against  whom  the  first  writ 
issued.  The  extent  and  value  of  the  interests  thus  acquired,  may  obviously 
vary  with  the  circumstances  of  each  case  in  which  the  question  arises  ;  but  it 
would  seem  plain,  that  the  right  of  the  purchaser  under  the  writ  of  the  sepa- 
rate creditor,  must  extend  as  far  as  that  of  the  partner  for  whose  debt  it  issued, 
and  cannot  be  a  nullity  unless  the  firm  is  insolvent,  or  the  relation  between 
its  members  is  such  that  the  whole  of  the  assets  would  be  appropriated  by 
equity  to  the  other  partners.  Reed  v.  Shepardson,  2  Vt.  120.  For  although 
the  interest  of  the  separate  creditor  is  the  interest  of  the  partner  in  the  state 
and  condition  in  which  the  partner  has  it,  and  is,  consequently,  worth  nothing 
unless  the  partnership  assets  are  sufficient  for  the  payment  of  its  debts  ;  Tay- 
lor V.  Fields,  4  Ves.  396  ;  Commercial  Bank  f.  Wilkins,  9  Greenl.  28 ;  yet,  for 
the  same  reason,  it  must  necessarily  have  a  real  value,  when  the  firm  is  solvent, 
and  the  partner  is  not  indebted  to  the  firm.  Snodgrass' Appeal,  13  Penn. 
St.  471,  475.  The  sheriff  should,  therefore,  as  already  stated,  unless  there  is 
something  more  to  the  contrary  than  the  fjict  that  a  levy  for  a  separate  debt 
has  been  followed  by  a  joint  execution,  proceed  separately  to  a  sale  under 
bothwrits,  in  the  order  of  time  in  which  he  received  them,  and  leave  the 
rights  of  the  partners  to  be  decided  subsequently  by  equity.  But  although 
this  course  is  consistent  with  the  legal  rights  of  the  purchaser  under  the  separate 
writ,  and  even  with  principle  (Moody  v.  Payne,  2  Johns.  Ch.  548),  and  would 
seem  to  be  that  taken  in  England,  it  is  attended  with  some  inconveniences  in 
practice,  and  among  others,  with  that  of  making  the  extent  of  the  interest 
exposed  for  sale  depend  on  the  solvency  of  the  partnership ;  and  the  state 


428  PARTNERSHIP.  [cHAP.  XII. 

restrain  the  sheriff  from  a  sale,  or  the  vendee  of  the 
sheriff  from  an  alienation  of  the  property  seized,  until 

of  the  accounts  between  the  partners,  in  manifest  derogation  of  the  certainty 
■which,  as  Lord  Eldon  observed  in  Waters  t;.  Taylor,  2  Ves.  &  B.  299,  should 
characterize  every  sale,  especially  when  made  by  the  law  or  by  virtue  of  le- 
gal 25rocess.  The  proper  remedy  or  preventive  under  these  circumstances, 
lies  in  a  levy  by  the  joint  creditors,  either  before  or  after  the  sale,  followed 
by  an  appeal  for  aid  to  equity,  which  will  give  the  complainants  the  full  ben- 
efit of  the  equity  of  the  partners,  either  by  enjoining  the  sale,  under  the  sep- 
ai'ate  execution,  or  by  compelling  the  purchaser  to  submit  to  the  result  of  an 
account  between  the  partners,  and  applying  the  property  to  the  payment  of 
the  partnership  debts,  if  necessary  for  their  liquidation.  Witter  u.  Richards,  10 
Conn.  37;  Washburn  «.  Bank  of  Bellows  Falls,  19  Vt.  278;  Shedd  v.  Wil- 
son, 27  Vt.  478.  But  as  such  a  bill  must  be  founded  on  an  allegation  of  the 
insolvency  of  the  partnership,  and  cannot  reach  a  final  decision  until  that  al- 
legation has  been  substantiated  by  proof,  it  may  necessarily  lead  to  a  long 
and  involved  litigation,  and  prove  of  little  benefit  in  fact,  however  perfect 
in  theory.  A  different  view  has  accordingly  been  taken  in  many  of  the 
States  of  the  Union,  and  a  levy  for  a  debt  due  by  the  partnership,  held  to 
relate  back  to  the  equity  of  the  partners,  and  thus  obtain  a  priority  over  an- 
terior executions  for  the  separate  debts  of  the  partners.  '  A  sale  made  under 
these  circumstances,  by  virtue  of  the  joint  writ,  consequently  confers  an  abso- 
lute title  on  the  purchaser,  and  the  proceeds  will  be  applied,  in  the  first  m- 
stance,  to  the  payment  of  the  joint  debts,  to  the  exclusion  of  the  separate 
creditors,  unless  there  is  more  than  enough  to  satisfy  the  others.  Pierce  v. 
Jackson,  6  Mass.  242 ;  Morrison  v.  Blodgett,  8  N.  H.  250;  Coover's  Appeal, 
29  Penn.  St.  9  ;  Jarvis?;.  Brooks,  3  Foster,  136, 146  ;  Benson  v.  Ela,  35  N.  H. 
402;  Tappan  w.  Blaisdell,  5  N.  H.  190;  Crane  v.  French,  1  Wend.  311; 
Dunham  v.  Murdock,  2  Id.  558  ;  Commercial  Bank  v.  Wilkins,  9  Greenl.  28  ; 
Douglas  V.  Winslow,  20  Me.  89  ;  Trowbridge  v.  Cushman,  24  Pick.  310. 
The  same  view  was  taken,  under  somewhat  different  circumstances,  in 
Lancaster  Bank  v.  Myley,  13  Penn.  St.  544,  and  a  mortgage  of  the  real  es- 
tate of  a  partnership  by  the  firm,  held  entitled  to  the  whole  of  the  proceeds 
of  the  land,  in  opposition  to  a  prior  judgment  for  the  sej^ai'ate  debts  of  one 
of  the  partners.  In  some  of  these  cases,  the  partnership  was  proved  or  con- 
ceded to  be  insolvent,  and  a  sufficient  equitable  ground,  consequently,  laid  for 
treating  the  levy  for  the  separate  debt  as  a  nullity,  and  awarding  the  whole  of 
the  pi'oceeds  to  the  joint  creditor.  Pierce  v.  Jackson ;  Commercial  Bank 
V.  Wilkins  ;  Douglas  v.  Winslow ;  but  there  are  others  in  which  this  ingre- 
dient was  wholly  wanting ;  Crane  v.  French  ;  Dunham  v.  Murdock  ;  Morri- 
son V.  Blodgett ;  Trowbridge  v.  Cushman ;  Coover's  Appeal ;  and  which 
seem  to  have  been  based  on  the  principle,  that  a  partner  has  no  right  or 
title  to  any  specific  portion  of  the  partnership  assets,  and  only  a  right  to  what 
may  remain  after  the  debts  of  the  firm  and  the  demands  of  his  partners  are 
satisfied;  Gibson  v.  Stevens,  7  N.  H.   352;  Lovejoy  v.  Bowers,  11  Id.  404; 


CHAP.  XII.]       REMEDIES    AGAINST    THIRD    PERSONS.  429 

the  account  is  taken,  and  the  share  of  the  partner  is 
ascertained.     Mr.  Chancellor  Kent  has  decided,  that  an 

Deal  V.  Bogue,  20  Penn.  St.  228  ;  and  that  the  claims  of  the  separate  credi- 
tors cannot  rise  higher  in  this  respect  than  those  of  the  partners ;  Morrison 
V.  Blodgett.  But  although  this  may  be  true  as  a  princij^le  of  equity,  it  is  not 
less  true  that  a  partner  is  legally  entitled  to  the  custody  and  possession  of  the 
partnershijT  assets  as  a  tenant  in  common  as  a  means  of  securing  and  pro- 
tecting his  equitable  or  resulting  interest  in  the  partnership,  and  that  neither 
he,  nor  those  who  claim  under  him  as  creditors,  can  be  deprived  of  this  right, 
without  a  sacrifice  of  justice  as  well  as  of  technical  principle.  Hence,  any 
course  of  decision,  which  treats  a  separate  execution  as  invalidated  or  super- 
seded by  a  subsequent  levy  under  a  joint  writ,  without  proof  of  the  insolven- 
cy of  the  firm,  is  unquestionably  a  departure  not  only  from  the  course  of  the 
common  law,  but  from  equity  ;  the  right  of  the  separate  creditors  to  obtain 
satisfaction  out  of  the  share  of  their  debtor  in  the  property  of  the  firm,  being 
equally  valid  under  both  systems,  with  that  of  the  joint  creditors  to  the  joint 
or  collective  title  of  the  partners;  and  the  priority  of  the  joint  creditors  a 
mere  right  to  a  remedy,  and  liable  to  be  defeated  altogether,  by  the  superior 
diligence  of  the  separate  creditors,  unless  asserted  in  due  season  ;  Russ  v.  Fay, 
29  Vt.  381;  Reed  v.  Shepardson,  2  Vt.  120;  Haskins  v.  Everett,  4  Sneed, 
531 ;  Doner  v.  Stautfer,  1  Penn.  198  ;  Snodgrass'  Appeal,  13  Penn.  St.  470.  It 
has  accordingly  been  held,  in  a  number  of  instances,  that  the  legal  right  of 
the  separate  creditors  to  proceed  against  the  joint  assets  is  indubitable,  and 
will  not  be  restrained  by  equity  unless  some  specific  cause  is  shown  why  it 
should  not  be  exercised  ;  Cammack  v.  Johnson,  1  Green,  Ch.  163;  Moody  w. 
Payne,  2  Johns.  Ch.  548 :  even  when  the  partnership  is  insolvent,  and  when  a 
sale  of  the  share  or  interest  of  the  partner  must,  consequently,  be  mere  form, 
and  will  pass  no  beneficial  interest.  Russ  v.  Fay,  29  Vt.  381.  The  better 
opinion  would,  however,  seem  to  be,  that  insolvency  constitutes  a  sufKcient 
ground  for  an  injunction  in  favor  of  the  partners,  or  of  joint  creditors  whose 
rights  have  been  perfected  by  a  judgment  and  levy,  to  prevent  the  sheriff 
from  proceeding  to  a  sale  on  an  execution  issued  by  a  separate  creditor,  which 
will  confer  no  real  right  on  the  buyer,  and  consequently  ought  not,  as  it  would 
seem,  to  be  made  by  the  law.  Witter  t).  Richards,  10  Conn.  37  ;  1  Story,  Eq. 
Jur.  678  ;  Skipp  v.  Harwood,  2  Swans.  586  ;  1  Ves.  Sr.  239  ;  Washburn  v.  Bank 
of  Bellows  Falls,  19  Vt.  278  ;  Sheddu.  Wilson,  27  Vt.478.  But  the  American 
cases  generally,  as  we  have  seen,  cut  the  knot  as  too  tedious  to  unloose,  and 
postpone  the  separate  creditors  to  the  joint,  whenever  executions  issued  by  both 
come  in  conflict,  without  other  proof  of  the  insolvency  of  the  firm,  or  that  there 
will  be  no  surplus  left  for  the  separate  creditor  on  a  settlement  of  tlie  partner- 
ship accounts,  than  the  existence  of  the  executions  themselves,  which  may,  per- 
haps, be  regarded  as  prima  facie  evidence  of  the  inadequacy  of  the  partnership 
assets  to  satisfy  all  tlie  demands  against  them.  Tillinghast  v.  Champlin,  4  K.  I. 
173, 190."  See,  also,  Willis  v.  Freeman,  35  Vt.  44  ;  Crawfurd  v.  Baum,  12  Rich. 
75;  Scudder  v.  Delashmat,  7  Iowa,  39;  Hubbard  v.  Curtis,  8  Iowa,  1.}     [It 


430  PARTNERSHIP.  [CHAP.  XII. 

injunction  for  such  a  purpose  ought  not  to  issue  to 
restrain  a  sale  by  the  sheriff,  upon  the  ground,  that  no 
harm  is  thereby  done  to  the  other  partners  ;  and  the 
sacrifice,  if  any,  is  the  loss  of  the  judgment  debtor 
only.^  But  that  does  not  seem  to  be  a  sufficient 
ground  upon  which  such  an  injunction  should  be  de- 


is  equally  an  interesting  question  whether  the  converse  of  the  rule  alluded 
to  in  the  preceding  sections  is  recognized  at  law ;  that  is,  whether  the  pref- 
erence of  a  sej^arate  ci-editor  of  a  partner,  to  be  paid  out  of  the  separate 
estate  of  his  debtor,  before  the  creditors  of  the  partnership,  can  be  enforced 
and  secured  at  law.  In  some  courts  it  is  held,  that  the  lien  acquired  by  a 
partnership  creditor,  by  an  attachment  of  the  separate  property  of  one  part- 
ner, cannot  be  defeated  by  a  subsequent  attachment  of  the  same  property,  by 
a  separate  creditor  of  the  partner  owning  such  property.  Allen  v.  Wells, 
22  Pick.  450  ;  Newman  b.  Bagley,  16  Pick.  570;  {Baker  v.  Wimpee,  19  Ga. 
87;  Kuhne  v.  Law,  14  Rich.  18,  overruling  Roberts  v.  Roberts,  8  Rich. 
15.  But  see  Purple  v,  Cooke,  4  Gray,  120.}  But  a  contrary  view  has  been 
taken  in  more  recent  cases,  and  it  has  been  thought  to  be  a  branch  and 
member  of  the  same  equitable  doctrine  that  the  right  of  private  creditors  to 
look  to  private  property,  should  be  paramount  to  the  right  of  joint  creditors, 
although  the  latter  might  have  commenced  the  first  jjrocess  against  the  pri- 
vate estate.  Accordingly  it  was  held,  in  a  recent  case,  that  where  land  of 
one  partner  had  been'  set  off  on  execution  for  a  debt  due  from  the  part- 
nership, and  afterwards  the  same  land  was  set  off  on  execution  for  a  separate 
debt  of  the  same  partner,  the  separate  creditor  of  such  2:)artner  could  recover 
the  land  from  the  creditor  of  the  ^partnership  by  a  writ  of  entry.  Jarvis  v. 
Brooks,  3  Fost.  136,  And  see  Murrill  v.  Neill,  8  How.  414  ;  Crockett  v. 
Grain,  33  N.  H.  542.  {See,  also,  Tenney  v.  Johnson,  43  N.  H.  144,  and 
Gay  V.  Johnson,  45  N.  H.  587.  But  the  postponement  at  law  of  an  execution 
by  a  partnership  creditor  against  separate  property,  to  a  subsequent  execu- 
tion by  a  separate  creditor  against  the  same  property,  seems  to  be  confined  to 
New  Hampshire.}  Whether  such  a  preference  is  to  be  observed  in  equity, 
when  there  are  no  jjartnership  funds,  is  more  questionable.  Bardwell  v. 
Perry,  19  Vt.  292;  Washburn  v.  Bank  of  Bellows  Falls,  Id,  278.  In  these 
cases  it  was  held  that  in  equity  both  sejiarate  and  partnership  creditors  have 
the  same  rights  to  the  separate  estate  of  the  partners,  after  the  partnership 
funds  are  exhausted,  and  that  separate  creditors  cannot  prevent  joint  creditors 
from  sharing  equally  with  them  in  the  separate  estate,  when  there  are  no  part- 
nership funds.     See  the  able  judgments  of  Redfield,  Chancellor.] 

'  Moody  V.  Payne,  2  Johns.  Ch.  548,  549.  {So  Brewster  v.  Hammet, 
4  Conn.  640;  Sitler  v.  Walker,  Freera.  Ch.  77.  See  Phillips  v.  Cook,  24 
Wend.  389,  398;  3  Kent,  65.} 


CHAP.  XII.]       REMEDIES    AGAINST   THIRD    PERSONS.  431 

nied.  If  the  debtor  partner  has,  or  will  have,  upon  a 
final  adjustment  of  the  accounts,  no  interest  in  the  part- 
nership funds ;  and  if  the  other  partners  have  a  lien 
upon  the  funds,  not  only  for  the  debts  of  the  partner- 
ship, but  for  the  balance  ultimately  due  to  them ;  it  may 
most  materially  affect  their  rights,  whether  a  sale  takes 
place,  or  not.  For,  it  may  be  extremely  difficult  to 
follow  the  property  mto  the  hands  of  the  various  ven- 
dees ;  and  the  lien  of  the  other  partners  may,  perhaps, 
be  displaced,  or  other  equities  arise  by  intermediate 
hona  fide  salps  of  the  property  m  favor  of  the  vendees, 
or  other  purchasers  without  notice  ;  and  the  partners 
may  have  to  sustain  all  the  chances  of  any  supervening 
insolvencies  of  the  immediate  vendees.^  To  prevent 
multiplicity  of  suits,  and  irreparable  mischiefs,  and  to 
insure  an  unquestionable  lien  to  the  partners,  it  would 
seem  perfectly  proper,  in  cases  of  this  sort,  to  restraui 
any  sale  by  the  sheriff.  And  besides ;  it  is  also  doing 
some  injustice  to  the  judgment  debtor,  by  compelling  a 
sale  of  his  mterest  under  circumstances  in  which  there 
must  generally,  from  its  uncertainty  and  litigious  char- 
acter, be  a  very  great  sacrifice  to  his  injury.  If  he  has 
no  right,  in  such  a  case,  to  maintain  a  bill  to  save  his 
own  mterest,  it  furnishes  no  ground  why  the  Court 
should  not  interfere  in  his  favor,  through  the  equities 
of  the  other  partners.  This  seems  (notwithstanding 
the  doubts  suggested  by  Mr.  Chancellor  Kent)  to  be 
the  true  result  of  the  English  decisions  on  this  subject ; 
which  do  not  distinguish  between  the  case  of  an  as- 
signee of  a  partner,  and  that  of  an  executor  or  adminis- 
trator of  a  partner,  or  of  the  sheriff,  or  of  an  assignee  in 
bankruptcy.^ 

'  See  Skipp  v.  Harwood,  2  Swans.  586,  587. 

""  See  Taylor  v.  Fields,  4  Ves.  396-398  ;  s.  c.  15  Ves.  559,  note  ;  Barker  «. 
Goodair,  11  Ves.  78,  85-87  ;  Slcipp  v.  Harwood,  2  Swans.  586,  587  ;  Franklyn 


432  PARTNERSHIP.  [CHAP.  XII. 

V.  Thomas,  3  Mer.  225,  234 ;  Hawkshaw  v.  Parkins,  2  Swans.  539,  548 ;  Parker 
V.  Pistor,  3  B.  &  P.  288,  289  ;  Eden  on  Injunct.  31 ;  Coll.  on  P.  B.  3,  c.  6,  § 
10,  p.  557-565,  2d  ed. ;  1  Madd.  Cb.  Pr.  112.  See  also  Brewster  v.  Ham- 
met,  4  Conn.  540.  See  also  Matter  of  Smith,  16  Johns.  102,  and  the 
Reporter's  learned  note ;  Gow  on  P.  c.  3,  §  2,  p.  142,  3d  ed. ;  Id.  c.  4,  § 
1,  p.  203-211;  Id.  c.  5,  §  2,  p.  229;  Id.  §  3,  p.  307,  308.  See  1  Story, 
Eq.  Jur.  §  678.  {And  so  are  Place  v.  Sweetzer,  16  Ohio,  142;  Newhall  v. 
Buckingham,  14  111.  405;  Hubbard  v.  Curtis,  8  Iowa,  1.  And  see  Cammack 
V.  Johnson,  1  Green,  Ch.  163 ;  Thompson  v.  Frist,  15  Md.  24 ;  Moore  v. 
Sample,  3  Ala.  319;  White  v.  Woodward,  8  B.  Mon.  484;  2  Lead.  Cas.  in 
Eq.  338,  3d  Am.  ed.}  [Another  question  sometimes  arising  from  the 
law  of  partnership  is,  bow  far  a  person  indebted  to  a  partnership,  may 
be  summoned  into  Court  by  process  of  foreign  attachment,  and  be  charged 
for  goods,  effects,  or  credits  in  bis  hands,  as  the  trustee  of  one  partner,  in  a 
suit  by  a  separate  creditor.  {1  Am.  Lead.  Cas.  473-475,  4tb  ed. }  It 
has  been  claimed  that,  since  the  separate  creditor  of  each  partner  may  levy 
bis  execution  against  one  partner  upon  the  joint  estate  of  the  partnership 
(when  such  estate  consists  of  tangible  property),  and  may  sell  on  execution 
the  interest  of  such  partner,  whatever  it  may  be,  in  the  partnership  goods, 
the  same  rule  applies  to  proceedings  by  foreign  attachment,  and  that  the 
interest  of  each  partner  in  a  debt  due  the  partnership  from  the  trustee  may 
be  reached  by  this  process  ;  and  some  decisions  countenance  this  view. 
Whitney  v.  Munroe,  19  Me.  42.  And  see  Thompson  v.  Lewis,  34  Me.  167. 
{And  so  are  Wallace  v.  Hull,  28  Ga.  68 ;  and  Berry  v.  Ilawes,  22  Md.  38.} 
On  the  other  hand,  a  juster  rule  has  been  more  frequently  adopted  in  other 
Courts,  and  it  is  now  held  by  the  current  of  authorities,  that  a  trustee, 
under  such  circumstances,  cannot  be  charged.  To  hold  otherwise  would 
be  creating  a  severance  of  a  joint  debt,  and  would  lead  to  great  embarrass- 
ment and  confusion  in  determining  the  rights  of  all  parties.  Fisk  v.  Her- 
rick,  6  Mass.  271  ;  Lyndon  v.  Gorbam,  1  Gall.  367  ;  Hawes  v.  Waltham, 
18  Pick.  451 ;  Upbam  v.  Naylor,  9  Mass.  490 ;  Cbui-cb  v.  Knox,  2  Conn. 
514;  Mobley  v.  Lonbat,  7  How.  (Miss.)  318;  Barber  v.  Hartford  Bank,  9 
Conn.  407 ;  Pettes  v.  Spalding,  21  Vt.  66 ;  Cook  v.  Arthur,  11  Ired.  407]  ; 
{Johnson  v.  King,  6  Humph.  233;  Towne  v.  Leach,  32  Vt.  747;  Lucas  v. 
Laws,  27  Penn.  St.  211 ;  See  Maynard  v.  Fellows,  43  N.  H.  255.  In  Tread- 
well  V.  Brown,  43  N.  II.  290,  it  is  said  that  a  valid  lien  as  against  a  partner 
may  be  acquired  by  attaching  all  his  interest  in  the  effects  of  the  firm,  and 
summoning  the  other  partners  as  trustees  ;  but  it  was  held,  that  such  a  lien  is 
not  acquired,  so  as  to  support  a  bill  for  an  account  by  merely  summoning 
the  other  partners  as  trustees.} 


CHAP.  XIII.]        DISSOLUTION    OF    PARTNERSHIP.  433 


CHAPTER  XIII. 


DISSOLUTION    OF    PARTNERSHIP. 

{  §  265.  Modes  of  dissolution. 

266.  Roman  law. 

267.  Foreign  law. 

267  a.  (1)   Dissolution  by  act  of  partners. 

268.  Any  jiartnersbip  may  be  dissolved  by  consent  of  all  the  partners. 

269.  Any  partnership  not  limited  as  to  time  maybe  dissolved  at  the  will 

of  any  partner. 

270.  Roman  and  French  law. 

271.  Will  to  dissolve  may  be  expressed. 

272.  Or  implied. 

273.  In  the  Roman  law  the  will  to  dissolve  must  be  exercised  in  a  rea- 

sonable manner. 

274.  Foreign  law  on  this  subject. 

275.  Common  law  on  this  subject.     Partnership  for  a  time  limited. 

276.  Roman  and  foreign  law. 

277.  Whether  a  partnership  is  for  a  term,  or  at  will. 

278.  Dissolution  by  expiration  of  term. 

279.  Nature  of  a  partnership  continued  beyond  the  term. 

280.  Dissolution  by  completion  of  the  objects  of  the  partnership. 

281.  Roman  law. 

282.  (2)  Dissolution  by  a  court  of  equity. 

283.  Roman  law, 

284.  Foreign  law. 

285.  Partnerships  declared  void  ah  initio. 

286.  Causes  of  dissolution. 

287.  Dissolution  not  decreed  for  trifling  causes. 

288.  But  decreed  for  gross  misconduct. 

289.  Roman  law. 

290.  ImpossibiHty  of  going  on. 

291.  292.  Incapacity  or  inability  of  a  pai'tner. 

293.  Roman  law. 

294.  French  law. 

295.  Insanity  of  a  partner. 

296.  Roman  law. 

297.  Dissolution  not  decreed  unless  the  insanity  Is  confirmed. 

298.  Other  causes  of  dissolution  by  decree. 
299-301.  Dissolution  by  award. 

28 


434  PARTNERSHIP.  fCHAP.  XIII. 

302.  (3)  Dissolution  by  operation  of  law. 

303.  (a)  By  change  in  the  status  of  a  partner. 

304.  Outlawry  or  conviction  of  a  partner. 

305.  Roman  law. 

30G.  Marriage  of  a  female  partner. 

307.  (b)  Dissolution  by  voluntary  transfer  of  interest. 

308.  In  case  of  a  partnership  for  a  time  limited. 

309.  Roman  law. 

310.  Assignment  of  the  whole  partnership  property. 

311.  (c)  Dissolution  by  involuntary  transfer. 

312.  Sale  of  partner's  share  on  execution. 

313.  Bankruptcy  and  insolvency. 

314.  From  what  time  bankruptcy  dissolves  a  partnership. 

315.  316.  (d)  Dissolution  by  war. 

317.  (e)  Dissolution  by  death. 

318.  Roman  law. 

319.  Death  is  ipso  facto  a  dissolution. 

319  a.  Effect  of  provisions  in  the  articles  concerning  death.} 

§  265.  Having  considered  the  various  topics  belong- 
ing to  the  original  formation  of  the  contract  of  partner- 
ship, the  rights  of  the  partners  in  and  over  the  partner- 
ship property  and  effects,  the  powers  and  authorities  of 
each  of  the  partners,  relative  to  the  partnership  prop- 
erty, effects,  and  concerns  ;  the  liabilities  of  the  partners 
to  third  persons,  and  inter  sese,  and  the  various  remedies 
and  modes  of  redress  by  and  against  partners,  existing 
at  law  and  in  equity,  we  come,  in  the  next  place,  to  the 
consideration  of  the  modes,  in  which  a  partnership  may 
be  dissolved.  And  this  part  of  our  subject  may  be  con- 
veniently discussed  under  three  distinct  heads.  (1.) 
Dissolution  by  the  act  or  agreement  or  consent  of  the 
parties,  or  of  some  of  them ;  (2.)  Dissolution  by  the 
decree  of  a  court  of  equity;  (3.)  Dissolution  by  the 
mere  operation  of  law. 

§  266.  The  Roman  law  in  like  manner  declared,  that 
partnership  might  be  dissolved  in  various  ways ;  as  by 
the  extinction  of  the  thing  held  in  partnership ;  or  of 
the  persons  forming  it ;  or  of  the  rights  of  action  grow- 


CHAP.  XIII.]         DISSOLUTION    OF    PARTNERSHIP.  435 

ing  out  of  it;  or  of  the  will  of  the  parties  to  the  con- 
tinuance of  it.  Societas  solvitur  ex  personis,  ex  rehus, 
ex  vohmtate,  ex  actione.  Ideoqite,  sive  homines,  sive 
res,  sive  voluntas,  sive  actio  interierit,  distrahi  videtur 
societas}  Of  course,  any  partnership  whatsoever, 
whether  it  be  for  a  definite  period,  or  for  an  indefinite 
period,  may  be  at  any  time  dissolved,  at  the  mutual  will 
and  pleasure  of  all  the  partners.  Diximus  (says  the 
Digest),  dissensu  solvi  societatem ;  hoc  ita  est,  si  omnes 
dissentiunt.^  And  the  same  rule  must  be  recognized  in 
the  jurisprudence  of  every  country,  acting  upon  the 
mere  dictates  of  reason  and  natural  justice. 

§  267.  According  to  Pothier,  partnership  is  dissolu- 
ble under  the  old  French  law,  (1.)  By  the  expiration 
of  the  time,  for  which  it  is  contracted ;  (2.)  By  the  ex- 
tinction of  the  thing,  or  the  completion  of  the  business ; 
(3.)  By  the  natural  or  civil  death  of  some  one  of  the 
partners ;  (4.)  By  his  failure  or  bankruptcy ;  or,  (5.) 
By  the  voluntary  expressed  intention  of  being  no  longer 
in  partnership.^  Substantially  the  like  distinction  ex- 
ists in  the  present  Civil  Code  of  France,  and  in  that  of 
Louisiana.'^  The  same  causes  of  dissolution  are  also 
recognized  in  the  Scottish  law,  the  Spanish  law,  the  law 
of  Holland,  and  probably  in  that  of  the  other  conti- 
nental nations,  which  derive  the  basis  of  their  jurispru- 
dence from  the  Roman  law.^  This  general  coincidence 
of  opinion,  in  assigning  the  same  causes  for  the  dissolu- 
tion of  partnership,  in  so  many  countries,  shows,  that 
the  doctrine  has  its  true  foundation  in  the  general  prin- 

1  D.  17,  2,  63,  10;  Poth.  Pand.  17,  2,  n.  54,  55,  62,  64,  70;  ante,  § 
84,  85. 

^  D.  17,  2,  65,  3 ;  Poth.  Panel.  17,  2,  n.  64. 

3  Poth.  de  Soc.  n.  138. 

*  Code  Civil  of  France,  art.  1865 ;  Code  of  Louisiana,  art.  2847. 

^  Ersk.  Inst.  B.  3,  tit.  3,  §  25 ;  Johnson's  Inst,  of  Laws  of  Spain,  tit.  15, 
p.  232;  Van  Leeuwen,  Comm.  B.  4,  c.  23,  §  1. 


436  PARTNERSHIP.  [CHAP.  XIII. 

ciples  of  natural  justice  and  reason,  rather  than  in  the 
peculiar  institutions  of  any  particular  age  or  nation. 

§  267  a}  Let  us,  in  the  first  place,  consider  the  cases 
of  dissolution,  at  the  common  law,  by  the  act,  or  agree- 
ment, or  consent  of  the  parties  themselves,  or  of  some 
of  them  ;  and  this  will  properly  include  all  cases,  where 
the  partnership  is  merely  at  will,  or  is  for  a  prescribed 
period,  which  expires  by  efflux  of  time,  or  otherwise, 
according  to  its  own  limitation,  or  is  voluntarily  dis- 
solved by  mutual  consent  within  the  prescribed  or  lim- 
ited period. 

§  268.  In  respect  to  all  partnerships,  whether  they 
are  for  a  limited  period,  or  at  will,  it  is  very  clear,  that 
they  may  at  any  time  be  dissolved  by  the  mutual  pleas- 
ure clearly  expressed  of  all  the  parties.  And  this  is  so 
consonant  to  reason  and  justice,  that  it  would  seem  to 
require  no  authority  to  support  it.  Nevertheless,  the 
Roman  law  has  expressly  recognized  it ;  and  only  put 
the  question,  as  worthy  of  inquiry,  when  and  under 
what  circumstances  the  partnership  might  be  dissolved 
at  the  will  of  one  partner.  Diximiis  (says  the  Digest) 
dissensu  solvi  societatem ;  hoc  ita  est,  si  omnes  dissen- 
tiunt.  Quid  ergo  si  unus  renuntiet  ?  ^  But  there  is  a 
technical  principle  of  the  common  law,  which  seems  to 
require,  that,  when  the  partnership  is  formed  by  deed 
for  a  definite  period,  it  can  properly,  according  to  the 
common  law,  be  dissolved  only  by  deed ;  for  here  the 
maxim  is. held  to  apply:  Eodem  modo,  quo  quid  oritur, 
eodem  7nodo  dissolvitur?     The  same  rule  would  seem 

^   {In  the  first  two  editions  this  section  was  by  accident  numbered  2G8.} 

2  D.  17,  2,  65,  3;  Poth.  Pand.  17,  2,  n.  68. 

»  Ante,  §  117 ;  Bac.  Abr.  Release,  A.  1 ;  2  Saund.  47  ff,  Williams's 
ed. ;  Story  on  Ag.  §  49 ;  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  154,  155,  2d  ed. ; 
Doe  V.  Miles,  1  Stark.  181 ;  Rackstraw  v.  Imber,  1  Holt,  368 ;  Countess  of 
Rutland's  Case,  5  Co.  25  b  ;  Blake's  Case,  6  Co.  43  b  ;  1  Mont,  on  P.  Pt.  3,  c. 
1,  p.  90,  [113.]     [Although  the  partnership  agreement  be  under  seal,  it 


CHAP.  XIII.]        DISSOLUTION    OF    PARTNERSHIP.  437 

to  have  been  adopted  in  the  Roman  law.  Thus,  it  is 
said  in  the  Digest :  JVihil  tain  naturale  est,  quam  eo  ge- 
nere  quidque  dissolvere,  quo  coUigatiim  est.  Ideo  ver- 
horum  ohligatio  verbis  toUitur ;  niidi  consensus  ohligatio 
contrario  consensu  dissolmtur}  Front  quidque  con- 
tractum  est,  ita  et  solvi  debet ;  ut  cum  re  contraxe7nmus, 
re  solvi  debet.^  However  this  may  be,  it  is  very  clear, 
that  a  dissolution  actually  made  by  the  parties  will  be 
held  in  equity  perfect  and  complete,  to  all  intents  and 
purposes,  between  the  parties,  and  also  as  to  third  per- 
sons, having  full  notice  thereof.^ 

§  269.  In  respect  to  partnerships,  where  no  certain 
limit  of  their  duration  is  fixed,  they  are  deemed  to  be 
mere  partnerships  at  will,  and,  therefore,  are  ordinarily 
at  the  common  law  dissolvable  at  the  will  of  any  one 
or  more  of  the  partners ;  for  in  such  cases,  as  the  con- 
tract subsists  only  during  the  pleasure  of  all  the  part- 
ners, it  is  therefore  naturally  and  necessarily  dissolved 
by  the  pleasure  of  any  one  or  more  of  them,  like  every 
other  contract  existing  at  the  mere  will  of  both  parties.'* 

seems,  it  is  not  necessary  that  an  agreement  ibr  dissolution  should  be  also 
under  seal.     Wood  v.  Gault,  2  Md.  Ch.  Dec.  433.] 
'  D.  50,  17,  35 ;  ante,  §  118. 

2  D.  46,  3,  80;  Poth.  Pand.  50,  17,  n.  1388;  Story  on  Ag.  §  49,  note; 
ante,  §  118. 

3  Coll.  on  P.  B.  2,  c.  2,  §  2,  p.  154,  155,  2d  ed. 

*  Ante,  §  84 ;  3  Kent,  53  ;  1  Mont,  on  P.  Pt.  3,  c.  1,  p.  90,  [113]  ;  Wats, 
on  P.  c.  7,  p.  381,  2d  ed. ;  Master  v.  Kirton,  3  Ves.  74;  Gris\yold  v.  Wad- 
dington,  15  Johns.  57;  Heath  v.  Sansom,  4  B.  &  Ad.  172;  Marquand  v. 
Kew  York  Manuf.  Co.  17  Johns.  525 ;  Miles  v.  Thomas,  9  Sim.  606,  609 ; 
Xerot  V.  Burnand,  4  Russ.  247,  260.  — Mr.  Chancellor  Kent  (3  Kent,  53) 
says  :  "It  is  an  established  principle  in  the  law  of  partnership,  that,  if  it  be 
without  any  definite  period,  any  partner  may  withdraw  at  a  moment's  notice, 
when  he  pleases,  and  dissolve  the  partnership.  The  civil  law  contains  the 
same  rule  on  the  subject.  The  existence  of  engagements  with  third  persons 
does  not  prevent  the  dissolution  by  the  act  of  the  parties,  or  either  of  them, 
though  those  engagements  will  not  be  affected,  and  the  partnership  will  still 
continue  as  to  all  antecedent  concerns,  until  they  are  duly  adjusted  and 
settled.     A  reasonable  notice  of  the  dissolution  might  be  very  advantage- 


438  PARTNERSHIP.  [CHAP.  XIII. 

The  general  rule,  in  all  such  cases,  is,  Dissociamur  re- 
nuntiatione} 

ous  to  the  company,  but  It  is  not  requisite  ;  and  a  partner  may,  if  he  pleases, 
in  a  case  free  from  fraud,  choose  a  vei'v  unseasonable  moment  for  the  exer- 
cise of  his  right.  A  sense  of  common  interest  is  deemed  a  sufficient  security 
against  the  abuse  of  the  discretion."  In  Peacock  v.  Peacock,  16  Ves.  49,  56, 
Lord  Eldon  said:  "With  regard  to  what  passed,  since  the  question  was 
much  agitated  at  the  Bar,  whether  this  partnership  is  now  dissolved  by  the 
notice  in  writing  from  the  defendant,  that  from  and  after  the  date  of  that 
notice  the  partnership  should  be  considered  dissolved.  The  plaintiff  insists, 
that  it  is  not  dissolved ;  and  that  it  can  be  dissolved  only  upon  reasonable 
notice.  I  have  always  taken  the  rule  to  be,  that  in  the  case  of  a  partnership, 
not  existing  as  to  its  duration  by  contract  between  the  parties,  either  party 
has  the  power  of  determining  it,  when  he  may  think  proper ;  subject  to  a 
qualification,  that  I  shall  mention.  There  is,  it  is  true,  inconvenience  in 
this;  but  what  would  be  more  convenient?  In  the  case  of  a  partnership 
expiring  by  effluxion  of  time,  the  parties  may  by  pre\'ious  arrangement 
provide  against  the  consequences  ;  but  where  the  partnership  is  to  endure  so 
long  as  both  parties  shall  live,  all  the  inconvenience  from  a  sudden  determi- 
nation occurs  in  that  instance,  as  much  as  in  the  other  case.  I  cannot  agree, 
that  reasonable  notice  is  a  subject  too  thin  for  a  jury  to  act  upon,  as  in 
many  cases  juries  and  courts  do  determine  what  is  reasonable  notice.  With 
regard  to  the  determination  of  contracts  upon  the  holding  of  lands,  when 
tenancy  at  will  was  more  known  than  it  is  now,  the  relation  might  be  deter- 
mined at  any  time ;  not  as  to  those  matters,  which  during  the  tenancy  re- 
mained a  common  interest  between  the  jjarties  ;  but  as  to  any  new  contract 
the  will  might  be  instantly  determined.  When  that  interest  was  converted 
into  the  tenancy  from  year  to  year,  the  law  fixed  one  positive  rule  for  six 
months'  notice ;  a  rule,  that  may  in  many  cases  be  very  convenient ;  in 
others,  that  of  nursery  grounds,  for  instance,  most  inconvenient.  As  to 
trades,  in  general,  there  is  no  rule  for  the  determination  of  partnership; 
and  I  never  heard  of  any  rule  with  regard  to  different  branches  of  trade ; 
and,  supposing  a  rule  for  three  months'  notice,  that  time  might  in  one  case 
be  very  large ;  and  in  another,  in  the  very  same  trade,  unreasonably  short. 
I  have,  therefore,  always  understood  the  rule  to  be,  that,  in  the  absence  of 
express  contract,  the  partnership  may  be  determined,  when  either  party 
thinks  proper ;  but  not  in  this  sense,  that  there  is  an  end  of  the  whole  con- 
cern. All  the  subsisting  engagements  must  be  wound  up;  for  that  purpose 
they  remain  with  a  joint  interest ;  but  they  cannot  enter  into  new  engage- 
ments. This  being  the  impression  u2)on  my  mind,  I  had  some  apprehension 
from  the  turn  of  the  discussion  here,  that  some  different  doctrine  might  have 
fallen  from  the  Court  at  Guildhall ;  but  upon  inquiry  from  the  Lord  Chief 
Justice,  as  to  his  conception  of  the  rule,  I  have  no  reason  to  believe,  that. 


>  2  Bell,  Comm.  B.  7,  c.  2,  p.  631,  5th  ed.  ;  Poth.  Pand.  17,  2,  n.  54. 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  439 

§  270.  The  same  rule  equally  prevails  in  the  Roman 
law.^  Manet  autem  societas  (say  the  Institutes)  eo  usque^ 
donee  in  eodein  consensu  perseveraverint  At  cum  ali- 
quis  renuntiaverit  societati,  solvitur  societas  ;  ^  or  (as  it 
is  expressed  in  the  Code),  Tamdiu  societas  durat,  quam- 
diu  consensus  j^artium  integer  p)erseverat.^  And  Vinnius 
has  remarked  upon  the  coincidence,  in  this  respect, 
of  the  contract  of  partnership  with  that  of  mandate. 
Societas  et  mandatum  in  eo  conveniunt,  quod  j^^ojyrio 
quodam  jure,  et  suis  quihusdam  modis  solvantur,  quos 
Justinianus,  cjuoniam  ah  iis  modis,  quihus  jure  communi 
ohligatio  toUitur,  remoti  sunt,  exjylicare  voluit^  And, 
after  alluding  to  the  fact,  that  in  common  contracts  the 
obligation  thereof  can  be  extinguished  only  by  the  con- 
sent of  all  the  parties,  he  adds,  that  it  is  otherwise  in 
relation  to  the  contract  of  partnership.  Sed  illud  pro- 
prium  hujus  contractus  (societatis)  est,  quod  etiam  post- 
quam  res  integra  esse  desiit,  id  est,  postquain  jam 
coUatio  et  communicatio  facta  est,  ah  eo  recedi  et  vel 
unius  voluntate  p)otest ;  cpiomodo  in  specie  dicitur  socie- 
tas dissolvi  renuntiatione.^     This  also  is  the  clear  result 

if  this  notice  ha^  been  given  before  the  trial,  the  jury  would  not  have  been 
directed  to  find  that  the  partnership  was,  by  the  delivery  of  that  pajDcr,  dis- 
solved." See  also  Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  308,  809 ; 
Crawshay  v.  Maule,  1  Swans.  495,  508 ;  Heath  v.  Sansom,  4  B.  «&  Ad.  172. 
{See  §275.} 

1  Poth.  Pand.  17,  2,  n.  64;  ante,  §  84,  85. 

^  List.  3,  26,  4. 

3  Cod.  4,  37,  5;  Poth.  Pand.  17,  2,  n.  69;  Id.  n.  64;  Domat,  1,  8,  5, 
art.  1,  2  ;  ante,  §  84,  85. 

*  Vinn.  ad  Inst.  3,  26,  4. 

'=  Vinn.  ad  Inst.  3,  26,  4,  Comra.  Intr.  n.  1 ;  Poth.  Pand.  17,  2,  n.  64- 
68.  — Vinnius  proceeds  to  give  the  reasons  of  this  doctrine,  and  holds  that 
it  is  so  fundamental,  that  it  cannot  be  varied  by  express  agreement :  "  Hoc 
in  contractu  socictatis  jure  singulari  receptum  est  contra  regulas  communes 
de  dissolvendis  obligationibus.  Idque  duplici  de  causa ;  primura,  quia  socii 
officium  invlcem  pra;stant,  et  accipiunt ;  deinde  quia  non  bene  convenit  cum 
natura  et  conditione  socictatis,  quas  rationem  (juandam  et  jus  fraternitatis 
habere  creditur,  aliqueni  invituui   retinere  in  connnunione ;    quippe  cujus 


440  PARTNERSHIP.  [cHAP.  XIII. 

of  the  French  law,  as  Pothier  has  instructed  us,  under 
ordmary  circumstances.^  Indeed,  to  so  great  an  extent 
did  the  Roman  law  carry  its  doctrine,  that  (as  we  shall 
presently  see)  a  positive  stipulation  against  its  dissolu- 
tion at  the  will  of  either  of  the  partners  was  held  to  be 
utterly  void,  as  inconsistent  with  the  true  nature,  and 
interests,  and  confidence  of  that  relation.^ 

§  271.  A  partnership  at  will  is  presumed  to  endure 
so  long  as  the  parties  are  in  life  and  have  a  capacity  to 
continue  it.^  The  dissolution  of  it,  either  by  death  or 
by  a  supervenient  incapacity,  will  of  course  come  under 
consideration  when  we  speak  of  dissolution  by  mere 
operation  of  law.  At  present  it  is  only  necessary  to 
say,  that  a  dissolution  may  be  made  not  only  by  a  posi- 
tive or  express  renunciation  thereof  by  one  partner,  but 
also  by  implication  from  his  acts  and  conduct ;  or  as 
Vinnius  expresses  it:  Porro  autetn  renuniiatione  disso- 
ciamur  aut  voluntate  aperta,  aut  tacita.  Aperta,  cum 
ceteris  nimtiafur,  ut  res  suas  sihi  liahecmt  atqiie  agcmt.^ 
Of  express  renunciation  it  scarcely  seems  necessary  to 
say  any  thing,  when  the  partnership  is  merely  at  will ; 
since  it  can  make  no  difference  whether  it  originated  by 
mere  consent,  or  by  verbal  agreement,  or   by  written 

materia  discordias  inter  non  consentientes  excitare  solet.  Adeo  autem 
visum  est  ex  natura  esse  societatis,  unius  dissensu  totam  dissolvi,  ut, 
quamvis  ab  initio  convenerit,  ut  societas  perpetuo  duraret,  aut  ne  liceret  ab 
ea  resilire  invitis  ceteris ;  tamen  tale  pactum,  tanquam  factum  contra  natu- 
ram  societatis,  cujus  in  ajternura  nulla  coitio  est  contemnere  liceat.  Nam, 
quod  Paulus  seribit,  societatem  etiam  in  perpctuum  coii'i  posse,  nihil  aliud 
significat,  quam  sine  ulla  temporis  praefinitione,  aut  donee  socii  vivant ;  quae 
conventio  non  hoc  operatur,  ut  non  liceat  abire,  sed  ut  solo  lapsu  temporis 
non  finiatur  societas." 

1  Poth.  dc  Soc.  n.  149. 

2  Ibid.;  Toth.  de  Soc.  n.  145;  ante,  §  85;  D.  17,  2,  14;  Poth.  Pand. 
17,  2,  n.  68. 

3  Coll.  on  P.  B.  1,  c.  2,  §  1,  p.  68,  2d  ed. ;  2  Bell,  Comm.  B.  7,  c.  2,  p. 
631,  632,  5th  ed. ;  Poth.  de  Soc.  n.  65 ;  ante,  §  84. 

*  Vinn.  ad  Inst.  3,  26,  4,  Comm.  n.  1 ;  ante,  §  84,  85. 


CHAP.  XIII.]        DISSOLUTION    OF    PARTNERSHIP.  441 

articles,  oi'  by  any  instrument  under  seal ;  for  in  each 
and  every  of  these  cases  the  same  doctrine  will  prevail, 
whether  the  renunciation  be  by  parol,  or  in  writing,  or 
by  declaration  under  seal.^  For  the  rule  of  the  common 
law  already  referred  to  has  here  no  just  application, 
that  the  dissolution  must  be  by  an  instrument  of  as  high 
a  nature  as  that  by  which  it  was  created,  according  to 
the  maxim :  Eodem  modo,  quo  quid  constituitur,  eodem 
modo  dissohntu7' ;  ^  or,  as  it  is  sometimes  expressed : 
Nihil  tarn  conveniens  est  naturaU  cequitati,  qucmi  unum- 
quodque  dissolvi  eo  ligamine,  quo  ligatum  est  ;^  which 
is  certainly  open  to  much  question  as  a  doctrine  of 
natural  equity,  if  we  are  to  understand  thereby  that  it  is 
the  only  effectual  mode  of  working  a  dissolution  thereof. 
§  272.  As  to  dissolution  by  tacit  renunciation,  or  by 
implication  from  circumstances,'*  it  may  arise  in  various 
ways,  as  by  the  withdrawal  of  a  partner  from  the  busi- 
ness of  the  partnership,  and  engaging  in  other  concerns, 
or  by  his  refusal  to  act  with  the  other  partners  in  the 
business ;  or  by  his  assigning  over  his  share  in  the  part- 
nership ;  °  or  by  his  doing  any  other  act  utterly  incon- 

'  But  see  Doe  d.  Waitbman  v.  Miles,  1  Stark.  181. 

2  Branch's  Max.  47,  5th  ed.  1824;  Blake's  Case,  6  Co.  43  b;  ante,  §  268. 

'  The  Countess  of  Rutland's  Case,  5  Co.  25  b ;  Blake's  Case,  6  Co.  43  b ; 
2  Inst.  359;  ante,  §  268. 

"   [Fellows  V.  Wyman,  33  N.  H.  351.] 

*  Marquand  v.  New  York  Manuf.  Co.  17  Johns.  525  ;  Ketcham  v.  Clark, 
6  Johns.  144 ;  Per  Lord  Chief  Justice  Denman,  in  Heath  v.  Sansom,  4  B.  & 
Ad.  172;  Rodriguez  v.  Heffernan,  5  Johns.  Ch.  417.  {A  proposal  for  a 
dissolution,  not  accepted,  is  not  a  dissolution;  Hall  v.  Hall,  12  Beav.  414; 
but  notice  by  two  partners  to  the  third  that  "  we  shall  dissolve  the  partner- 
ship "  on  a  certain  day,  operates  as  a  dissolution  on  that  day ;  and  this, 
although  the  partner  to  whom  the  notice  is  sent  is  a  lunatic;  Mellersh 
V.  Keen,  27  Beav.  23G.  See  .Hart  v.  Clarke,  6  De  G.  M.  &  G.  232; 
Pearce  v.  Lindsay,  3  De  G.  J.  &  S.  139.  Making  up  a  stock  account  of  a 
firm,  and  ascertaining  the  amount  of  the  interest  of  one  partner,  and  trans- 
ferring it  to  the  credit  of  another  firm  of  which  he  was  a  member,  will  not 
dissolve  the  firm.     Russell  v.  Leland,  12  All.  349.} 


442  PARTNERSHIP.  [CHAP.  XIII. 

sistent  with  the  continuing  relation  of  partnership. 
Vinnius  has  enumerated  several  modes  under  the  Ro- 
man law,  by  which  a  tacit  renunciation  took  effect, 
upon  the  ground  of  their  inconsistency  with  the  rela- 
tion of  partnership;  (1.)  by  a  novation  of  the  action, 
pro  socio,  effected  by  one  of  the  partners ;  (2.)  by  an 
action  brought  by  one  partner  against  the  others  for 
the  purpose  of  dissolving  the  partnership ;  (3.)  by  each 
partner  separately  engaging  in  business,  and  acting  for 
his  own  sole  account.^  This  last  ground  is  pointedly 
adverted  to  in  the  Koman  law.  Itaque,  cum  separatwi 
socii  agere  coeperint,  et  imusquisque  eorum.  sibi  nego- 
tietur,  sine  duhio  jus  societatis  dissolvitur.^ 

§  273.  And  here  the  question  was  greatly  discussed 
in  the  Roman  law,  whether  the  right  of  renunciation 
of  a  partnership  could  be  exercised  at  any  time  by 
any  partner  at  his  mere  will  and  pleasure,  however 
unreasonable,  or  even  injurious  it  might  be  to  the  other 
partners.  It  was  held,  that  it  was  competent  for  any 
partner  to  renounce  the  partnership,  whether  it  was  a 
partnership  at  will,  or  for  a  fixed  period  of  time,  even 
although  he  had  expressly  stipulated  to  the  contrary, 
provided  he  acted  with  good  faith,  and  without  any 
sinister  motive,  and  provided,  further,  that  the  time 
chosen  for  the  purpose  was  not  unseasonable,  or  injuri- 
ous to  the  interests  of  the  other  partners ;  in  other  words. 


'  Vinn.  Inst.  3,  26,  4,  Conim.  n.  2.  —  The  language  of  Vinnius  is  :  "Tacita 
voluntas  renuntiandi  tribus  his  factis  evidenter  arguitur;  (1.)  novatione 
actionis  pro  socio  ab  uno  ex  sociis  facta,  quod  etiam  significat  Ulpianus,  cum 
dicit,  societatem  etiam  ab  actione,  seu  ab  interitu  actionis  distrahi ;  (2.) 
actione  pro  socio  ab  uno  adversus  alios  instituta  distrahendae  societatis 
causa;  (3.)  cum  separatim  agere  coeperint,  et  sibi  quisque  negotiari ;  veluti, 
si  typographi  alifj^uot,  qui  antea  communibus  sumptibus  libros  imprimendos 
curabant,  postea  singuli  domi  suaj  sibi  imprimere  coeperint,  et  commune 
impendium  facere  desierint,  tacite  renuntiasse  societati  intelliguntur." 

2  D.  17,  2,  6i;  roth.  Tand.  17,  2,  n.  C9. 


CHAP.  XIII.]        DISSOLUTION    OF    PARTNERSHIP.  443 

it  was  sufficient  if  the  partner  renounced  for  a  reason- 
able cause,  and  at  a  reasonable  time,  and  in  a  reasonable 
manner.  Si  eonvenerit  inter  socios,  ne  intra  certum 
tempus  communis  res  dimdatur,  non  videiur  convenisse, 
ne  societate  aheatur.  Quid  tamen,  si  hoe  convenit,  ne 
abeatur  ;  an  valeat  ?  Eleganter  Pom^jonius  scripsit, 
frustra  hoc  convenire,  nam  etsi  nbn  convenit^  si  tamen 
intempestive  renuntietur  societati,  essejiTO  socio  actionem. 
Sed  etsi  convenit^  ne  intra  certum.  tempus  societate  ahea- 
tur, et  ante  tempus  renuntietur,  potest  rationem  habere 
renuntiatio ;  nee  tenehitur  pro  socio,  qui  ideo  renun- 
tiamt,  quia  conditio  qucedam,  qua  societas  erat  coita,  ei 
non  proistatur  ;  aut  quid,  si  ita  [ijijuriosus  ef]  damnosus 
socius  sit,  ut  non  exp)ediat  eum  pati  ?  ^ 

>  D.  17,  2,  14 ;  Poth.  Panel.  17,  2,  n.  64-68 ;  1  Story,  Eq.  Jur.  §  668.  — 
Domat  has  summed  up  the  principal  doctrines  of  the  Roman  law  on  this 
subject  in  the  following  articles.  "  1.  As  partnership  is  formed  by  consent, 
so  is  it  in  the  same  manner  dissolved  ;  and  it  is  free  for  the  partners  to  break 
off  their  partnership,  and  to  give  it  over  whenever  the_y  please,  even  before 
the  end  of  the  term  which  it  was  to  have  lasted,  if  they  all  agree  to  it. 
2.  The  tie  which  is  among  partners,  being  founded  on  the  reciprocal  choice 
which  they  make  of  one  another,  and  on  the  hopes  of  some  profit,  it  is  free 
for  every  one  of  the  partners  to  break  off  partnership  whenever  he  pleases ; 
whether  it  be  because  there  is  no  good  agreement  among  the  partners,  or 
that  some  necessary  absence,  or  other  affiiirs,  make  the  partnershij)  burden- 
some to  him  who  is  desirous  to  leave  it ;  or  that  he  does  not  like  a  commerce 
which  the  partners  are  about  to  undertake ;  or  that  he  does  not  find  his 
account  in  the  partnership ;  or  for  other  reasons.  And  he  may  give  over 
partnership  without  the  consent  of  the  other  partners,  and  that  even  before 
the  time  at  which  it  was  to  have  ceased,  and  although  it  have  been  agreed 
that  none  of  tlie  partners  should  break  off  the  partnership  till  the  time 
agreed  on  were  expired.  Provided,  that  the  partner  does  not  break  off 
with  some  sinister  view;  as  if  he  quits  the  partnership  that  he  may  buy  for 
himself  alone,  what  the  whole  community  had  a  mind  to  purchase,  or  that 
he  may  make  some  other  profit  to  the  prejudice  of  the  other  partners,  by 
his  leaving  them ;  or  provided  he  does  not  quit  after  some  business  is  begun, 
or  at  an  unseasonable  time,  which  may  occasion  some  loss  or  damage  to  the 
community.  3.  The  partner  who  breaks  off  partnership  with  an  inifair 
design,  disengages  liis  copartners  from  all  engagements  to  him,  but  does 
not  disengage  himself  from  his  obligations  to  them.  Thus,  he  who  should 
withdraw   himself  from    an    universal    partnership    of  tiioir   whole   estate. 


444  PARTNERSHIP.  [cHAP.  XIII. 

§  274.  By  the  old  French  law,  a  partnership,  which 
was  for  an  indefinite  period,  or  without  any  limitation 
of  time,  might  be   dissolved   at  the   mere   pleasure  of 

present  and  to  come,  that  he  alone  might  inherit  a  succession  fallen  to  him, 
would  bear  the  whole  loss,  if  the  succession  which  he  alone  inherits  should 
prove  burdensome ;  but  he  would  not  deprive  his  copartners  of  the  profit, 
if  the  succession  should  prove  advantageous,  and  they  have  a  mind  to  share 
in  it.  And  in  general,  if  a  partner  breaks  off  at  an  unseasonable  time, 
which  occasions  the  loss  of  some  profit  to  the  community,  which  otherwise  it 
miglit  have  made,  or  which  causes  any  other  damage,  he  will  be  bound  to 
make  it  good ;  as  if  he  quits  before  the  time  to  which  the  partnership  was 
to  have  lasted,  abandoning  a  business  with  which  he  was  charged.  And  he 
who  breaks  off  the  partnership  in  this  manner,  shall  have  no  share  in  the 
profits  which  shall  happen  to  be  made  afterwards ;  but  he  shall  bear  his 
part  of  what  losses  shall  afterwards  happen,  in  the  same  manner  as  he 
would  have  been  bound  to  do  if  he  had  not  quitted  the  partnership.  4.  The 
partner  who  renounces  the  partnership  at  an  unseasonable  time,  not  only 
does  not  free  himself  from  his  engagements  to  his  copartners,  but  is  answer- 
able for  all  the  losses  and  damages  which  his  unseasonable  renunciation 
may  have  caused  to  the  society.  Thus,  if  a  partner  quits  whilst  he  is  on  a 
journey,  or  engaged  in  any  other  business  for  the  community ;  or  if  his 
quitting  obliges  the  partners  to  sell  any  merchandise  before  the  time  ;  he 
shall  bo  bound  to  make  good  the  losses  and  damages  which  his  leaving  the 
partnership  under  these  circumstances  shall  have  occasioned.  5.  In  order 
to  judge  whether  the  partner  withdraws  himself  at  an  unseasonable  time,  it 
is  necessary  to  consider  what  is  most  profitable  for  the  whole  community, 
and  not  for  any  one  of  the  partners  in  particular.  6.  If,  after  a  fair  and  law- 
ful renunciation,  the  partner  who  has  quitted  the  partnership,  begins  anew 
to  carry  on  any  commei'ce  from  which  he  reaps  some  profit,  he  will  not  be 
bound  to  share  it  with  his  former  partners.  7.  A  fraudulent  and  unseason- 
able renunciation  is  never  permitted,  whether  the  contract  of  partnership 
has  provided  against  it  or  not.  For  this  would  be  repugnant  to  fidelity, 
which,  being  essential  to  the  contract  of  partnership,  is  always  understood 
to  be  comprehended  in  it.  8.  The  renunciation  is  of  no  use  to  the  person 
who  has  made  it,  till  it  be  made  known  to  the  other  partners ;  and  if  in  the 
interval  after  the  renunciation,  and  before  it  is  known  to  the  other  partners, 
he  who  lias  renounced  makes  any  profit,  he  will  be  obliged  to  share  it  with 
his  copartners  ;  but  if  he  suffers  any  loss,  it  will  all  fall  upon  himself.  And 
if  in  tliis  space  of  time  the  other  partners  reap  any  gain,  he  will  have  no 
share  in  it;  and  if  they  suffer  any  loss,  he  must  bear  his  part  of  it." 
Domat,  1,  8,  5,  art.  1-8,  by  Strahan.  See,  also,  Mr.  Swanston's  learned 
note  to  Crawshay  v.  Maule,  1  Swans.  609,  note  (a)  ;  Poth.  Pand.  17,  2,  n. 
64-68 ;  2  Bell,  Comra.  B.  7,  c.  2,  p.  632,  633,  6th  ed. ;  1  Story,  Eq.  Jur. 
§  668. 


CHAP.  XIII.]        DISSOLUTION    OF    PARTNERSHIP.  445 

any  one  of  the  partners,  under  two  qualifications  or 
restrictions;  (1.)  that  the  renunciation  should  be  in 
good  faith ;  (2.)  that  it  should  not  be  made  at  an 
improper  time.^  But  partnerships,  which  by  the  origi- 
nal contract  were  to  endure  for  a  limited  period,  were 
deemed  not  to  be  dissoluble,  until  the  expiration  of 
that  period,  unless  some  just  cause  of  dissolution  should 
occur.^  In  this  latter  event,  any  partner  might,  upon 
giving  due  notice,  renounce  the  partnership.  Some 
of  the  just  causes  here  referred  to  were,  that  such 
partner  was  to  be  long  absent  in  the  service  of  the 
State ;  another  was  some  habitual  infirmity,  which  dis- 
abled him  from  performing  his  duties.^  The  modern 
Code  of  France,  and  that  of  Louisiana,  have  adopted 
the  same  rules."*  Substantially  the  same  principles  pre- 
vail in  the  Scottish  law.^ 

§  275.  At  the  common  law,  there  does  not  seem  to 
be  any  such  recognized  limitation  or  qualification  of 
the  right  of  renunciation  by  any  one  partner,  where 

1  Poth.  de  Soc.  n.  149,  150.  -  Poth.  de  Soc.  n.  152,  153. 

^  Poth.  de  Soc.  n.  153,  154.  See  a  like  rule  in  the  Roman  law.  Poth. 
Pand.  17,  2,  n.  68. 

*  Code  Civil  of  France,  art.  1869-1871 ;  Code  of  Louisiana  (1825),  art. 
2855-2859.  —  The  French  Civil  Code  expresses  the  whole  doctrine  in  the 
following  brief  terms :  "Dissolution  of  partnership  by  the  will  of  one  of 
the  parties  applies  only  to  partnerships,  the  duration  of  which  is  unlimited, 
and  is  etiected  by  a  renunciation  notified  to  all  the  partners,  provided  such 
renunciation  be  bona  fide,  and  not  made  at  an  improper  time.  Renunciation 
is  not  made  bona  fide,  where  the  partner  renounces  in  order  to  appropriate 
to  himself  alone  the  profit,  which  the  partners  proposed  to  have  drawn  out 
in  common.  It  is  made  at  an  improper  time,  where  the  things  are  no  longer 
entire,  and  that  it  is  of  consequence  to  the  partnership  that  its  dissolution 
be  deferred.  Dissolution  of  partnerships  for  a  term  cannot  be  demanded 
by  one  of  the  partners  before  the  term  agreed,  unless  for  just  motives ;  as 
where  another  partner  fails  in  his  engagements,  or  that  an  habitual  infirmity 
renders  him  unfit  for  the  aflfairs  of  the  partnership,  or  other  similar  cases, 
the  lawfulness  and  weight  of  which  are  left  to  the  arbitration  of  judges." 

*  Ersk.  Inst.  B.  3,  c.  3,  §  26 ;  2  Bell,  Comm.  B.  7,  c.  1,  p.  532,  533, 
6th  ed. 


446  PARTNERSHIP.  [cHAP.  XIII. 

the  partnership  is  merely  at  will ;  for  in  such  cases, 
any  partner,  as  we  have  seen,  may  dissolve  it  at  his 
pleasure.^     In  cases,  where  the  partnership  is  by  the 

'  Ante,  §  269;  Marquand  v.  N.  Y.  Manuf.  Co.  17  Johns.  525. — Mr. 
Swanston,  in  bis  learned  note  to  Crawshay  v.  Maule,  1  Swans.  509-514, 
says:  "  The  Editor  is  not  apprised  of  any  direct  authorities  in  the  English 
law  on  the  distinction  between  seasonable  and  unseasonable  dissolution. 
But,  in  one  instance,  the  Court  of  Chancery  seems  to  have  assumed  jurisdic- 
tion to  qualify  the  right  of  renunciation,  by  reference  to  that  distinction. 
'  An  application  was  made  some  years  ago  to  the  Court  of  Chancery  for  an 
injunction  to  inhibit  the  defendants  from  dissolving  a  commercial  partner- 
ship ;  the  other  side  proposed  to  defer  it,  as  not  having  had  time  to  answer 
the  affidavits  ;  but  it  was  insisted  that  this  was  in  the  nature  of  an  injunction 
to  stay  waste,  and  that  irreparable  damage  might  ensue.  At  length  the 
Court  deferred  it,  the  defendants  undertaking  not  to  do  any  thing  preju- 
dicial in  the  mean  time.  But  no  doubt  arose  concerning  the  general  pro- 
priety of  such  an  application.  Chavany  against  Van  Sommer,  in  Chancery, 
M.  T.  11,  G.  3;'  3  Wooddeson,  Lect.  416,  note.  The  register  contains 
the  following  entry  of  the  original  application  in  this  case.  Peter  Chavany, 
plaintiff,  James  Van  Sommer,  and  others,  defendants ;  14th  November, 
1771.  'Whereas  Mr.  Solicitor-General,  of  counsel  with  the  plaintiff,  this 
day  moved  and  offered  divers  reasons  into  this  Court,  that  an  injunction 
may  issue  to  restrain  the  said  defendants,  James  Van  Sommer,  &c.,  from 
dissolving  or  breaking  up  the  copartnership,  now  carrying  on  between  the 
plaintiff  and  the  said  defendants,  &c. ;  or  from  doing  any  act  whatever 
tending  thereto,  and  also  to  restrain  the  said  defendants,  &c.,  from  selling,  or 
disposing  of,  or  joining  in  the  sale,  conveyance,  or  assignment  of  the  lease- 
hold estate,  and  interest  belonging  to  the  said  copartnership,  or  contracting 
for  the  sale  thereof,  or  joining  in  such  contract,  in  the  presence  of  Mr.  John 
Cocks  and  Mr.  Maddock,  of  counsel  with  the  defendants,  who  prayed  that 
the  said  notice  might  be  saved;  whereupon,  and  upon  hearing  what  was 
alleged  by  the  counsel  on  both  sides,  it  is  ordered,  that  the  benefit  of  the 
notice  of  the  said  motion  be  saved  till  the  last  day  of  this  term,  the  defend- 
ants consenting  not  to  do  any  thing  contrary  to  what  the  plaintiff  now  jirays, 
in  the  mean  time  ;  and  it  is  further  ordered,  that  the  defendants  do  file  their 
affidavits  two  days  before.'  Reg.  Lib.  A.  1771,  fol.  6.  The  benefit  of  the 
notice  was  afterwards  saved,  till  the  first  general  seal  ensuing  the  term  (Id. 
fol.  7),  and  on  the  25th  of  November,  the  defendants  obtained  an  order  for 
time  to  answer.  Id.  fol.  147.  The  register  has  been  searched  to  the  end  of 
Trinity  term,  1775,  without  discovering  any  further  trace  of  this  cause.  In 
another  case,  the  Court  qualified  the  obligation  to  continue  a  partnership,  by 
reference  to  the  design  of  the  contract ;  and  directing  an  inquiry  whether 
the  business  could  be  carried  on  according  to  the  true  intent  and  meaning 
of  the  articles,  expressed  a  determination  to  dissolve  the  partnership,  if  the 
Master  reported  in  the  negative.     Baring  v.  Dix,  1  Cox,  213 ;  1  Mont,  on 


CHAP.  XIII.]         DISSOLUTION    OF    PARTNERSHIP.  447 

agreement  to  endure  for  a  limited  period  of  time,  the 
question,  whether  it  may  within  the  period  be  dis- 
solved by  the  mere  act  or  will  of  one  of  the  partners, 
without  the  consent  of  all  the  others,  does  not  seem 
to  be  absolutely  and  definitely  settled  in  our  jurispru- 
dence, although  it  would  not  seem,  upon  principle,  to 
admit  of  any  real  doubt  or  difficulty.  Whenever  a 
stipulation  is  positively  made,  that  the  partnership  shall 
endure  for  a  fixed  period,  or  for  a  particular  adventure 
or  voyage,  it  would  seem  to  be  at  once  inequitable  and 
injurious  to  permit  any  partner,  at  his  mere  pleasure, 
to  violate  his  engagement,  and  thereby  to  jeopard,  if 
not  sacrifice,  the  whole  objects  of  the  partnership ;  for 
the  success  of  the  whole  undertaking  may  depend 
upon  the  due  accomplishment  of  the  adventure  or 
voyage,  or  the  entire  time  be  required  to  put  the  part- 
nership into  beneficial  operation.^  It  is  no  answer 
to  say,  that  such  a  violation  of  the  engagement  may 
entitle  the  injured  partners  to  a  compensation  in  dam- 
ages ;  for,  independently  of  the  delay  and  uncertainty 
attendant  upon  any  such  mode  of  redress,  it  is  obvious, 
that  the  remedy  may  be,  nay,  must  be,  in  many  cases 
utterly  inadequate  and  unsatisfactory.  If  there  be  any 
real  and  just  ground  for  the  abandonment  of  the  part- 
nership, a  court  of  equity  is  competent  to  administer 
suitable  redress.  But  that  is  exceedingly  different  from 
the  right  of  the  partner,  sua  sponte^  from  mere  caprice, 

P.  90;  and  in  Waters  v.  Taylor,  2  Ves.  &  B.  299,  Lord  Eldon  declared  a 
partnership  dissolved  by  the  conduct  of  the  parties,  rendering  it  impossible 
to  conduct  the  undertaking  on  the  terms  stipulated.  See  Denisart,  voce, 
Societe,  s.  12,  p.  539."  But  the  right  of  a  Court  to  decree  a  dissolution  of 
the  partnership  is  a  very  different  thing  from  the  right  of  the  partner  him- 
self to  dissolve  it  sua  sponte.  {See  Blisset  v.  Daniel,  10  Hare,  493  ;  Feath- 
erstonhaugh  v.  Turner,  25  Beav.  382;  Skinner  v.  Tinker,  3-1  Barb.  333.} 
'  Story,  Eq.  Jur.  §  668. 


448  PARTNERSHIP.  [cHAP.  XIII. 

or  at  his  own  pleasure,  to  dissolve  the  partnership,^  In 
short,  the  opposite  doctrine,  although  perhaps  in  some 
measure  countenanced  by  the  Roman  law,  is  founded 
upon  reasons  exceedingly  artificial,  if  not  indefensible. 
It  proceeds  upon  a  ground  which  cannot  be  maintained 
in  common  sense  or  justice,  that  any  partner  has  a  right 
to  found  his  own  claim  to  immediate  indemnity  and 
safety  upon  a  known  injury  to  the  rights  and  interests 
of  his  copartners,  whatever  may  be  the  nature  or  extent 
thereof.^ 

'  See  1  Story,  Eq.  Jur.  §  668.  {A  partnership  between  two  solicitors 
may  be  dissolved  instanter,  if  one  of  them  fraudulently  sells  out  trust  funds 
and  applies  the  produce  to  his  own  use.  Essell  v.  Hayward,  30  Beav.  158 ; 
See  AUhusen  v.  Borries,  15  Weekly  Rep.  739.} 

^  The  opinion  here  maintained  has  the  apparent  support  of  the  most 
respectable  elementary  writers,  and  has  been  either  taken  for  granted,  or 
partially  upheld  by  many  eminent  judges.  See  Gow  on  P.  c.  5,  §  1,  p. 
218,  219,  226,  3d  ed. ;  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  68,  2d  ed. ;  Wats,  on 
P.  c.  7,  p.  381,  2d  ed. ;  1  Mont,  on  P.  Pt.  3,  c.  1,  §  1,  p.  90,  [113];  3 
Kent,  61.  Lord  Eldon  in  Peacock  v.  Peacock,  16  Ves.  49,  and  Crawshay 
V.  Maule,  1  Swans.  495,  took  it  for  granted  that  one  partner  could  not,  of 
his  own  mere  will,  dissolve  a  partnership  for  a  limited  period.  Mr.  Justice 
Washington  asserted  the  same  doctrine  in  positive  terms,  in  Pearpoint  v. 
Graham,  4  Wash.  C.  C.  223.  On  that  occasion  he  said  :  "  iSTow  it  is  perfectly 
clear,  that  one  partner  cannot,  by  withdrawing  himself  from  the  association 
before  the  period  stipulated  between  the  partners  for  its  continuance,  either 
dissolve  the  partnership,  or  extricate  himself  from  the  responsibilities  of  a 
partner,  either  in  respect  to  his  associates,  or  to  third  persons ;  and  if  this 
be  so,  it  would  seem  that  he  could  not  produce  the  same  consequence  by 
any  other  voluntary  act  of  his  own.  This  is  not  like  those  cases  where,  by 
the  act  of  God,  or  by  the  operation  of  law,  the  partnership  is  dissolved,  as 
by  the  death  or  bankruptcy  of  a  partner."  The  same  doctrine  seems  to 
have  been  held  in  the  unreported  case  of  Chavany  v.  Van  Sommer,  3  Wood- 
des.  Lect.  p.  416,  note;  1  Swans.  512,  note;  ante,  §  275,  note;  {and  it 
was  so  held  in  Smith  v.  Mulock,  1  Robertson,  (N.  Y.)  569.}  The  case  of 
Marquand  v.  N.  Y.  Manuf.  Co.  17  Johns.  625,  and  the  dictum  of  Mr.  Justice 
Piatt,  in  Skinner  v.  Dayton,  19  Johns.  513,  538,  are  indeed  to  the  contrary. 
Mr.  Chancellor  Kent  (3  Kent,  54,  55,  Id.  61)  has  summed  up  the  reasoning 
on  this  side  of  the  question,  without,  however,  expressing  his  own  opinion. 
He  says  :  "  But  if  the  partners  have  formed  a  partnership  by  articles,  for  a 
definite  period,  in  that  case  it  is  said,  that  it  cannot  be  dissolved  without 
mutual  consent  before  the  period  arrives.     This  is  the  assumed  principle  of 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  449 

§  276.  Nor  does  the  Roman  law,  or  the  foreign  law, 
founded  upon  it,  in  cases  of  a  partnership  for  a  lim- 

Law  bj'  Lord  Eldon,  in  Peacock  v.  Peacock,  and  in  Crawsliay  v.  Maule ; 
and  yet  in  Marquand  v.  N.  Y.  Manuf.  Co.  it  was  held,  that  the  vohmtary 
assignment,  by  one  partner,  of  all  his  interest  in  the  con(^ern,  dissolved  the 
partnership,  though  it  was  stipulated  in  the  articles,  that  the  partnership 
was  to  continue  until  two  of  the  partners  should  demand  a  dissolution,  and 
the  other  partners  wished  the  business  to  be  continued,  notwithstanding  the 
assignment.     And  in  Skinner  v.  Dayton,  it  was  held  by  one  of  the  Judges, 
that  there  was  no  such  thing  as  an  indissoluble  pai'tnership.     It  was  revoca- 
ble in  its  own  nature,  and  each  party  might,  by  giving  due  notice,  dissolve 
the  partnership,  as  to  all  future  capacity  of  the  firm  to  bind  him  by  contract ; 
and  he  had  the  same  legal  power,  even  though  the  parties  had  covenanted 
with  each  other  that  the  partnership  should  continue  for  such  a  period  of 
time.     The  only  consequence  of  such  a  revocation  of  the  partnership  power, 
in  the  intermediate  time,  would  be,  that  the  partner  would  subject  himself 
to  a  claim  of  damages  for  a  breach  of  the  covenant.     Such  a  power  would 
seem  to  be  implied  in  the  capacity  of  a  partner,  to  interfere  and  dissent 
from  a  purchase  or  contract  about  to  be  made  by  his  associates ;   and  the 
commentators  on  the  Institutes  lay  down  the  principle,  as  drawn  from  the 
civil  law,  that  each  partner  has  a  power  to  dissolve  the  connection  at  any 
time,  notwithstanding  any  convention  to  the  contrary,  and  that  the  power 
results  from  the  nature  of  the  association.     They  hold  every  such  conven- 
tion null,  and  that  it  is  for  the  ^^"blic  interest,  that  no  partner  should  be 
obliged  to  continue  in  such  a  partnership  against  his  will,  inasmuch  as  the 
community  of  goods  in  such  a  case  engenders  discord  and  litigation."     He 
afterwards  adds  :   "In  some  instances,  Chancery  will  restrain  a  partner  from 
an  unseasonable  dissolution  of  the  connection,  and  on  the  same  principle, 
that  it  will  interfere  to  stay  waste  and  prevent  an  irreparable  mischief.    And 
such  a  power  was  assumed  by  Lord  Apsley,  in  1771,  without  any  question*' 
being  made  as  to  the  fitness  of  the  exercise  of  it.     In  the  civil  law,  it  was 
held  by  the  civilians  to  be  a  clear  point,  that  an  action  might  be  instituted 
by,  or  on  behalf  of,  the  partnership,  if  a  partner,  in  a  case,  in  which  no  pro- 
vision was  made  by  the  articles,  should  undertake  to  dissolve  the  partnership 
at  an  unseasonable  moment ;  and  they  went  on  the  ground,  that  the  good  of 
the  association  ought  to  control  the  convenience  of  any  individual  member. 
But  such  a  power,  acting  upon  the  strict  legal  right  of  a  party,  is  extremely 
difficult  to  define,  and  I  should  think  rather  hazardous  and  embarrassing  in 
its  exercise."     Vinnius  has  stated  the  general  reasoning  of  the  Roman  law 
on  this  point  in  the  passage  already  cited,  ante,  §  270,  note.     But  his  sole 
ground  is,  that  otherwise  the  partnership  would  be  perpetual,  which  can- 
only  apply  to  a  case  where  there  is  a  covenant  for  its  perjjetual  duration ; 
and  even  then  it  might  be  dissolved  by  a  court  of  justice,  for  a  reasonable 
cause.     In  the  recent  case  of  Bishop  v.  Breckles,  Hoff.  Ch.  531:,  the  Vice- 
Chancellor  (llullinan)  of  New  York  examined  all  the  authorities ;  and  con- 

29 


450  PARTNERSHIP.  [CHAP.  XIII. 

itecl  period  of  time,  properly  considered,  justify,  or 
allow  one  partner  to  dissolve  it  at  his  mere  pleasure, 
within  that  period.  On  the  contrary,  as  we  have  seen,^ 
it  annexes  to  the  exercise  of  the  right  a  positive  condi- 
tion, that  it  shall  be  for  a  just  cause  and  under  reasona- 
ble circumstances.  Pothier  accordingly  says,  that  in 
cases  of  partnership  for  a  fixed  period  of  time,  there  is 
an  implied  understanding,  that  it  shall  not  be  dissolved 
until  the  expiration  of  that  period,  at  least  unless  some 
just  cause  for  the  dissolution  shall  have  supervened; 
and,  therefore,  one  partner  cannot,  without  such  just 
cause,  dissolve  the  partnership,  to  the  prejudice  of  the 
other  partners.  He  cites  the  Roman  law  in  support 
thereof :  Qui  societatem  in  tenipus  coit,  earn  ante  tem/pus 
renuntiando^  sociinn  a  se,  non  se  a  socio  liherat;^  and 
he  then  proceeds  to  enumerate  the  particular  cases  which 
shall  constitute  just  causes  of  dissolution.  Moreover, 
this  important  qualification  is  annexed  by  the  Roman 
law  to  the  right  of  renunciation,  that  it  is  limited  to  cases 
where  it  is  for  the  benefit,  not  of  the  particular  partner, 
but  of  the  partnership  itself,  that  it  should  be  dissolved ; 

eluded  by  saying:  "The  law  of  the  Court,  then,  requires  something  more 
than  the  mere  will  of  one  party  to  justify  a  dissolution.  But  it  seems  to  me, 
that  but  little  should  be  demanded.  The  principle  of  the  civil  law  is  the 
most  wise.  Why  should  this  Court  compel  the  continuance  of  an  union, 
when  dissension  has  marred  all  prospect  of  the  advantages  contemplated  at 
its  formation  ?  By  refusing  to  dissolve  it,  the  power  of  binding  each  other, 
and  of  dealing  with  the  jjartnership  property  remains,  when  all  confidence 
and  all  combination  of  effort  is  at  an  end.  The  object  of  the  contract  is 
defeated."  In  truth,  however,  the  Roman  law  carries  in  its  own  bosom  a 
qualification,  which  shows  that  the  dissolution  must  be  for  a  reasonable 
cause,  and  under  reasonable  circumstances ;  and  then  it  seems  most  fit  for 
the  action  of  a  court  of  justice,  and  not  for  one  of  the  interested  parties. 
Ante,  §  273,  and  note;  Both.  Band.  17,  2,  n.  64,  %b\  Both,  de  Soc.  n.  138, 
146,  149-152. 

'  Ante,  §  273,  274 ;  Both.  Band.  17,  2,  n.  64,  Qb,  68 ;  2  Bell,  Conmi.  B. 
7,  c.  2,  p.  632,  633,  5th  ed. 

=  Both.de  Soc.  n.  152;  D,  17,  2,65,  6;  Both.  Band.  17,  2,  n.  64,65; 
ante,  §  273,  note. 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  451 

otherwise  it  is  deemed  unseasonable.  Hoc  ita  verum 
esse,  si  socieiatis  intersit  non  dirimi  societatein,  semper 
enhn,  non  id  quod  privatim  interest  unius  ex  sociis^ 
servaiH  solet,  sed  quod  societati  exp)edit}  So  that,  in 
effect,  the  whole  difference  in  this  view  between  the 
Roman  and  foreign  law,  and  the  common  law%  resolves 
itself  into  this,  that  in  the  former  the  partner  may,  by 
his  own  act,  primarily  insist  upon  a  dissolution,  which, 
however,  is  not  valid,  unless  it  be  for  a  just  cause,  and 
is  affirmed  to  be  so  by  a  Court  of  Justice ;  ^  whereas 
the  common  law  does  not  allow  the  dissolution  to  be 
complete  or  effective,  until  a  Court  of  Justice  has  itself 
decreed  the  dissolution  for  a  just  cause.  In  substance, 
therefore,  the  rule  is  the  same  in  both  laws ;  although 
it  is  varied  in  its  actual  application.  The  rule  of  the 
common  law  is,  to  say  the  least  of  it,  quite  as  conven- 
ient as  that  of  the  Koman  and  foreign  law,  if,  indeed, 
it  be  not  more  appropriate,  and  just,  and  equitable,  than 
that  of  the  latter. 

§  277.  The  question  sometimes  occurs,  whether  a 
partnership,  under  all  the  circumstances  of  the  case,  is 
properly  to  be  treated  as  a  partnership  at  will,  or  as  a 
partnership  for  a  limited  period.  It  is  by  no  means 
necessary,  that  there  should  be  an  express  stipulation 
either  way ;  for  its  intended  duration  may  often  be  as- 
certained by  implications  or  presumptions,  arising  from 
the  acts  and  conduct  of  the  parties,  and  other  accompa- 
nying circumstances.  In  the  absence,  however,  of  all 
acts  or  circumstances,  which  clearly  rebut  and  control 
the  inference,  the  conclusion  of  law  is,  that  the  partner- 
ship is  intended  to  be  at  the  mere  will  and  pleasure  of 
the  parties.     But  acts  and  circumstances  may  greatly 


1  D.  17,  2,  65,  5;  Poth.  Pand.  17,  2,  n.  Go ;  Domat,  1,  8,  5,  art.  4,5. 
*  Poth.  de  Soc.  n.  154. 


452  PARTNERSHIP.  [cHAP.  XIII. 

qualify  or  even  overturn  this  conclusion.  Thus,  the 
question  has  arisen,  whether  the  purchase  or  lease  of 
certain  premises,  for  carrying  on  the  trade  or  business 
of  the  partnership  for  a  limited  term  of  years,  did,  of 
itself,  amount  to  presumptive  proof,  that  there  was  an 
implied  agreement  between  the  partners,  that  the  dura- 
tion of  the  partnership  should  be  co-extensive  with  the 
term  of  the  purchase  or  lease.  It  has  been  held,  that  it 
did  not ;  for  it  was  not  of  itself  decisive  any  way :  but 
was  readily  reconcilable  with  the  notion,  that  it  was 
purchased  for  the  mere  accommodation  of  the  trade  or 
business,  while  it  should  endure,  and  then  to  be  sold  as 
part  of  the  partnership  effects ;  and  so  it  was  not  in- 
tended in  any  manner  to  indicate  the  period  of  its 
duration.  Upon  any  other  ground  of  reasoning,  if  the 
purchase  was  of  an  estate  in  fee-simple,  it  might  be  con- 
tended, that  the  partnership  was  to  continue  for  ever 
which  would  be  a  wholly  inadmissible  doctrine.^ 

'  See  Marshall  v.  Marshall,  cited  2  Bell,  Comm.  B.  7,  c.  1,  p.  633,  note  3  ; 
Crawshay  v.  Maule,  1  Swans.  495,  508,  521.  In  this  last  case.  Lord  Eldon 
said  :  "  The  general  rules  of  partnership  are  well  settled.  Where  no  term 
is  expressly  limited  for  its  duration,  and  there  is  nothing  in  the  contract  to  fix 
it,  the  partnership  may  be  terminated  at  a  moment's  notice  by  either  party. 
By  that  notice  the  partnership  is  dissolved,  to  this  extent,  that  the  Court  will 
compel  the  parties  to  act  as  partners,  in  a  partnership  existing  only  for  the 
purpose  of  winding  up  the  aSairs.  So  death  terminates  a  partnership,  and 
notice  is  no  more  than  notice  of  the  fact  that  death  has  terminated  it.  With- 
out doubt,  in  the  absence  of  express,  there  may  be  an  implied  contract,  as  to 
the  duration  of  a  partnership.  But  I  must  contradict  all  authority,  if  I  say, 
that  wherever  there  is  a  partnership,  the  purchase  of  a  leasehold  interest  of 
longer  or  shorter  duration  is  a  circumstance  from  which  it  is  to  be  inferred 
that  the  partnership  shall  continue  as  long  as  the  lease.  On  that  argument 
the  Court  holding  that  a  lease  for  seven  years  is  proof  of  jDartnership  for  sev- 
en years,  and  a  lease  of  fourteen  of  a  partnership  for  fourteen  years,  must 
hold,  that  if  the  partners  purchase  a  fee-simple,  there  shall  be  a  partnership 
for  ever.  It  has  been  repeatedly  decided,  that  interests  in  lands,  purchased 
for  the  purpose  of  carrying  on  trade,  are  no  more  than  stock  in  trade.  I  re- 
member a  case  in  the  House  of  Lords,  about  three  years  ago  (the  case  of  the 
Carron  Company),  in  which  the  question  was  much  discussed,  whether,  when 
partners  purchase  freehold  estate  for  the  purpose  of  trade,  on  dissolution, 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  453 

§  278.  In  the  next  place,  a  partnership  may  expire 
by  the  mere  efflux  of  the  time,  which  limits  and  bounds 
its  duration  under  the  terms  of  the  original  contract,  by 
which  it  is  created.  This  is  the  natural,  nay,  the  ne- 
cessary, result  of  the  very  design  and  terms  of  the  con- 
tract; for  the  same  consent,  which  originated,  terminates 
it ;  and  the  consent  cannot  be  presumed  to  exist  beyond 
the  fixed  period,  since  the  presumption  would  be  direct- 
ly contradictory  to  the  actual  limitation.  Hence,  if  in 
fact  continued,  it  must  be  continued  by  a  new  agree- 
ment, and  not  under  the  old  one.^  So  Pothier  lays 
down  the  rule.  Lorsque  la  societe  a  ete  contradee  pour 
un  certain  te7n2:)s  limite,  elle  jinit  de  plein  droit  par  Vex- 

that  estate  must  not  be  considered  as  personalty,  with  regard  to  the  repre- 
sentatives of  a  deceased  partner."  Again  he  added :  "  It  has  also  been  in- 
sisted, that  the  purchase  of  leases  must  be  considered  as  evidence  of  a  con- 
tract for  the  continuance  of  the  concern.  Unquestionably  partners  may  so 
purchase  leasehold  interest,  as  to  imply  an  agreement  to  continue  the  part- 
nership as  long  as  the  leases  endure ;  but  it  is  equally  certain  that  there  is  no 
general  rule,  that  partners,  purchasing  a  leasehold  interest,  must  be  under- 
stood to  have  entered  into  a  contract  of  partnership  commensurate  with  the 
duration  of  the  leases.  For  ordinary  purposes  a  lease  is  no  more  than  stock 
in  trade,  and  as  part  of  the  stock  may  be  sold  ;  nor  would  it  be  material,  that 
the  estate  purchased  by  a  partnership  was  freehold,  if  intended  only  as  an 
article  of  stock  ;  though  a  question  might,  in  that  case,  arise  on  the  death  of 
a  partner,  whether  it  would  pass  as  real  estate,  or  as  stock,  personal  estate  in 
enjoyment,  though  freehold  in  nature  and  quality.  It  is  impossible,  therefore, 
in  my  opinion,  to  hold  that  there  being  many  leases,  some  long,  some  of  short 
duration,  and  others  intermediate,  the  partnership  is  to  subsist  during  the 
term  of  the  leases,  or  of  the  longest  lease."  See  also  2  Bell,  Comm.  B.  7,  c. 
2,  p.  633,  5th  ed.  ;  Coll.  on  P.  B.  1,  c.  2,  §  1,  p.  68,  69,  2d  ed, ;  Gow  on  P. 
c.  5,  §  1,  p.  225,  3d  ed.  { On  an  agreement  by  a  partner  with  a  stranger  for 
a  sub-partnership,  there  is  no  implication  that  the  sub-partnership  shall  con- 
tinue as  long  as  the  original  partnership.  Frost  v.  Moulton,  21  Beav.  596. 
A  partnership  formed  for  mining  and  trading  in  California  will  be  presumed 
to  be  intended  to  continue  at  least  one  mining  season  ;  at  least  if  such  a  part- 
nership engages  men  to  work  for  a  year,  to  be  paid  by  a  share  of  the  profits, 
this  is  an  implication  that  the  partnership)  was  intended  to  last  a  year,  and  it 
cannot  be  dissolved  at  will.  Potter  v.  Moses,  1  R.  I.  430.  See  Reade  v. 
Bentley,  4  Kay  &  J.  656.} 

'  2  Bell,  Comm.  B.  7,  c.  2,  p.  631,  5th  ed. ;  Id.  c.  3,  p.  649-655  ;  U.  S. 
Bank  v.  Binney,  5  Mason,  176,  185;  3  Kent,  53. 


454  PARTNERSHIP.  [cHAP.  XIII. 

piration  de  ce  temps}  And  he  adds,  that  the  prolonga- 
tion of  it  beyond  that  period  must  be  proved  by  some 
act  in  writing,  clothed  with  the  proper  formalities, 
which  were  required  by  law  in  its  original  formation.^ 
§  279.  But  the  question  may  arise  at  the  common 
law,  when  a  partnership  is  actually  continued  by  the 
parties  after  the  expiration  of  the  original  term,  pre- 
scribed for  its  duration,  what  is  to  be  deemed  the  true 
effect  and  interpretation  of  the  act '?  Is  it  to  be  treated 
as  a  continuation  of  the  partnership,  upon  all  the  origi- 
nal terms  thereof,  and  for  a  like  period  ?  Or,  is  it  to 
be  deemed  a  mere  continuation  of  the  partnership,  dur- 
ing the  will  of  the  parties'?  The  question  does  not, 
perhaps,  admit  of  any  uniform  or  universal  answer.  It 
may  be  affected  by  various  considerations ;  by  the  acts 
of  the  parties ;  by  the  habits  and  changes  of  their  busi- 
ness ;  by  implications  from  their  omission  to  act  upon 
certain  terms  of  the  original  contract,  and  from  appar- 
ent qualification  and  exceptions  and  restrictions  of  oth- 
ers, in  their  dealings  and  settlements  with  each  other, 
or  even  with  third  persons.  But,  in  the  absence  of  all 
acts  and  circumstances  whatsoever,  to  control  or  vary 
the  original  terms  of  the  agreement,  the  just  legal  con- 
clusion seems  to  be,  that  the  partnership  is  to  be  treated 
as  a  mere  partnership  during  the  joint  will  and  pleasure 
of  all  the  parties,  and,  therefore,  dissoluble  at  the  will 
of  any  one  of  them ;  but  that  in  all  other  respects  it  is 
to  be  carried  on  upon  the  original  terms  thereof,  as  to 
rights,  duties,  interests,  liabilities,  and  shares  of  the 
profits  and  losses.^ 

»  Poth.  de  Soc.  n.  139;  Code  Civil  of  France,  art.  1865,  1866;  Code  of 
Louisiana,  1825,  art.  2848,  2849. 

*  Ibid. 

'  {See  §  19  7,  198};  Featherstonhaugh  v.  Fenwick,  17  Ves.  298;  U.  S. 
Bank  v.  Binney,  5  Mason,  176,  185  ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  632,  633, 
5th  ed. ;  Gow  on  P.  c.  5,  §  1,  p.  224,  225,  3d  ed. ;  Mifflin  v.  Smith,  17  S.  &  R. 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  455 

§  280.    In  the  next  place,  a  partnership  may  expire 
by  its  own  express  or  implied  limitation,  whenever  the 

165.  —  Sir  Wm.  Grant  (Master  of  the  Rolls),  in  the  case  of  Featherstonhaugh 
V.  Fenwick,  17  Ves.  298,  307,  discussed  the  subject  somewhat  at  large;  and 
how  far  presumptions  might  arise  from  circumstances,  as  to  the  terms  on 
which  the  partnership  was  to  be  deemed  continued,  he  said :  "  The  first  ques- 
tion in  this  cause  is,  whether  the  partnership  was  dissolved  on  the  22d  of 
November,  1804.  The  plaintiff  contends  that  the  defendants  had  no  right 
to  put  an  end  to  the  partnership  at  that  period ;  and  that  is  contended  on 
several  grounds ;  first,  that  as  by  the  articles  which  formerly  existed,  but  had 
expired,  twelve  months'  notice  was  necessary  to  enable  a  partner  to  with- 
draw, the  same  notice  was  necessary  for  withdrawing  from  the  partnership , 
which  continued  without  articles.  I  do  not  agree  to  that  proposition.  The 
latter  partnership  was  for  an  indefinite  period,  and  therefore  might  be  dis- 
solved at  the  will  of  the  parties ;  subject  to  the  question,  afterwards  made, 
by  what  notice  that  will  must  be  declared.  Another  ground  on  which  the 
plaintiff  contends  against  the  dissolution  on  the  22d  of  November,  is,  that  the 
lease  of  the  premises  in  London,  used  in  carrying  on  the  concern,  was  then 
unexpired.  That  does  not  oppose  any  obstacle  to  the  dissolution  ;  as  it  is 
not  a  necessary  consequence,  that  partners,  taking  premises  for  the  use  of 
their  trade  for  a  definite  period,  contract  a  partnership  for  the  same  period. 
If  any  part  of  the  term  is  unexpired  at  the  end  of  the  partnership,  that  is 
partnership  property,  and  is  to  be  distributed  as  such ;  but  I  do  not  appre- 
hend that  they  are  bound  to  continue  the  partnership  on  that  account.  A 
third  ground  is,  that  there  were  several  contracts  subsisting  with  their  work- 
men, which  had  a  considerable  period  of  time  to  run.  That  argument  goes 
considerably  too  far.  It  would  go  to  this  extent,  that  a  partnership  could  not 
be  dissolved,  until  all  their  contracts  were  completely  ended  and  wound  up  ; 
and  that  can  hardly  be  the  case  at  any  period,  as  persons  are  entering  into 
contracts  from  day  to  day,  which  cannot  all  expire  at  the  same  period.  It 
would  on  that  ground  be  hardly  possible  to  dissolve  any  partnership,  as  there 
must  always  be  contracts  depending.  I  do  not  conceive,  therefore,  that  the 
existence  of  engagements  with  third  persons,  either  for  goods  to  be  worked 
up,  or  engagements  with  their  workmen,  which  had  not  come  to  a  conclusion, 
can  form  an  objection  to  the  dissolution.  The  partners  cannot,  it  is  true,  by 
a  dissolution,  relieve  themselves  from  the  performance  of  any  engagements, 
which  they  may  have  contracted  with  third  persons ;  but,  as  among  them- 
selves, the  existence  of  such  engagements  cannot  prevent  a  dissolution,  either 
by  mutual  consent  or  by  notice.  The  question  then  is,  what  sort  of  notice 
ought  to  be  given  tor  this  purpose  ?  Until  a  very  recent  period,  it  had  been, 
I  believe,  understood,  that  a  reasonable  notice  should  be  given ;  but  upon  the 
question,  what  is  reasonable  notice,  much  difference  of  opinion  may  prevail. 
On  the  one  hand,  it  may  be  extremely  disadvantageous  to  parties  to  say, 
that  a  partnership  shall  be  dissolved  on  a  given  day ;  on  the  other,  it  must 
be  extremely  difficult  for  a  Court  of  Equity,  by  a  general  rule,  to  ascertain 


456  PARTNERSHIP.  [cHAP.  XIII, 

event  has  occurred,  which  the  parties  naturally  or  ne- 
cessarily contemplated  as  its  just  termination.^  This  may 
arise  in  two  ways;  (1.)  by  the  extinction  of  the  thing, 
which  constituted  the  sole  subject-matter  of  the  partner- 
ship;  (2.)  by  the  completion  or  accomplishment  of  the 
entire  business,  for  which  the  partnership  was  formed.^ 

■what  is  reasonable  notice ;  and  the  question,  whether  the  particular  notice 
■was  reasonable  or  convenient,  would  be  the  subject  of  discussion  in  almost 
every  instance  of  the  dissolution  of  a  partnership.     Considerations  of  that 
sort,  I  believe,  have  led  to  a  different  rule ;  that  in  the  case  of  a  partnership, 
such  as  this,  subsisting  without  articles,   and  for  an  indefinite  period,  any 
partner  may  say,  '  It  is  my  pleasure  on  this  day  to  dissolve  the  partnership.' 
But,  considering  the  principles  on  Avhich  the   dissolution  must  take  place,  a 
partner  can  very  seldom,  if  ever,  have  an  interest  to  give  notice  of  dissolu- 
tion at  a  period  disadvantageous  to  the  general  interests  of  the  concern ;  as, 
where  the  articles  do  not  prescribe  the  terms,  the  law  ascertains  what  shall 
be  the  consequence  of  dissolution  ;  viz.,  that  the  whole  of  the  joint  property 
must  be  sold  off,  and  the  whole  concern  wound  up.     Xo  partner,  therefore, 
can  derive  a  particular  advantage  by  choosing  an  unseasonable  moment  for 
dissolution ;  as,  upon  the  principles  established  in  Crawshay  v.  Collins,  and 
the  authorities  there  referred  to,  he  must  suffer  in  proportion  to  the  extent  of 
his  interest  in  the  trade.     I  hold,  therefore,  that  the  dissolution  of  this  part- 
nership took  place  on  the  2 2d  November."    In  U.  S.  Bank  v.  Binney,  5  iNIason, 
176,  185,  the  Court  said:  "  Those  articles  (of  partnership)  expired  by  their 
own  limitation  in  two  years,  and  had  force  no  longer,  unless  the  parties 
elected  to  continue  the  partnership  on  the  same  terms.     That  is  matter  of 
evidence  upon  the  whole  facts.     The  natural  presumption  is,  that,  as  the 
partnership  was  continued  in  fact,  it  was  construed  upon  the  same  terms  as 
before,  unless  that  presumption  is  rebutted  by  the  other  circumstances  in  the 
case.    There  is  no  written  agreement  respecting  the  extension  of  the  partner- 
ship, and  therefore  it  is  open  for  inquiry  upon  all  the  evidence." 

1  3  Kent,  52,  53. 

2  3  Kent,  53;  [Fellows  v.  Wyman,  33  X.  H.  351]  ;  Griswold  v.  Wadding- 
ton,  16  Johns.  438,  491. —  On  this  occasion  Mr.  Chancellor  Kent,  in  his  most 
masterly  judgment,  used  upon  this  point  the  following  language :  '•  Pothier, 
in  his  treatise  on  Partnership,  says,  that  every  partnership  is  dissolved  by  the 
extinction  of  the  business  for  which  it  was  formed.  This  he  illusti-ates,  in 
his  usual  manner,  by  a  number  of  easy  and  familiar  examples.  Thus,  if  a 
partnership  be  formed  between  two  or  more  persons,  for  bringing  together, 
and  selling  on  joint  account,  the  produce  of  their  farms,  or  of  their  live-stock, 
and  the  produce  of  the  stock  of  one  of  them  should  happen  to  fail  or  be 
destroyed,  the  partnership  ceases,  of  course ;  for  there  can  be  no  longer  any 
partnership,  when  one  has  nothing  to  contribute.     So,  if  two  persons  form  a 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  457 

Ail  example  of  the  first  kind  may  easily  be  suggested 
by  a  case,  where  two  persons  (not  being  otherwise  part- 
iiers)  should  jointly  buy  a  ship,  to  be  employed  by  them 
for  their  joint  and  mutual  profit  as  partners  ;  and  the 
ship  should  afterwards  be  totally  lost  or  destroyed. 
That  would  constitute  a  complete  termination  of  the 
partnership,  not  merely  by  operation  of  law  (although 
that  ground  might  be  fairly  maintainable),  but  as  an 
exact  exposition  of  the  actual  intendment  and  under- 
standing of  the  parties.^  An  example  of  the  second 
kind  is  readily  found  in  the  common  case  of  a  joint  en- 
terprise, voyage,  adventure,  or  other  commercial  specula- 
tion, for  the  joint  account  and  mutual  profit  of  the  par- 
ties concerned  therein.  Thus,  for  example,  if  two  per- 
sons (not  bemg  otherwise  partners)  should  hire  a  ship 
for  a  particular  voyage,  upon  their  joint  account  and 
for  their  mutual  profit,  and  the  voyage  should  be  under- 
taken and  completed,  and  the  business  thereof  closed ; 
the  partnership  so  formed  would  be  dissolved  by  the 
mere  lapse  of  time,  and  the  occurrence  of  the  event,  by 
which  it  was  originally  intended  by  the  parties  that  it 

partnership  in  a  particular  business,  and  the  one  engages  to  furnish  capital, 
or  the  raw  materials,  and  the  other  his  skill  and  labor,  and  the  latter  becomes 
disabled  by  the  palsy,  the  jjartnership  is  extinguished,  because  the  object  of 
the  partnership  cannot  be  fulfilled.  So,  again,  if  two  or  more  persons  form 
a  partnership  to  buy  and  sell  goods  at  a  particular  place,  the  partnership  is 
dissolved,  Avbenever  the  business  is  terminated.  Poth.  de  Soc.  n.  l-iO-143. 
Extincto  suhjecto,  tollitur  adjundum,  is  the  observation  of  Huberus,  when 
speaking  on  this  very  point."     5  Duvergier,  Droit  Civil  Franc.^  418-428. 

>  See  Poth.  de  Soc.  n.  140,  141.  —  The  Civil  Code  of  France  (art.  1867) 
declares :  "  Where  one  of  the  partners  has  promised  to  put  in  common  the 
ownership  of  a  thing,  the  loss  of  it,  happened  before  the  bringing  in  can  be 
effected,  operates  a  dissolution  of  the  partnership  in  relation  to  all  the  part- 
ners. Partnership  is  in  like  manner  dissolved  in  all  cases  by  the  loss  of  the 
thing,  where  the  enjoyment  alone  has  been  put  in  common,  and  the  owner- 
ship remains  in  the  hands  of  the  partner.  But  the  partnership  is  not  broken 
up  by  the  loss  of  a  thing,  the  ownership  of  which  has  already  been  brought 
into  the  partnership."     {Claiborne  v.  Creditors,  18  La.  501.} 


458  PARTNERSHIP.  [CHAP.  XIII. 

should  terminate.^  The  same  doctrine  would  apply  to 
the  case  of  a  joint  shipment  of  goods,  upon  the  joint 
account  and  for  the  mutual  profit  of  the  shippers  on  a 
foreign  voyage ;  or  a  joint  purchase  of  goods,  to  be 
sold  for  the  joint  benefit  and  profit  of  the  purchasers 
thereof;  or  a  joint  undertaking  by  mechanics,  to  per- 
form work  and  labor,  and  find  materials,  to  erect  a 
dwelling-house  for  a  third  person,  upon  their  joint 
account  and  for  their  mutual  profit.  For,  in  all  such 
cases,  the  completion  of  the  voyage,  or  adventure,  or 
undertaking,  or  commercial  speculation,  naturally  ter- 
minates the  partnership  contemplated  by  the  parties.^ 

§  281.  The  same  doctrine  was  formally  promulgated 
in  the  Roman  law ;  and  has  been  incorporated  into  the 
jurisprudence  of  all  modern  commercial  nations,  as  in- 
deed it  might  naturally  be  presumed  to  be,  since  it  is 
founded  in  common  sense,  and  a  just  interpretation  of 
the  intention  of  the  parties.  Thus,  in  the  Roman  law 
it  is  said  (as  we  have  already  seen),^  Societas  solvitur  ex 
persoiiis,  ex  rebus,  ex  voluntate,  ex  actione.  Ideoque 
sive  homines,  sive  res,  sive  actio  interierit,  disti'alii  vi- 
detur  societas}  Res  vero  intereunt,  cum  cmt  nidlce  relin- 
quantur,  aut  conditionem  midaverint,  neque  enhn  ejus 
rei,  qucejam  nulla  sit,  quisquam  socius  est ;  neque  ejus, 
quce  consecrata  puhlicatave  sit.^  And  again  :  Item;  si 
alicitjus  rei  contracta  societas  sit,  et  finis  7iegotio  impo- 

'  Ante,  §  27,  30,  55,  267;  Post  v.  Kimberly,  9  Johns.  470;  Gow  on  P. 
c.  5,  §  1,  p.  218,  3d  ed. ;  Wats,  on  P.  c.  7,  p.  379,  2d  ed. ;  1  Voet  ad  Pand. 
17,  2,  §  26,  p.  761  ;  5  Diivergier,  Droit  Civ.  Franc,  tit.  9,  §  411-420. 

^  Ante,  §  27,  30,  55,  267  ;  Cumpston  v.  McNair,  1  Wend.  457  ;  Poth.  de 
Soc.  n.  143  ;  Coll.  on  P.  B.  1,  c.  1,  §  1,  p.  32,  2ded.;  Wats,  on  P.  c.  7,  p.  379, 
2d  ed. ;  1  Voet  ad  Pand.  17,  2,  §  26,  p.  761  ;  5  Duvergier,  Droit  Civil  Franc. 
§431. 

3  Ante,  §  266. 

*  Poth.  Pand.  17,  2,  n.  54  ;  D.  17,  2,  63,  10  ;  Domat,  1,  8,  5,  art.  11. 

*  D.  17,  2,  63,  10  ;  Poth.  Pand.  17,  2,  n.  62. 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  459 

situs  est,  fiiitiir  societas?  Pothier,  Vinniiis,  and  other 
learned  jurists,  have  done  little  more  than  to  state  the 
same  doctrine,  with  a  few  appropriate  illustrations.^ 

§  282.  In  the  next  place,  as  to  the  cases  of  dissolu- 
tion by  the  decree  of  a  court  of  equity.^  It  is  obvious, 
from  what  has  been  already  stated,  that  although  a 
partnership  may,  by  the  original  agreement,  be  formed 
for  a  stipulated  period,  and  on  that  account  may  not 
be  dissoluble  at  the  mere  will  of  either  of  the  partners, 
without  the  concurrence  of  all  the  others ;  "^  yet,  that 
various  cases  may  occur,  in  which  it  may  become  the 
duty  of  a  judicial  tribunal,  either  to  declare  the  original 
partnership  null  and  void  ah  initio,  or  to  annul  it  in 
respect  to  all  future  operations ;  otherwise  the  grossest 
injustice  and  most  mischievous  consequences  might 
occur  to  some  of  the  partners,  without  any  fault  or 
impropriety  on  their  own  part.  Indeed,  the  remedial 
authority  of  a  judicial  tribunal,  in  order  to  be  adequate 
and  complete,  ought  not  to  stop  here  ;  for  many  cases 
of  unforeseen  accident,  or  unsuspected  mischief,  may 
occur,  which  may  make  the  further  prosecution  of  the 
business  of  the  partnership  injurious,  or  improper, 
without  the  fault  of  any  partner,  and,  indeed,  where 

1  Inst.  3,  26,  6  ;  D.  17,  2,  65,  10  ;  Poth.  Pand.  17,  2,  n.  63  ;  Domat,  1,  8, 
5,  art.  11. 

*  Poth.  de  Soc.  n.  140-143  ;  Vinn.  ad  Inst.  3,  26,  6,  Comm.  ;  Johnston's 
Civil  Law  of  Spain,  B.  2,  tit.  15,  p.  232;  Van  Leeuwen's  Comm.  B.  4,  c.  23, 

§  11,  p.  415  ;  2  Moreau  &  Carlt.  Partidas  5,  tit.  10,  1.  10,  p.  773  ;  Code  Civil 
of  France, art.  1865  ;  Code  of  Louisiana  (1825),  art.  2847  ;  Griswold  v.  Wad- 
dington,  16  Johns.  438,  491,  492,  per  Mr.  Chancellor  Kent.  Vinnius  puts  the 
doctrine  in  brief  but  very  clear  terms.  "  Si  societas  certas  alicujus  negotia- 
tionis  causa  inita  sit,  puta  vini  aut  frumenti  ad  certam  quantitatem  emendi 
vendendique,  sine  negotio  imposito,  id  est,  empto  distractoque  vino  aut  fru- 
mento,  societas  extinguitur.  Bed  in  eo  nihil  proprium  videtur  societatis  ;  ut- 
pote  cui  ea  lex  ab  initio  dicta  sit.  Idem  est,  si  ad  certum  tenipus  coutracta 
sit  societas ;  nam,  exacto  tempore,  ea  expirat." 
3  3  Kent,  60. 

*  Ante,  §  273,  276. 


460  PARTNERSHIP.  [cHAP.  XIII. 

all  of  them  are  equally  innocent.  The  Prsetor's  Fo- 
rum at  Rome  seems  ordinarily  to  have  exercised,  or 
at  least  to  have  superintended  the  exercise  of  this 
authority,  by  controlling  or  confirming  the  acts  of  the 
partners,  as  to  the  right  of  dissolution,  as  the  partic- 
ular case  required  its  interposition ;  and  thus  to  have 
administered  the  appropriate  relief.  The  Koman  law 
(and  the  modern  continental  law  has  in  a  great  meas- 
ure followed  it)  authorized,  as  we  have  seen,  any  part- 
ner to  renounce  such  a  partnership  for  any  just  and 
reasonable  cause.  But  then  the  sufficiency  of  that 
cause  was  ultimately  a  matter  for  the  decision  of  the 
proper  judicial  tribunal;  and  until  that  decision  was 
had,  his  act  could  be  deemed  nothing  more  than  a  pre- 
liminary step,  or  conditional  assertion  of  the  right  of 
dissolution.^ 

§  283.  The  Roman  law  also  treated  it  as  a  clear  case 
of  dissolution,  where  action  was  brought  by  one  partner 
against  the  others,  for  an  account  of  the  partnership 
business,  and  a  judgment  passed  accordingly.  [Societas) 
actione  dlstrahitur,  cum  aut  stiinilaiione  aut  judicio 
mutata  sit  causa  societatis.  Proculus  enim  ait,  hoc 
ipso,  quod  judicium  ideo  dictatum  est,  ut  societas  distra- 
liaiur,  renuntiaiam  societatem,  sive  totorum  honorum, 
sive  unius  rei  societas  co'iia  sit.^ 

§  284.  In  England  and  America  no  jurisdiction 
whatever  exists,  to  decree  a  dissolution  of  a  partner- 
ship, for  any  cause  whatsoever,  in  the  Courts  of  Com- 
mon Law.  It  is  confided  exclusively  to  Courts  of 
Equity ;  and,  indeed,  as  in  many  cases  it  must  be  a 
matter  resting  in  the  sound  discretion  of  the  Court, 
it  seems  most  fit  and  proper  to  appropriate  the  juris- 

'  Ante,  §  273,  274,  276  ;  Poth.  de  Soc.  n.  154 ;  Civil  Code  of  France,  art. 
1871  ;  Poth.  Pand,  17,  2,  n.  70. 

=  D.  17,  2,  65 ;  Poth.  Pand.  17,  2,  n.  70. 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  461 

diction  to  those  tribunals  which  constantly  exercise  a 
very  large  discretion  in  matters  ex  cequo  et  bono}  This 
was  precisely  the  case  in  suits  in  the  Prgetor's  Forum  ; 
and  for  the  most  part  it  now  also  belongs  to  the  higher 
tribunals  of  the  different  nations  of  continental  Europe, 
where  the  strict  distinction  between  law  and  equity,  so 
well  recognized  in  our  municipal  jurisprudence,  is 
either  unknown,  or  is  repudiated.  The  principal  dis- 
tinctions as  to  the  exercise  of  this  jurisdiction  between 
our  Courts  of  Equity  and  the  tribunals  of  continental 
Europe,  seem  to  be  these.  In  the  first  place,  in  the 
latter  tribunals,  it  is  competent  for  one  partner,  in  any 
case  and  at  any  time,  to  renounce  the  partnership  suh 
moclo,  although  not  absolutely,  for  any  reasonable  cause, 
which  afterwards  shall  be  sanctioned  and  approved  by 
the  proper  tribunal ;  whereas,  in  our  law  (as  has  been 
already  suggested),^  a  previous  decree  of  the  Court  is 
necessary,  however  reasonable  the  cause  may  be.^  In 
the  next  place,  in  the  Roman  law  and  in  the  modern 
foreign  law,  certain  causes  are  deemed  ipso  facto  to 
amount  to  an  actual  dissolution ;  whereas,  in  our  law, 
they  furnish  proper  grounds  only  for  a  decree  of  disso- 
lution. This  will  become  more  apparent  in  the  subse- 
quent pages. 

§  285.  The  jurisdiction  exercised  by  our  Courts  of 
Equity,  to  decree  a  dissolution  of  the  partnership, 
during  the  term  for  which  it  was  originally  entered 
into,  is  of  a  most  extensive  and  beneficial  nature,  and 
has  the  strongest  tendency  to  prevent  irremediable 
injuries,  and  often  utter  ruin  to  some  of  the  partners. 
It  may  be  exercised,  as  has  been  already  suggested,  in 
the  first  place,  to  declare  partnerships  utterly  void  ah 

'  1  Story,  Eq.  Jur.  §  673  ;  3  Kent,  60. 

"  Ante, §273,  274,  276. 

*  Gow  on  P.  c.  5,  §  1,  p.  221,  3d  ed. 


462  PARTNERSHIP.  [CHAP.  XIII. 

initio ;  and,  in  the  next  place,  to  decree  a  dissolution 
from  the  time  of  the  decree.^  The  former  remedial 
justice  is  usually  applied  to  cases  where  there  was 
fraud,  imposition,  misrepresentation,  or  oppression  in 
the  original  agreement  for  the  partnership.^  The  latter 
may  arise  in  very  different  classes  of  cases,  and  be 
affected  by  very  different  considerations. 

§  286.  Let  us  then  proceed  to  the  examination,  in 
their  order,  of  the  various  causes  for  which  a  Court  of 
Equity  will,  or  at  least  may,  decree  a  dissolution  of  a 
partnership  which  was  unobjectionable  in  its  origin.^ 
They  may  be  distributed  under  two  general  heads ; 
(1.)  Causes  arising  subsequently  to  the  formation  of 
the  contract,  founded  upon  the  alleged  misconduct,  or 
fraud,  or  violation  of  duty  of  one  partner ;  (2.)  Causes 
arising  subsequently  to  the  formation  of  the  contract, 
where  no  blame,  laches,  or  impropriety  of  conduct, 
necessarily  attaches  to  any  of  the  partners. 

§  287.  Under  the  first  head,  that  of  the  misconduct, 
fraud,  or  violation  of  duty  by  a  partner,  it  is  proper  to 
observe,  that  it  is  not  for  every  trivial  departure  from 
duty  or  violation  of  the  articles  of  partnership,  or  for 
every  trifling  fault  or  misconduct,  that  Courts  of  Equity 
will  interfere  and  decree  a  dissolution.  Thus,  for  ex- 
ample, Courts  of  Equity  will  not  interfere  in  cases-  of 
mere  defects  of  temper,  casual  disputes,  differences  of 
opinion,  and  other  minor  grievances,  which  may  be 
somewhat  inconvenient  and  annoying,  but  do  not  essen- 

1  Ante,  §  232,  282.  { On  the  date  from  which  a  dissolution  shall  be  de- 
creed, see  Durbin  v.  Barber,  14  Ohio,  311 ;  Dumont  v.  Ruepprecht,  38 
Ala.  175.} 

2  Ante,  §  6 ;  1  Story,  Eq.  Jur.  §  222,  240  ;  Coll.  on  P.  B.  2,  c.  3,  §  7,  p. 
244,  2d  ed. ;  Gow  on  P.  c.  3,  §  1,  p.  107,  3d  ed. ;  [Hynes  v.  Stewart,  10  B. 
Mon.  429.]  See  Lord  Eldon's  remarks  in  Tattersall  r.  Groote,  2  B.  &  P. 
131,  135  ;  Colt  V.  WooUaston,  2  P.  Wms.  154  ;  Green  v.  Barrett,  1  Sim.  45. 

^  (On  the  return  of  a  premium  on  dissolution,  see  §  203.} 


CHAP.  XIII.]       DISSOLUTION    OF    PARTNERSHIP.  463 

tially  obstruct  or  destroy  the  ordinary  rights,  interests, 
and  operations  of  the  partnership.^ 

§  288.  On  the  other  hand,  if  a  case  of  gross  mis- 
conduct, or  abuse  of  authority,  or  gross  want  of  good 
faith  or  dihgence,  such  as  is  and  must  continue  to  be 
productive  of  serious  and  permanent  injury  to  the  suc- 
cess and  prosperity  of  the  business  of  the  partnership, 
or  such  as  renders  it  impracticable  to  be  carried  on,  or 
as  is  positively  ruinous  to  its  interests.  Courts  of  Equi- 
ty will  promptly  interfere,   and    decree   a  dissolution.^ 

'  Coll.  on  P.  B.  2,  c.  2,  §l,p.  131,  2d  ed. ;  Id.  B.  2,  c.  3,  §  3,  p.  193,  196; 
Goodman  r.  Whitcomb,  1  Jac.  &  W.  589,  592  ;  Wray  v.  Hutcliinson,  2  Myl. 
&  K.  235  ;  1  Story,  Eq.  Jur.  §  673  ;  Gow  on  P.  c.  3,  §  1,  p.  114,  3d  ed.  —  In 
Goodman  r.  Whitcomb,  1  Jac.  &  W.  589,  592,  593,  Lord  Eldon  said:  "It 
may  be  a  question  whether  the  Court  ■will  not  restrain  a  partner,  if  he  has 
acted  improperly,  from  doing  certain  acts  in  future.  But  if  -what  he  has 
done  does  not  give  the  other  party  a  right  to  have  a  dissolution  of  the  part- 
nership, what  right  has  the  Court  to  appoint  a  receiver,  and  make  itself  the 
manager  of  every  trade  in  the  kingdom '?  Where  partners  differ,  as  they 
sometimes  do,  when  they  enter  into  another  kind  of  partnership,  they  should 
recollect  that  they  enter  into  it  for  better  and  worse,  and  this  Court  has  no 
jurisdiction  to  make  a  separation  between  them,  because  one  is  more  sullen, 
or  less  good-tempered,  than  the  other.  Another  Court,  in  the  j^artnership 
to  which  I  have  alluded,  cannot,  nor  can  this  Court,  in  this  kind  of  part- 
nership, interfere,  unless  there  is  a  cause  of  separation,  which  in  the  one  case 
must  amount  to  downright  cruelty,  and  in  the  other,  must  be  conduct  amount- 
ing to  an  entire  exclusion  of  the  partner  from  his  interest  in  the  partnei-ship. 
Whether  a  dissolution  may  ultimately  be  decreed,  I  will  not  say  ;  but  triflinor 
circumstances  of  conduct  are  not  sufficient  to  authorize  the  Court  to  award  a 
dissolution.  It  is  said,  that  the  plaintiff  has  made  larger  advances  of  capital 
than  he  was  bound  to  do,  and  has  received  none  of  the  profits.  But  that  is 
no  ground  for  a  dissolution.  It  is  then  stated  that  the  defendant  has  ex- 
changed carpets  for  household  furniture.  That  may  perhaps  be  an  improper 
act ;  but  still  there  may  be  a  thousand  reasons  why  the  Court  should  not  do 
more  than  restrain  him  in  future  from  so  doing,  and  more  particularly  when 
he  states  in  his  answer  that  he  did  it  because  he  thought  it  the  best  thing  that 
could  be  done." 

2  1  Story,  Eq.  Jur.  §  673  ;  Coll.  on  P.  B.  2,  c.  3,  §  3,  p.  195,  196,  2d  ed.  ; 
Goodman  v.  Whitcomb,  1  Jac.  &  W.  589,  592,  593  ;  Chapman  v.  Beach,  1 
Jac.  &  W.  594,  note  ;  Waters  v.  Taylor,  2  Ves.  &  B.  299  ;  Loscombe  v.  Rus- 
sell, 4  Sim.  8 ;  3  Kent,  60,  61  ;  Gratz  v.  Bayard,  11  S.  &  R.  41,  48,  per  Ch. 
Just.  Tilghman  ;  1  Mont,  on  P.  Pt.  3,  c.  1,  p.  112  ;  Adams  i".  Liardet,  cited  in 


464  PARTNERSHIP.  [cHAP.  XIII. 

Habitual  intoxication,  gross  extravagance,  and  gross 
negligence,  and  rash  and  reckless  speculation,  in  the 
conduct  of  the  business  of  the  partnership,  would  prob- 
ably lead  the  Court  to  a  like  result.^  To  justify  such 
an  extraordinary  interposition,  however,  the  Court 
always  expects  a  strong  and  clear  case  to  be  made  out 
of  positive  or  meditated  abuse. ^  It  is  not  sufficient  to 
show,  that  there  is  a  temptation  to  such  misconduct, 
abuse,  or  ill  faith  ;  but  there  must  be  an  unequivocal 
demonstration,  by  overt  acts,  or  gross  departures  from 
duty,  that  the  danger  is  imminent,  or  the  injury  already 
accomplished.^  For  minor  misconduct  and  grievances, 
if  they  require  any  redress,  the  Court  ordinarily  will  go 
no  further  than  to  act  upon  the  faulty  party  by  way  of 
injunction.^ 

Waters  v.  Taylor,  2  Ves.  &  B.  299,  300,  304,  and  in  1  Mont,  on  P.  Pt.  3,  c.  1, 
p.  99,  and  in  Gow  on  P.  c.  5,  §  1,  p.  227,  3d  ed. ;  Gow  on  P.  c.  3,  §  1,  p.  1 11- 
115,  3d  ed. ;  [Fogg  v.  Johnston,  27  Ala.  432.]  See  also  Littlewood  v.  Cald- 
well, 11  Price,  97,  99 ;  Wats,  on  P.  c.  7,  p.  381,  382,  2d  ed. ;  Smith  v.  Jeyes, 
4  Beav.  503;  {Harrison  w.  Tennant,  21  Beav.  482;  Watney  o.  Wells,  30 
Beav.  56 ;  Leary  v.  Shout,  33  Beav.  582  ;  Baxter  v.  West,  1  Drew  &  Sm. 
173.     See  Meaher  v.  Cox,  37  Ala.  201.} 

'  Ibid.;  2  Bell,  Comm.  B.  7,  c.  2,  p.  634,  635,  5th  ed. 

'^  See  Smith  v.  Mules,  9  Hare,  556  ;  10  Eng.  L.  &  Eq.  103. 

8  2  Bell,  Coram.  B.  7,  c.  2,  p.  634,  635,  5th  ed. ;  Glassington  v.  Thwaites, 
1  Sim.  &  St.  124  ;   Smith  v.  Jeyes,  4  Beav.  503. 

■»  Ante,  §  224-228,  287 ;  Marshall  v.  Colman,  2  Jac.  &  W.  266  ;  Goodman 
V.  Whitcomb,  1  Jac.  &  W.  589,  592,  593  ;  Charlton  v.  Poulter,  19  Ves.  148, 
note  (c)  ;  Gow  on  P.  c.  3,  §  1,  p.  111-115,  3d  ed.  —  Mr.  CoUyer  has  summed 
up  the  whole  doctrine  on  this  subject  in  the  following  terms :  "  Lord  Thur- 
low  once  said,  that  as  to  misbehavior  in  one  of  the  partners,  he  did  not 
see  what  line  could  possibly  be  drawn,  and  what  degree  of  misconduct 
was  to  be  held  a  sufficient  ground  for  dissolving  the  partnership.  Liardet 
V.  Adams,  1  Mont,  on  P.  112.  And  certainly,  a  Court  of  Equity  will 
not  dissolve  a  partnership  on  slight  grounds  ;  as,  for  instance,  because  one 
partner  may  have  conducted  himself  towards  the  other  in  an  overbearing 
and  insulting  manner.  '  The  Court,'  to  use  Lord  Eldon's  expressions  be- 
fore adverted  to,  '  having  no  jurisdiction  to  make  a  separation  between 
them,  because  one  is  more  sullen  or  less  good-tempered  than  the  other.' 
Goodman  v.  Whitcomb,  1  Jac.  &  W.  592.     See  Wray  v.  Hutchinson,  2  Myl. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  465 

§  289.  The  like  doctrine  is  promulgated  in  the  Roman 
law ;  which  permits  any  partner,  at  his  election,  to  re- 
nounce the  partnership,  whenever  the  objects  of  the 
partnership  are  no  longer  attainable,  or  the  misconduct 
of  the  other  partner  is  so  seriously  injurious  or  mis- 
chievous to  the  partnership,  that  it  ought  not  to  be  tol- 
erated. Etsi  ante  tempus  renuntietur,  potest  rationem 
habere  remmtiatlo.     Nee  tenehitur  2>i'o  socio,  qui  ideo 

&  K.  235  ;  [Blake  v.  Dorgan,  1  G.  Greene,  537.]  So  again,  want  of  prudence 
or  ability  on  the  part  of  the  person  seeking  relief,  is  no  just  ground  for  a 
dissolution  ;  as,  where  he  has  made  larger  advances  of  capital  than  he  is 
bound  to  do,  and  has  received  none  of  the  jirofits.  Goodman  v.  Whit- 
comb,  supra.  However,  it  may  with  safety  be  laid  down,  that  not  only 
wilful  acts  of  fraud  and  bad  faith,  but  gross  instances  of  carelessness  and 
waste  in  the  administration  of  the  partnership,  as  well  as  exclusion  of 
the  other  partners  from  their  just  share  of  the  management,  so  as  to 
prevent  the  business  from  being  conducted  on  the  stipulated  terms,  are 
sufficient  grounds  for  the  dissolution  of  the  contract  by  a  Court  of  Equity. 
See  Marshall  v.  Colman,  2  Jac.  &  W.  266  ;  Goodman  v.  Whitcomb,  1  Jac. 
&  W.  589;  Chapman  v.  Beach,  Id.  594;  Norway  v.  Rowe,  19  Ves.  144; 
Waters  v.  Taylor,  2  Ves.  &  B.  299.  So  also  it  seems  clear,  that  a  habit 
on  the  part  of  one  partner  of  receiving  moneys,  and  not  entering  the  re- 
ceipts in  the  books,  or  not  leaving  the  books  open  to  the  inspection  of  the 
other  partners,  whether  such  conduct  arises  from  a  fraudulent  intent  or 
not,  is  good  ground  for  a  dissolution.  Goodman  v.  Whitcomb,  1  Jac.  & 
W.  589.  So  if  a  partner  in  a  banking-house  allows  a  customer  to  over- 
draw, and,  by  way  of  security,  takes  bonds  from  the  customer,  executed 
to  himself  separately  and  not  to  the  firm,  this  is  such  misconduct  as  will 
warrant  a  Court  of  Equity  in  decreeing  a  dissolution.  Master  t'.  Kirton, 
3  Ves.  74  ;  R.  L.  1796,  B.  428.  And  although  this  relief  will  not  be  admin- 
istered for  mere  defects  of  temper  in  some  of  the  parties,  yet  violent  and  last- 
ing dissension  seems  to  be  a  ground  upon  which  a  Court  of  Equity  will  de- 
cree a  dissolution ;  as  where  the  parties  refuse  to  meet  each  other  upon 
matters  of  business,  a  state  of  things  which  precludes  the  possibility  of  the 
partnership  affairs  being  conducted  with  advantage.  De  Berenger  v.  Ham- 
mel,  7  Jarm.  Conv.  p,  2G.  And  it  has  been  laid  down,  that  though  the  court 
stands  neuter  with  respect  to  occasional  breaches  of  agreements  between  part- 
ners, which  are  not  so  grievous  as  to  make  it  impossible  for  the  partnership 
to  continue  ;  yet  when  it  finds  that  the  acts  complained  of  are  of  such  a  char- 
acter, that  relief  cannot  be  given  to  the  parties  except  by  a  dissolution,  the 
Court  will  decree  a  dissolution,  though  it  is  not  specifically  asked.  Per  Sir 
L.  Shad  well,  4  Sim.  11."  See  also  the  language  of  Mr.  Chancellor  Kent 
on  the  same  subject,  3  Kent,  60,  61  ;  Gow  on  P.  c.  5,  §  1,  p.  227,  3d  ed. 

30 


466  PARTNERSHIP.  [cHAP.  XIII. 

reniintiavit,  quia  conditio  qucedam^  qua  societas  erat 
co'ita,  ei  non  prcestatur,  aut  quid,  si  ita  injuinosus  et  dam- 
nosus  socius  sit,  ut  non  expediat  eum  pati  ?  ^  Such  also 
is  the  French  law.^ 

§  290.  Let  us  now  proceed  to  the  other  head,  em- 
bracing the  decree  of  a  dissolution  of  the  partnership 
for  causes  independent  of  any  blame,  laches,  or  impro- 
priety of  conduct,  necessarily  attached  to  any  of  the 
partners.  And  here,  in  the  first  place,  it  will  be  a  suffi- 
cient ground  to  decree  a  dissolution,  that  there  exists  an 
impracticability  in  carrying  on  the  undertaking  for  which 
the  partnership  was  formed.^  This  may  take  place, 
either  from  the  inability  of  one  or  all  of  the  partners 
from  carrying  into  effect  the  terms  of  the  original  con- 
tract ;  or  from  the  undertaking  itself  being  in  its  char- 
acter visionary,  or  its  operations  absolutely  impractica- 
ble. The  case  of  an  Opera  House,  where  the  conduct 
of  the  parties  rendered  it  impossible  to  carry  it  on  upon 
the  terms  originally  stipulated,  may  serve  to  illustrate 
the  former  part  of  the  position.'*     The  latter  part  of  the 

1  D.  17,  2,  14  ;  Poth.  Pand.  17,  2,  n.  68. 

*  See  5  Duvergier,  Droit  Civil  Franc.  §  447-452. 

»  Coll.  on  P.  B.  2,  c.  3,  §  3,  p.  199,  200,  2d  ed.;  Gow  on  P.  c.  5,  §  1, 
p.  226,  227,  3d  ed.     { See  Meaher  v.  Cox,  37  Ala.  201. } 

*  Waters  v.  Taylor,  2  Ves.  &  B.  299  ;  Griswold  v.  Waddington,  16  Johns. 
438,  491  ;  5  Duvergier,  Droit  Civil  Franc.  §  420-428;  Id.  §  446-449.  — In 
Waters  v.  Taylor,  Lord  Eldon  said  :  "  The  real  question  here  is  quite  dif- 
ferent from  Adams  v.  Liardet ;  which  I  take  to  be  that  in  which  Lord  Thur- 
low's  opinion  was  expressed.  This  question  is,  whether  from  the  acts  of 
Taylor  himself,  it  is  not  manifest,  that  this  partnership  cannot  be  carried 
on  upon  the  terms  for  which  the  parties  engaged  ;  whether  a  single  act  has 
been  done  by  him  of  late,  that  is  not  evidence,  on  his  part,  that  he  can  no 
longer  himself  be  bound  by  his  contract,  so  as  to  observe  the  terms  of  it  5 
when  he  excludes  himself  from  the  concern  and  the  partnership,  as  far  as 
it  is  to  be  conducted  upon  the  terms  on  which  it  was  formed,  and  says  he 
will  carry  it  on  upon  other  terms.  Taking  that  to  be  his  conduct,  this 
comes  to  the  common  case  of  one  partner  excluding  the  other  from  the 
concern ;  u,s  if  one  will  not,  because  he  cannot,  continue  it  upon  the  terms 
on  which  it  was  formed,  the  consequence  must  be,  that   he  says  his  part- 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  467 

position  may  be  readily  illustrated  in  the  not  infrequent 
case,  where  the  partnership  is  to  work  a  mine,  which 
turns  out  to  be  wholly  unproductive,  and  ruinous  in  its 
expenses ;  or  for  the  introduction  of  a  supposed  newly 
invented  machinery  or  manufacture,  which  proves  to  be 
a  mere  delusion,  or  incapable  of  being  put  into  success- 
ful operation  ;  or  for  any  other  scheme  of  trade  or  oper- 
ation, which  is  a  mere  bubble,  or  wild  speculation,  or  is 
founded  in  fundamental  errors.^ 

ner  shall  not,  because  he  cannot,  carry  it  on  upon  those  terms.  That  is 
the  true  amount  of  this  case.  The  one  cannot  engage  a  performer  with- 
out the  other's  consent ;  having  entered  into  stipulations  only  with  refer- 
ence to  agreement,  they  have  given  me  no  means  of  extricating  them 
from  the  difficulties  arising  from  non-agreement.  Suppose  an  opera  at  this 
time  requires  more  than  £300  per  week,  or  a  new  exhibition  more  than  £500, 
if  the  plaintiff  differs  upon  that,  what  is  a  judge  to  do  but  to  look  at  the 
contract,  as  the  only  thing  the  Court  can  act  upon  ?  and  if  both  parties 
agree  that  the  contract  cannot  be  acted  on,  that  furnishes  the  means  of 
saying,  there  is  an  end  of  it  ;  and  their  interests  are  to  be  regarded  as 
if  no  such  contract  had  existed.  The  parties,  by  consent,  determine  that 
there  is  an  end  of  the  concern,  which  cannot  be  carried  on  upon  the  terms 
stipulated  ;  and  the  Court  cannot  substitute  another  contract."  Mr.  Chancellor 
Kent,  in  Griswold  v.  Waddington,  16  Johns.  438,491,  said :  "  In  speaking  of 
the  dissolution  of  partnerships,  the  French  and  civil  law  wi-iters  say,  that 
partnershijJs  are  dissolved  by  a  change  of  the  condition  of  one  of  the  par- 
ties, which  disables  him  to  perform  his  part  of  the  duty,  as  by  a  loss  of 
liberty,  or  banishment,  or  bankruptcy,  or  a  judicial  prohibition  to  execute 
his  business,  or  by  confiscation  of  his  goods.  Inst.  3,  26,  §  7,  8  ;  Vinn.  h. 
t.  3,  26,  4;  Huberus  in  Inst.  3,  26,  6 ;  D.  17,  2,  65 ;  Poth.  de  Soc.  n.  147, 
148 ;  Code  Civil,  No.  1865 ;  Diet,  du  Dig.  par  Thevenot  Dessaules,  Art. 
Soc.  No.  56.  The  English  law  of  partnership  is  derived  from  the  same 
source  ;  and  as  the  cases  arise,  the  same  principles  are  applied.  The  prin- 
ciple here  is,  that  when  one  of  the  parties  becomes  disabled  to  act,  or 
when  the  business  of  the  association  becomes  impracticable,  the  laAV,  as 
well  as  common  reason,  adjudges  the  partnership  to  be  dissolved." 

'  3  Kent,  60  ;  Baring  v.  Dix,  1  Cox,  213  ;  Pearce  v.  Piper,  17  Ves.  1,  and 
Buckley  v.  Carter,  referred  to  in  17  Ves.  11,  15,  16,  and  in  Beaumont  w. 
Meredith,  3  Ves.  &  B.  180,  181 ;  Reeve  v.  Parkins,  2  Jac.  &  W.  390 ; 
Coll.  on  P.  B.  2,  c.  3,  §  3,  p.  193,  2d  ed. ;  Barr  v.  Speirs,  cited  in  2  Bell, 
Comm.  633,  note  (2),  5th  ed. ;  Gow  on  P.  c.  5,  §  1,  p.  227,  3d  ed.  {In 
Jennings  v.  Baddeley,  3  Kay  &  J.  78,  a  dissolution  was  decreed  of  a  part- 
nership, the  business  of  which  could  not  be  carried  on  without  further 
capital,  each  partner  having  contributed  his  share  ;  though  it  did  not  appear 


468  PARTNERSHIP.  [CHAP.  XIII. 

§  291.  In  the  next  place,  a  partnership  may  be  dis- 
solved by  the  decree  of  a  Court  of  Equity,  on  account 
of  the  inability  or  incapacity  of  one  partner  to  perform 
his  obligations  and  duties,  and  to  contribute  his  skill, 
labor,  and  diligence  in  the  promotion  and  accomplish- 
ment of  the  objects  of  the  partnership.  This  inability 
or  incapacity  may  arise  in  various  ways ;  and  whenever 
its  direct  tendency  is  either  necessarily  to  frustrate,  or 
essentially  to  obstruct,  or  diminish,  the-  objects  of  the 
partnership,  it  would  seem  clear  upon  principle,  that  it 
ought  to  furnish  a  complete  ground  for  a  dissolution  by 
a  court  of  justice ;  for  the  further  continuance  of  the 
partnership  must  be  productive  of  serious  inconvenience 
and  injury  to  the  other  partners,  and  may  end  in  their 
irremediable  ruin,  or  the  utter  prostration  of  the  enter- 
prise.^ 

§  292.  Hence,  if  one  of  the  terms  of  the  partnership 
be,  that  the  whole  or  a  large  portion  of  the  capital 
stock  shall  be  furnished  by  one  partner,  and  skill  and 
diligence  are  mainly  relied  on  in  the  other,  as  the 
active  partner ;  and  after  the  partnership  is  actually 
commenced,  the  partner  who  is  to  furnish  the  capital, 
should  by  misfortune  become  wholly  unable  to  furnish 
it,  or  if  the  other  partner,  who  is  to  furnish  the  skill 
and  diligence,  should  be  seized  with  a  palsy,  or  any 
other  disease,  which  should  permanently  incapacitate 
him  from  performing  the  required  duties,  such  circum- 
stances would  seem  to  present  a  fit  case  for  the  inter- 
position of  a  Court  of  Equity  to  dissolve  the  partner- 
ship.^ 

that  the  ooncern  was  embarrassed.  See  Claiborne  v.  Creditors,  18  La.  501 ; 
Clough  V.  RatelilFe,  1  De  G.  &  Sni.  164.} 

»  3  Kent,  G2 ;  Gow  on  P.  c.  5,  §  1,  p.  221,  3d  ed. ;  5  Duvergier,  Droit 
Civil  Franc.  §  44G-150. 

^  3  Kent,  02 ;  Domat,  1,  8,  5,  art.  12 ;  2  Bell,  Comm.  B.  7,  c.  2,  p. 
C34,  635,  5th  ed. ;  Crawshay  v.  Maule,  1  Swans.  495,  514,  the  Reporter's 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  469 

§  293.  The  same  doctrine  is  fully  borne  out  by  the 
true  spirit  and  intendment  of  the  Roman  law,  which 

note ;  Jones  v.  Noy,  2  Myl.  &  K.  125,  129,  130 ;  Wrexham  v.  Huddleston, 
1  Swans.  514,  note ;  Waters  v.  Taylor,  2  Ves.  &  B.  299 ;  Wray  v.  Hutch- 
inson, 2  Myl.  &  K.  235,  238. — Vinnius  (Coram,  ad  Inst.  3,  26,  8)  puts 
the  doctrine  in  its  true  light,  as  to  inability  from  poverty  or  misfortune.  — 
"  Postremo  etiam  egestate  unius  socii  societas  solvitur,  egestate  scilicet 
extrema,  id  est,  bonorum  omnium,  aut  tantum  non  omnium  amissione. 
Nam  cum  societas  contrahatur  bonorum  in  commune  quaerendorum  causa, 
non  magis  bonis  sublatis  societati  locus  esse  potest,  quam  sublata  persona 
socii.  Amittuntur  bona  aut  civitate  salva,  veluti  cessione,  id  est,  si  socius, 
aere  alieno  oppressus,  bonis  suis  creditoribus  cesserit,  eaque  a  creditoribus 
distracta  fuerint ;  ac  turn  etiam  "societatem  dirimi  placet,  aut  civitate  una 
cum  bonis  amissa,  ut  in  specie  praecedente ;  nam  publicatione  bona  amitti, 
ipsum  verbum  publicationis  satis  indicat ;  eaque  consideratione  ilia  quoque 
ad  hanc  rationem  dissolvendse  societatis  referri  potest.  Sed  et  decoctione 
bona  amittuntur  et  pereunt.  Ceterum  decoctione  sola  societatem  solvl 
negat  Stracha,  nisi  ea  ad  manifestam  egestatem  socium  redegerit.  Non 
puto  autem,  quod  hie  traditur  de  dissolutions  societatis  ob  amissionem 
bonorum,  locum  habere  eo  casu,  quo  nihil  pecunise  in  societatem  collatum 
est,  aut  quo  ille,  qui  operam  tantum  contulit,  bona  salva  civitate  amisit, 
nisi  forte  ob  bona  amissa  speratam  operam  prfestare  nequeat."  See  also 
Voet  ad  Pand.  17,  2,  §  26,  Tom.  1,  p.  761.  — Mr.  Bell  has  made  the  fol- 
lowing striking  remarks  upon  this  subject:  "  Incapacity  by  disease.  1.  If 
the  partnership  proceed  in  reliance  on  such  aid  from  a  partner,  as  any 
bodily  illness  he  may  be  aifected  with  may  prevent,  it  would  seem  to  be  a 
justifiable  cause  for  having  the  partnership  judicially  dissolved,  or  for  re- 
nouncing the  partnership,  although  there  should  be  a  fixed  term  of  duration 
not  yet  arrived.  2.  Insanity  has  the  effect,  not  only  of  depriving  the 
partner  of  the  power  of  aiding  the  partnership  by  his  exertions,  but  it  pre- 
vents him  from  controlling,  for  his  own  safety,  the  proceedings  of  his  co- 
partners. And,  accordingly,  where  there  are  two  partners,  both  of  whom 
are  to  contribute  their  skill  and  industry,  the  insanity  of  one  of  them,  by 
which  he  is  rendered  incapable  of  contributing  that  skill  and  industry,  seems 
to  be  a  good  ground  to  put  an  end  to  the  partnership.  At  the  same  time 
it  may  be  observed,  that  these  are  cases  of  infinite  delicacy.  There  is  no 
line  of  distinction  by  which  it  shall  be  ascertained  how  long  a  term  of 
inability  shall  justify  measures  of  this  description.  A  broken  leg,  or  an 
accidental  blow,  may  incapacitate  a  partner  for  a  time  as  much  as  insanity, 
andthe  one  maybe  as  temporary  as  the  other;  and,  perhaps  the  nearest 
approximation  to  be  made  to  a  rule  on  the  subject  is,  that  a  remedy  and 
relief  will  Ijc  given  only  where  the  circumstances  amount  to  a  total  and 
important  I'ailure  in  those  essential  points  on  which  the  success  of  the  part- 
nership depends.  3.  Cases  may  be  supposed  of  danger  so  imminent, 
from  bad  health,  lunacy,  habits  of  intoxication,  etc.,  as  to  make  the  con- 


470  PARTNERSHIP.  [cHAP.  XIII. 

adopts  the  like  provision,  enabling  any  party  to  re- 
nounce the  partnership,  whenever  its  objects  are  no 
longer  attainable.  The  passage  already  cited  estab- 
hshes  this  right,  whenever  the  conditions  of  the  part- 
nership are  not  capable  of  being  fulfilled,  or  the  fruits 
thereof  cannot  be  properly  enjoyed.^  Quia  conditio 
qiicedam,  qua  societas  erat  co'ita,  ei  non  prcestaticr.^  Vel 
quod  ea  re  friii  non  liceat,  cujus  gratia  iiegotiatio  sus- 
cepta  sit.^  The  same  doctrine  is  applied  to  the  case  of 
a  partner  who  is  grievously  oppressed  with  debt,  at 
least,  when  it  amounts  to  insolvency.  IteTn  si  quis  ex 
sociis  mole  dehiti  j^roigravatus,  bonis  suis  cesserit^  et 
ideo  prop)ter  publica  aut  privata  dehita  substantia  ejus 
veneat,    solvitur    societas^       Another    of    the    causes 

tinuance  of  the  partnership  likely  to  prove  ruinous  to  all  concerned ;  as  in 
the  case  of  uncontrollable  habits  of  intoxication  in  the  partner  of  a  gun- 
powder manufactory.  In  cases  of  this  description  there  can  be  no  doubt 
that  such  perils  will  afford  ground  for  judicial  interference  to  dissolve  the 
company.  But  it  may  be  doubted,  whether  they  would  not  justify  the 
other  partners  in  entering  the  act  of  dissolution  in  the  books,  to  be  followed 
up  as  soon  as  possible  by  judicial  measures ;  for  such  a  state  of  things  may 
occur  at  the  commencement  of  a  long  vacation,  when  no  proper  opportunity 
can  be  had  of  dissolving  by  judicial  interposition."  2  Bell,  Comm.  B.  7, 
0.  2,  p.  634,  635,  5th  ed. 

1  Ante,  §  273,  289. 

*  D.  17,  2,  14;  Poth.  Pand.  17,  2,  n.  68;  ante,  §  273. 

3  D.  17,  2,  15 ;  Poth.  Pand.  17,  2,  n.  68 ;  Poth.  de  Soc.  n.  152. 

■*  Inst.  3,  26,  8;  Domat,  1,  8,  5,  art.  12.  —  Domat  has  In  this  place 
summed  up  the  main  principles  of  the  Roman  law  on  all  these  and  the  like 
incapacities.  "  If  one  of  the  partners  (says  he)  is  reduced  to  such  a  con- 
dition, that  he  cannot  contribute  to  the  community  what  he  is  obliged  to 
furnish,  whether  In  money,  or  in  labor,  the  other  partners  may  exclude 
him  from  the  society;  as,  if  his  goods  are  seized  on,  if  he  has  relinquished 
them  to  his  creditors  ;  if  he  labors  under  any  Infirmity  or  any  other  incon- 
venience that  hinders  him  from  acting  ;  if  he  is  excluded  from  the  manage- 
ment of  his  concerns,  as  being  a  prodigal ;  if  he  falls  Into  a  frenzy.  For  In 
all  these  cases,  the  partners  may  justly  exclude  from  the  partnership  him, 
who  ceasing  to  contribute  to  It,  ceases  to  have  a  right  to  it.  But  this  Is  to 
be  understood  only  for  the  time  to  come ;  and  the  partner  who  may  chance 
to  be  excluded  for  any  one  of  these  causes,  ought  to  lose  nothing  of  the 
profits  which  may  come  to  his  share  in  proportion  to  the  contributions 
which  he  had  already  made." 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  471 

enumerated  in  that  law  for  a  dissolution  of  partnership, 
is  the  absolute  poverty  or  total  loss  of  the  property  of 
one  partner.     Dissociamur  egestate} 

§  294.  Pothier  fully  recognizes  the  same  doctrine.^ 
He  also  puts  the  corresponding  case  of  the  partner 
becoming  paralytic,  or  otherwise  infirm,  whose  skill  and 
diligence  are  relied  on  to  conduct  the  business,  or  man- 
ufacture the  articles  of  the  trade  ;  and  holds,  that  such 
an  occurrence  constitutes  a  sufficient  ground  for  a  dis- 
solution.^ In  each  of  these  cases,  however,  the  asserted 
inability,  or  incapacity,  does  not,  either  in  the  Roman 
law,  or  the  French  law,  constitute  ^:)er  se  a  positive 
dissolution ;  but  it  only  confers  the  right  of  election 
upon  the  other  partners,  to  do  so  at  their  pleasure  by 
an  open  renunciation.^  In  this  respect  it  is  in  perfect 
coincidence  with  the  doctrine  of  the  common  law. 

>  D.  17,  2,  4,  1 ;  Poth.  Pand.  17,  2,  n.  54,  62;  Domat,  1,  8,  5,  art.  12. 

2  Poth.  de  Soc.  n.  141,  142,  148 ;  Domat,  1,^8,  5,  art.  12. 

•''  Poth.  de  Soc.  n.  142,  152;  Civil  Code  of  France,  art.  1871;  Domat, 
1,  8,  5,  art.  12. 

*  Domat,  1,  8,  5,  art.  12,  and  note,  Ibid. ;  Poth.  de  Soc.  n.  142,  152.  — 
Pothier  says:  "The  same  thing  may  be  said  of  the  case  of  an  habitual 
infirmity  or  disease,  which  occurs  to  one  of  the  partners.  It  will  be  a  just 
cause  for  him  to  renounce  the  partnership,  if  the  business  of  the  partner- 
ship be  such  that  it  requires  his  personal  attention."  Poth.  de  Soc.  n.  152. 
The  Civil  Code  of  France  (art.  1871),  declares:  "Dissolution  of  partner- 
ships for  a  term  cannot  be  demanded  by  one  of  the  partners,  before  the 
term  agreed,  unless  for  just  motives,  as  where  another  partner  fails  in  his 
engagements,  or  that  an  habitual  infirmity  renders  him  unfit  for  the  affairs 
of  the  partnership,  or  other  similar  cases,  the  lawfulness  and  weight  of 
which  are  left  to  the  arbitration  of  Judges."  Ante,  §  274.  See  also  Code 
of  Louisiana  (1825),  art.  2858,  2859,  which  declares:  "Although  the  part- 
nership may  have  been  entered  into  for  a  limited  time,  one  of  the  partners 
may,  provided  he  has  a  just  cause  for  the  same,  dissolve  the  partnership 
before  the  time,  even  although  inconveniences  might  result  for  the  partners, 
and  although  it  might  have  been  stipulated,  that  the  partners  could  not 
desist  from  the  partnership  before  the  stipulated  time.  There  is  just  cause 
for  a  partner  to  dissolve  the  partnership  before  the  appointed  time,  when 
one  or  more  of  the  partners  fail  in  tht3ir  obligations,  or  when  an  liabitual 
infirmity  prevents  him  from  devoting  himself  to  the  affairs  of  the  jjartner- 
ship,  which  require  liis  presence  or  his  personal  attendance." 


472  PARTNERSHIP.  [cHAP.  XIII. 

§  295.  An  incapacity  of  a  dilFerent  sort,  but  which 
leads ,  directly  to  the  same  right  of  dissolution,  is  that 
of  insanity;  for  it  is  obvious,  that,  under  such  circum- 
stances, the  business  either  cannot  be  carried  on  at  all, 
or  not  as  beneficially  for  all  the  parties,  as  was  con- 
templated in  the  formation  of  the  original  partnership. 
Indeed,  theoretically  speaking,  as  insanity  amounts  to 
a  positive  incapacity  of  the  party  to  contract  during 
its  continuance,  and  as  the  supposed  agency  and  au- 
thority given  by  each  partner  to  the  others  to  transact 
the  business  of  the  partnership  in  the  name  of  all,  may 
be  deemed  during  the  like  period  to  be  suspended  or 
revoked,^  the  natural  conclusion  would  seem  to  be,  that 


^  Story  on  Ag.  §  481.  —  The  following  note,  appended  to  that  section, 
may  not  be  unimportant  upon  the  point  here  under  consideration.  "  This  is 
clear,  where  the  party's  lunacy  is  established  under  an  inquisition,  or  where 
he  is  put  under  guardianship.  But  some  doubt  seems  to  be  entertained, 
whether,  before  such  inquisition  or  guardianship,  there  is  any  implied  sus- 
pension or  revocation  of  the  agent's  authority.  Mr.  Bell  (1  Bell,  Comm. 
§  413,  p.  395,  396,  4th  ed. ;  Id.  p.  489,  5th  ed.)  considers  insanity,  not  so 
established,  to  be  no  suspension  or  revocation  of  the  authority.  He  says : 
'  Insanity  is  to  be  judged  of  differently.  There  is  here  neither  an  implied 
natural  termination  to  the  authority ;  nor  is  there  an  existing  will  to  recall 
the  former  appointment ;  nor  is  the  act  notorious,  by  which  the  public  may 
be  aware  of  such  fliilure  of  capacity.  It  was  to  this  interesting  question 
chiefly,  that  the  metaphysical  discussion,  to  which  I  have  already  alluded, 
was  applied.  But  the  strong  practical  ground  of  good  sense,  on  which  the 
question  was  disposed  of,  as  relative  to  the  public,  was,  that  insanity  is  con- 
tradistinguished from  death  by  the  want  of  notoriety ;  that  all  general  dele- 
gations of  power,  on  which  a  credit  is  once  raised  with  the  trading  world, 
subsist  in  force  to  bind  the  grantor,  till  recalled  by  some  public  act  or 
individual  notice  ;  and  that,  while  they  continue  in  uninterrupted  operation 
relied  on  by  the  public,  they  are,  in  law,  to  be  held  as  available  generally ; 
leaving  particular  cases  to  be  distinguished  by  special  circumstances  of  mala 
fides.  The  question  does  not  appear  to  have  occurred  in  England  ;  but  the 
opinion  of  very  eminent  English  counsel  was  taken  in  a  case,  wliich  was 
tried  in  Scotland,  and  tliey  held  the  acts  of  the  procurator  to  be  eifectual  to 
the  public  against  the  estate  of  the  person  by  whom  the  procuratory  was 
granted.'  He  states,  in  his  note  (1)  the  Scottish  case,  in  the  following 
words :  '  Pollock  against  Paterson.  The  case  in  which  this  question 
occurred  to  be  tried,  was  compromised,  and  I  had  imagined  was  not  reported. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  473 

no  valid  act  can  be  done,  or  contract  can  be  made,* 
during  the  insanity  of  any  partner,  which  should  be 
binding  upon  the  partnership.  The  common  law,  how- 
ever, does  not  in  this  respect  follow  out  the  theoretical 
principle ;  but,  upon  grounds  of  public  policy  or  con- 
venience, holds,  that  insanity  does  not  ordinarily  |9er  se 
amount  to  a  positive  dissolution  of  the  partnership  ; 
but  only  to  a  good  and  sufficient  cause  for  a  Court  of 
Equity  to   decree   a  dissolution.^     We   say  ordinarily ; 

But  after  I  had  prepared  a  note  from  my  own  papers,  to  subjoin  here,  I 
found  the  case  well  and  ably  reported  in  the  Faculty  Collection,  to  which  I 
refer  the  reader.  The  opinions  of  the  Judges  are  peculiarly  worthy  of  pe- 
rusal ;  not  being  confined  to  the  narrow  state  of  the  question,  as  it  occurred 
technically,  but  extending  to  a  large  and  comprehensive  discussion  of  the 
general  question,  as  to  the  effect  of  Insanity  on  such  powers.  10th  Decem- 
ber, 1811,  14  Fac.  Coll.  369.'  In  note  (2),  he  refers  to  the  opinions  of 
counsel  taken  in  England,  in  these  words  :  '  After  stating  the  terms  of  the 
procuration,  as  on  this  and  the  preceding  page,  and  that,  after  the  insanity 
of  the  grantor,  the  procurator  had  continued  to  carry  on  the  busmess  of  a 
banker  for  the  principal,  the  question  put  was.  Whether,  in  these  circum- 
stances, the  transactions  of  Mr.  John  Patterson,  under  his  father's  procu- 
ration, are  good  to  those  who  transacted  with  him  from  the  date  of  it  to  the 
period  of  stopping.'  The  answer  by  Sir  Vicary  Gibbs  (afterwards  Lord 
Chief  Justice  of  the  Common  Pleas) ,  Sir  Samuel  Romilly,  and  Mr.  Adam 
(now  Lord  Chief  Commissioner  of  the  Scottish  Jury  Court),  was,  'We 
think  they  are  good.'  JNlr.  Chancellor  Kent,  in  his  Commentaries,  inclines 
to  the  same  opinion.  2  Kent,  645.  Would  a  deed  or  sale,  executed  per- 
sonally by  a  party  manifestly  insane  at  the  time,  be  valid?  If  not,  can  his 
agent  be  in  a  better  condition  ?  " 

'  Saver  v.  Bennet,  1  Cox,  107 ;  Pearce  v.  Chamberlain,  2  Ves.  Sr. 
33,  35;"  [Leaf  v.  Coles,  1  De  G.  M.  &  G.  171 ;  12  Eng.  L.  &  Eq.  117]  ; 
Wrexham  v.  Huddleston,  1  Swans.  514,  note,  and  see  Ibid,  the  Reporter's 
note ;  Waters  v.  Taylor,  2  Ves.  &  B.  299,  302,  303 ;  Kirby  v.  Carr,  3  You. 
&  C.  184 ;  Jones  v.  Noy,  2  Myl.  &  K.  125  ;  1  Story,  Eq.  Jur.  §  673 ;  3  Kent, 
68  ;  Wats,  on  P.  c.  7,  p.  382,  2d  ed. ;  Griswold  v.  Waddington,  15  Johns.  57, 
per  Mr.  Ch.  Just.  Spencer.  {Anon.  Z.  v.  X.  2  Kay  &  J.  441.  See  Rowlands 
V.  Evans,  30  Beav.  302. }  In  Sayer  v.  Bennet,  1  Cox,  107,  109,  Lord  Kenyon 
(then  Master  of  the  Rolls)  said :  "I  think,  indeed,  it  may  be  laid  down  as 
a  general  rule  (without  considering  the  particular  circumstances  of  the 
case),  that  when  partners  are  to  contribute  skill  and  industry,  as  well  as 
capital,  if  one  partner  becomes  unable  to  contribute  that  skill,  a  Court  of 
Equity  ought  to  interfere  for  both  their  sakes ;  for  both  have  stakes  in  the 
partnership,  and  are  interested  in  having  it  carried  on  properly  ;  and  the 


474  PARTNERSHIP.  [cHAP.  XIII. 

for,  where  the  insanity  has  been  positively  ascertained, 
under  a  commission  of  lunacy,  or  by  the  regular  judi- 

Court  ought  to  see,  that  the  property  of  the  party,  unable  to  take  care  of 
himself,  should  be  taken  care  of  for  him.  It  appears,  that  few  people  care 
to  leave  the  management  of  their  property  to  other  persons ;  and  as  a 
lunatic  has  no  power  of  managing  his  own  property,  so  a  Court  of  Equity 
will  not  deliver  it  to  persons  to  whom  the  party  himself  has  not  committed 
it.  If,  therefore,  the  defendant  continued  in  the  same  situation  as  he  has 
been,  I  should  have  no  difficulty  in  saying  that  the  partnership  ought  to  be 
dissolved,  though  there  may  be  no  precedent  for  the  purpose.  As  to  what 
is  said  with  respect  to  a  substitute  for  defendant,  that  is  what  Sayer  never 
intended  by  the  partnership  ;  he  never  meant  to  take  a  partner  from  a  Court 
of  Equity.  The  next  thing  is,  how  far  his  present  situation  ought  to  in- 
fluence the  Court.  I  think  I  may  say,  that,  if  it  were  clearly  established, 
that  Bennet  had  recovered  his  senses,  and  there  was  no  probability  of 
a  relapse,  it  would  be  too  much  to  dissolve  the  partnership ;  (nor  if  it 
were  otherwise,  could  this  Court  dissolve  it  with  a  retrospect  to  the  time 
of  the  disorder's  commencing ;  for  as  his  capital  has  been  embarked,  dur- 
ing all  that  time,  he  must  have  the  profits  of  it) .  If  I  was  clearly  satisfied, 
that  Bennet  was  restored  to  a  sound  mind,  and  could  afford  the  proper 
assistance  to  Sayer,  the  partnership  ought  not  to  be  dissolved.  In  Hud- 
dleston's  Case  it  does  not  appear,  what  was  the  extent  of  the  dejection  of 
mind.  Everybody  knows  that  it  is  very  frequent  for  persons  once  mad 
to  recover.  And  in  this  case  I  cannot  find  what  the  apothecary  forms  his 
opinion  upon,  as  to  the  likelihood  of  Bennet's  recovery.  I  am  astonished 
that  neither  party  examined  Dr.  Monro ;  he  ought  to  have  had  frequent 
and  recent  opportunities  of  seeing  him.  Every  lunatic  is  supposed  to  have 
lucid  intervals ;  and  it  might  be,  that  these  were  selected  for  his  being 
seen  by  these  witnesses ;  at  least  it  is  not  made  to  appear  sufficiently  to 
me.  His  family,  with  whom  he  has  lived,  ought  to  have  stated  it.  Under 
these  circumstances  I  have  great  difficulty.  On  the  principle  I  have  no 
doubt;  but  I  cannot  tell  how  the  circumstances  apply.  I  must,  therefore, 
direct  a  new  kind  of  inquiry,  which  is,  the  Master  must  inquire  whether 
Bennet  is  now  in  such  a  state  of  mind  as  to  be  able  to  conduct  this  business 
in  partnership  with  Mr.  Sayer,  according  to  the  articles  of  copai'tnership ; 
for  if  he  has  merely  a  ray  of  intellect,  I  ought  not  to  reingrafl  him  in 
his  partnership,  and  that  in  mercy  to  both,  for  the  property  of  both  is 
concerned ;  and  he  who  cannot  dispose  of  his  property  by  law,  must  be 
restrained  here.  I  have,  therefore,  no  manner  of  doubt  of  the  principle." 
In  Waters  v.  Taylor,  2  Ves.  &  B.  299,  302,  303,  Lord  Eldon  said: 
"It  was  supposed  that  I  had  contradicted  Lord  Kenyon's  doctrine  in 
Sayer  v.  Bennet.  Certainly  I  did  not  contradict  that  doctrine ;  nor  did  I 
make  any  decree,  which,  duly  considered,  was  an  assent  to  it.  The  case 
was  no  more  than  this ;  one  partner  becoming  a  lunatic,  the  others  thought 
proper  by  their  own  act  to  put  an  end  to  the  partnership ;  which  they  had 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  475 

cial  appointment  of  a  guardian  to  the  lunatic,  it  may 
deserve  consideration,  whether  it  does   not  i2)So  facto 

no  right  to  do,  if  he  had  been  sane ;  and  they  continued  to  carry  on  the 
business  with  his  capital ;  not  being  able  to  state,  what  was  his,  as  a  cred- 
itor, and  what  was  not  his,  as  a  partner.  That,  Lord  Kenyon  thought, 
afforded  sufficient  ground  for  saying  the  partnership  was  not  determined ; 
and  he  also  held,  that  one  partner  cannot,  on  account  of  the  lunacy 
of  another,  put  an  end  to  the  partnership ;  but  that  object  must  be  attained 
through  the  decree  of  a  Court  of  Equity.  My  decision  was  not  intended 
either  to  support  or  impeach  that,  proceeding  upon  the  particular  circum- 
stances of  the  case  before  me.  The  question,  whether  lunacy  is  to  be  con- 
sidered a  dissolution,  is  not  before  me.  I  shall  therefore  say  no  more  upon 
it,  than  this.  If  a  case  had  arisen,  in  which  it  was  clearly  established,  as 
far  as  human  testimony  can  establish,  that  the  party  was  what  is  called  an 
incurable  lunatic,  and  he  had  by  the  articles  contracted  to  be  always  actively 
engaged  in  the  partnership,  and  it  was  therefore  as  clear  as  human  testimony 
can  make  it,  that  he  could  not  perform  his  contract,  there  could  be  no 
damages  for  the  breach  in  consequence  of  the  act  of  God.  But  it  would 
be  very  difficult  for  a  Court  of  Equity  to  hold  one  man  to  his  contract, 
when  it  is  perfectly  clear  that  the  other  could  not  execute  his  part  of  it. 
It  will  be  quite  time  enough  to  determine  that  case,  when  it  shall  arise  ; 
for,  as  we  know  that  no  lunacy  can  be  pronounced  incurable,  yet  the  dura- 
tion of  the  disorder  may  be  long  or  short ;  and  the  degree  may  admit 
of  great  variety.  I  would  not,  therefore,  lay  down  any  general  rule  by 
anticipation,  speculating  upon  such  circumstances.  I  agree  with  Lord 
Thurlow,  that  the  jurisdiction  is  most  difficult  and  delicate,  and  to  be  exer- 
cised with  great  caution."  In  Jones  v.  jSToy,  2  Myl.  &  K.  125,  129,  130, 
Sir  John  Leach  (Master  of  the  Rolls)  said:  "It  is  clear  upon  principle, 
that  the  complete  incapacity  of  a  party  to  an  agreement  to  perform  that 
which  was  a  condition  of  the  agreement,  is  a  ground  for  determining  the 
contract.  The  insanity  of  a  partner  is  a  ground  for  the  dissolution  of 
the  partnership,  because  it  is  immediate  incapacity ;  but  it  may  not,  in  the 
result,  prove  to  be  a  ground  of  dissolution,  for  the  partner  may  recover 
from  his  malady.  When  a  partner,  therefore,  is  affected  Avith  insanity,  the 
continuing  partner  may,  if  he  think  fit,  make  it  a  ground  of  dissolution. 
But  in  that  case,  I  consider  with  Lord  Keftyon,  that,  in  order  to  make  it  a 
ground  of  dissolution,  he  must  obtain  a  decree  of  the  Court.  If  he  does 
not  apply  to  the  Court  for  a  decree  of  dissolution,  it  is  to  be  considered 
that  he  is  willing  to  wait  to  see  whether  the  incapacity  of  his  partner  may 
not  prove  merely  temporary.  If  he  carry  on  the  partnership  business,  in 
the  expectation  that  his  partner  may  recover  from  bis  insanity,  so  long  as  he 
continues  the  business  with  that  expectation  or  hope,  there  can  be  no  disso- 
lution." See  also  Gow  on  P.  c.  5,  §  1,  p.  221,  3d  ed. ;  Besch  v.  Frolich,  1 
PhU.  172 ;  [Sander  v.  Sander,  2  Coll.  276.] 


476  PARTNERSHIP.  [CHAP.  XIII. 

amount  to  a  clear  case  of  dissolution  of  the  partnership 
by  operation  of  law  ;  since  it  immediately  suspends 
the  whole  functions  and  rights  of  the  party  to  act  per- 
sonally.^ The  Eoman  law  seems  fully  to  have  incul- 
cated the  same  doctrine,  upon  the  ground  that  a  mad- 
man has  no  capacity  to  contract.^ 

§  296.  Under  the  Roman  law  the  other  partners 
not  only  had  a  right  to  renounce  the  partnership,  where 
any  one  of  the  partners  was  a  prodigal  or  a  madman,  if 
he  was  put  under  guardianship  on  account  of  his  prodi- 
gality or  insanity ;  but  his  guardian  also  was  clothed 
with  the  like  authority,  which,  however,  as  he  was  at 
liberty  to  exercise  it  as  his  election,  does  not  seem  to 
have  been  understood  as  amounting  ^^er  se  to  a  dissolu- 
tion.^ Sancimus  (says  the  Code)  veteriim  dubitatione 
semota,  licentiam  habere  furiosi  cicratorem  dissolvere, 
si  mcdiierit^  societatem  furiosi^  et  sociis  licere  ei  renun- 
tiare.'^ 


1  Story  on  Ag.  §  481.  —  Mr.  Collyer  (Coll.  on  P.  B.  2,  c.  3,  §  3,  p.  195, 
2d  ed.)  seems  to  think  that  a  decree  for  a  dissolution  is  still  necessary, 
notwithstanding  a  commission  of  lunacy  has  found  the  partner  a  lunatic. 
The  case  of  Milne  v.  Bartlet,  cited  by  him  from  the  Jurist  (Eng.),  Vol.  3, 
p.  358,  certainly  seems  to  support  the  view  which  he  takes  of  the  subject. 
But,  at  the  same  time,  it  cannot  escape  observation,  that  the  point  was  not 
made  at  the  Bar,  and  that  the  decree  would  have  been  equally  correct,  if  it 
had  proceeded  to  decree  an  account  upon  the  ground  that  the  dissolution 
was  already  complete.  I  confess  myself  to  have  difficulty  in  comprehend- 
ing how  a  partnership  can  still  exist,  after  one  partner  is  put  under  guard- 
ianship by  reason  of  insanity.  See  also  5  Duvergier,  Droit  Civil  Franc,  tit. 
9,  §  443-446.  {In  Isler  v.  Baker,  6  Humph.  85,  it  was  held,  that  an  inqui- 
sition of  lunacy  found  against  a  partner  i^5o /Jr/c/o  dissolved  the  partnership. } 

*  In  negotiis  contrahendis  alia  causa  habita  est  furiosorum,  alia  eorum, 
qui  fari  possunt,  quamvis  actum  rei  non  intelligerent ;  nam  furiosus  nullum 
negotiura  contrahere  potest ;  pupillus  omnia,  tutore  auctore,  agere  potest. 
(D.  50,  17,  5.)  Furiosi,  vel  ejus  cui  bonis  interdictum  sit,  nulla  voluntas 
est.     (D.  50,  17,  40.) 

3  Domat,  1,  8,  5,  art.  12,  13. 

*  Cod.  4,  37,  7 ;  Poth.  Pand.  17,  2,  n.  67  ;  Domat,  1,  8,  5,  art.  12,  13. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  477 

§  297.  But   although    insanity    may   thus    constitute 
a  sufficient  ground  to  justify  a  Court  of  Equity  in  de- 
creeing a  dissolution ;    yet  we   are   to  understand  this 
doctrine,  and  indeed,  all  other  cases  of  personal  infir- 
mity or  disability,   in   a  qualified  sense,   and   with  its 
appropi'iate  limitations.     It  is  not  the  mere  fact  of  the 
existence  of  such  insanity,  infirmity,  or  other  disability, 
supervening,  that  will  justify  the  Court  in  the  applica- 
tion   of   such    an    extraordinary  remedy.     But  it  must 
be  of  such  a  character,  as  amounts  to  a  permanent  or 
confirmed  disqualification  to  perform  the  duties  of  the 
partnership.      If    the    insanity,   or   infirmity,    or    other 
disability,  be  of  a  temporary  or  fugitive  nature ;   if  it 
be  merely  an  occasional  malady,  or  accidental  illness, 
or   an   insanity,   admitting    of   long   lucid   intervals,   or 
mild  and  gentle  in  its    character,   amounting  to  little 
more    than    a  dejection   of  mind ;    if  there   be    a   fair 
prospect  of  recovery  within  a  reasonable   time ;  then, 
and  in  such  cases,  there  is  no  fit  ground  for  a  Court 
of  Equity  to   decree  a  dissolution ;  for  every  partner- 
ship  must   be    presumed    to    be    entered   into,   subject 
to  the   common  incidents    of  life,   such  as.  temporary 
illness,  infirmity,  or  insanity.^     The   case  must  be  far 
more   stringent ;   the  hope   of  a  recovery  must  be   re- 
mote ;  the  character  of  the  disease  must  be  permanent 
and    confirmed ;    and  the    impracticability  of  resuming 
the  partnership  duties,  until  after  a  period  of  indefinite 
and  doubtful  duration,  must  be  apparent  and  decisive. "-^ 

'  2  Bell,  Coram.  B.  7,  c.  2,  p.  62-i,  oth  ed. 

^  Gow  on  P.  c.  5,  §  1,  p.  221,  222,  3d  ed. ;  Id.  Suppl.  18il,  p.  64; 
Wats,  on  P.  c.  7,  p.  382,  2d  ed. ;  Jones  v.  Nov,  2  ]\hl.  &  K.  125.  — Mr. 
Gow  has  well  said  :  "  But,  as  the  duration  of  the  disorder  may  be  protracted 
or  circumscribed,  and  the  degree  may  admit  of  variety,  it  is  impossible 
speculatively  to  lay  down  any  general  rule  on  the  subject ;  since  such  a  rule, 
in  its  application,  must  vary  according  as  the  malady  is  either  confirmed 
insanity,  or  mere  temporary  illness,  or  dejection  of  mind,  and  according  as 


478  PARTNERSHIP.  [CHAP.  XIII. 

Even  when  a  Court  of  Equity  will,  on  account  of  the 
insanity  of  a  partner,  dissolve  the  partnership,  it  will 
not  give  a  retrospective  effect  to  its  decree,  by  carry- 
ing back  the  dissolution  to  the  time  when  the  insanity 
commenced,  or  even  to  the  time  of  filing  the  bill ;  but 
it  will  generally  confine  the  dissolution  to  the  time  of 
the  decree.^ 

§  298.  There  may  be,  and  indeed  are,  various  other 
circumstances  and  changes  of  state  or  condition  which 
may,  in  like  manner,  justify  a  Court  of  Equity  in  dis- 
solving a  partnership ;  such,  for  example,  as  in  the 
cases  already  hinted  at,^  of  the  long  absence  of  one 
partner  in  the  public  service ;  or  his  protracted  ab- 
sence abroad  for  mere  personal  or  private  objects ;  or 
his  change  of  domicile  to  another  state  or  country ;  ^  or 
his  voluntary  engagement  in  any  other  incompatible 
pursuits.  In  all  such  cases,  if  the  business  and  inter- 
ests of  the  partnership  will  be  thereby  materially  ob- 
structed, or  suspended,  or  interfered  with,  to  the  preju- 
dice of  the  other  partners,  it  will  furnish  a  just  and 

the  prospect  of  recovery  is  speedy  or  remote.  Each  case  must  be  governed 
and  decided  by  its  own  peculiar  circumstances.  However,  whatever  may 
be  the  nature  of  the  disorder,  one  partner  cannot,  in  consequence  of  such 
an  affliction,  put  an  end  to  the  partnership  by  his  own  act;  that  object  can 
only  be  attained  through  the  medium  of  the  decree  of  a  Court  of  Equity." 
Sadler  v.  Lee,  6  Beav.  324;  {Kirby  v.  Carr,  3  You.  &  C.  Ex.  184;  Anon. 
Z.v.X.2Kay  &  J.  441. 

'  Besch  V.  Frolich,  1  Phil.  172,  176 ;  [Sander  v.  Sander,  2  Coll.  276. 
But  where  by  articles  the  partnership  between  two  persons  was  to  be  dis- 
solved on  either  party  giving  the  other  six  months'  notice  ;  and  one  of  the 
parties  becoming  deranged  in  his  intellect,  the  other  gave  the  required 
notice ;  the  partnership  was  declared  to  have  been  dissolved  in  pursuance 
of  the  notice,  and  not  merely  from  the  time  of  the  decree,  notwithstanding 
the  insanity  of  the  party  to  whom  it  was  addressed.  Robertson  v.  Lockie, 
15  Sim.  285.  See  also  Bagshaw  v.  Parker,  10  Beav.  532.]  { So  Mellersh  v. 
Keen,  27  Beav.  236.} 

=*  Ante,  §  274,  291,  292. 

^  See  Whitman  v.  Leonard,  3  Pick.  177,  179.  [Explained  and  limited 
in  Arnold  v.  Brown,  24  Pick.  89,  94.] 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  479 

reasonable  cause  for  a  Court  of  Equity  to  dissolve  the 
partnership.  The  Roman  law  on  this  point  speaks  at 
once  the  language  of  common  sense  and  public  conven- 
ience.^ There  are  other  incapacities  and  disabilities, 
which  operate,  ijjso  facto,  a  dissolution  of  the  partner- 
ship, without  any  intervention  of  a  Court  of  Justice ; 
but  these  will  come  properly  under  consideration,  when 
we  treat  of  the  cases  of  dissolution  by  mere  operation 
of  law. 

§  299.  Analogous  to  the  cases  of  a  dissolution  by  the 
decree  of  a  Court  of  Equity,  is  that  of  a  dissolution 
which  is  adjudged  by  the  award  of  arbitrators,  upon  a 
proper  submission  of  the  case  to  them  by  the  consent 
of  all  the  partners.  Where  there  is  a  direct  submission  of 
the  very  question  to  arbitrators  by  the  express  terms 
of  the  submission,  there  does  not  seem  to  be  any,  the 
slightest  difficulty,  in  holding,  that  an  award  in  the 
premises,  directly  awarding  a  dissolution,  will,  12:) so  facto, 
if  unimpeached  and  unimpeachable,  amount  to  a  posi- 
tive dissolution.^  And  this  is  so  for  two  reasons ;  the 
one  of  which  is,  that  it  is  competent,  in  point  of  law, 
for  the  arbitrators  to  make  such  an  award  obligatory 
upon  the  parties,  as  the  decree  of  a  tribunal  of  their 
own  choice.^  The  other  is,  that  the  dissolution  of  the 
partnership  may  properly  be  treated,  as  made  with  the 
consent  of  all  the  partners.'* 

§  300.  The  question,  however,  may  arise,  and,  indeed, 
has  arisen,  whether,  when  the  arbitrators  have  not,  in 
express  terms,  awarded  a  dissolution,  it  may  neverthe- 
less be  implied  from  the  very  nature  and  operation  of 

'  D.  17,  2,  16 ;  Poth.  Pand.  17,  2,  n.  68;  Poth.  de  Soc.  n.  152. 

2  Wats,  on  P.  c.  7,  p.  383,  384,  2d  ed. ;  Coll.  on  P.  B.  2,  c.  2,  §  2,  p. 
152,  153,  2d  ed. ;  Gow  on  P.  c.  5,  §  1,  p.  230,  3d  ed. ;  Heath  v.  Sansom, 
4  B.  &  Ad.  172 ;  Street  u.  Rigby,  6  Ves.  815. 

'  Heath  V.  Sansom,  4  B.  »fe  Ad.  172. 

«  Ibid. 


480  PARTNERSHIP.  [CHAP.  XIII. 

the  actual  clauses  of  the  award  itself.  And  it  has  been 
held,  that  it  may,  if  the  award  admits  of  no  other  just 
and  reasonable  interpretation.  Thus,  for  example,  if  it 
is  awarded  by  the  arbitrators,  that  the  affairs  of  the 
partnership  shall  be  w'ound  up,  or  that  all  the  partner- 
ship property  shall  be  sold  and  delivered  to  the  partner, 
who  shall  become  the  purchaser ;  or  that  one  partner 
shall  take  all  the  property  and  pay  all  the  debts  of  the 
partnership  ;  in  thesd  and  the  like  cases,  it  seems  to  be 
clear,  that  a  dissolution  of  the  partnership  is  positively 
intended  by  the  arbitrators.^ 

§  301.  The  only  other  important  question  of  a  prac- 
tical nature  under  this  head  is,  What  terms  in  the  sub- 
mission w411  amount  to  an  implied  authority  to  the  arbi- 
trators to  dissolve  the  partnership  ?  Thus,  for  example, 
where  all  matters  in  difference  between  the  partners  are 
referred  to  arbitrators,  if  they  should  award  a  dissolu- 
tion of  the  partnership,  it  may  be  made  a  question, 
whether  the  arbitrators,  by  such  an  award,  have  not 
exceeded  their  authority.  In  a  case  of  this  sort,  the 
Court  held,  that  under  such  a  submission  it  was  clearly 
within  the  scope  of  the  authority  of  the  arbitrators  to 
award  a  dissolution  of  the  partnership.^ 

§  302.  We  come,  in  the  next  place,  to  the  considera- 
tion of  the  dissolution  of  partnership  by  mere  operation 
of  law.  And  this  is  divisible  into  vaiious  heads.  (1.) 
Dissolution  by  the  change  of  the  state  [status)  or  con- 
dition of  one  or  more  of  the  partners.  (2.)  Dissolution 
by  the  transfer  of  the  property  of  one  or  more  of  the 
partners,  by  their  own  act,  or  by  the  act  of  the  law. 
(3.)  Dissolution  by  the  bankruptcy  and  insolvency  of 
one   or  more   of  the   partners,     (-i.)  Dissolution  by   a 

*  Heath  V.  Sansom,  4  B.  &  Ad.  172 ;  Byers  v.  Van  Deusen,  5  Wend. 
208. 

^  Green  v.  Waring,  1  W.  Bl.  475;   {§  215.} 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  481 

public  war  between  the  countries,  of  which  the  partners 
are  respectively  subjects.  (5.)  Dissolution  by  the  death 
of  one  or  more  of  the  partners.  These  heads  may  seem 
somewhat  to  run  into  each  other  ;  but  a  distinct  consid- 
eration of  them,  in  the  order  stated,  may  enable  us  to 
see  the  principles  applicable  to  each  in  a  more  exact 
and  comprehensive  manner,  than  could  otherwise  be 
conveniently  done. 

§  303.  And  first,  as  to  dissolution  by  the  change  of 
the  state  or  condition  of  one  or  more  of  the  partners. 
This,  of  course,  must  arise,  whenever  the  incapacity 
further  to  act  sui  juris ^  results  by  operation  of  law  from 
such  change  of  state  or  condition.  To  this  head  we 
might  refer  the  case  of  persons,  who,  being  partners,  are 
put  under  actual  tutelage  or  guardianship,  and  are  by 
the  local  law  disabled  to  act  sui  juris  ;  such  as  persons 
becoming  insane,  idiotic,  spendthrifts,  or  otherwise,  from 
excessive  weakness  or  vice,  being  placed  under  tutelage 
or  guardianship ;  ^  for  the  continuance  of  the  partner- 
ship contract  would  seem  necessarily  founded  upon  the 
personal  capacity  of  the  partner  to  act  and  bind  him- 
self in  the  partnership  transactions.  We  have  already 
seen  how  this  subject  is  dealt  with  ui  the  Roman  and 
foreign  law.^ 

§  304.  So,  again,  the  same  result  will  arise  at  the 
common  law,  where  a  party  has  lost  his  capacity  to  act 
sui  juris,  by  reason  of  his  outlawry,  or  conviction  and 
attainder  of  felony,  or  treason.^  These  two  last  cases 
are  not  only  founded  upon  the  personal  incapacity  of 
the  parties  ;    but  also  upon  the  further  consideration, 

'  Ante,  §  295,  296 :  Domat,  1,  8,  5,  art.  12,  13 ;  Cod.  4,  37,  7  ;  Poth. 
Panel.  17,  2,  n.  67 ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  634,  635,  5th  ed. ;  Gris- 
wold  V.  Waddington,  16  Johns.  438,  491. 

*  Ante,  §  295,  296. 

3  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  71,  2d  ed. 

31 


482  PARTNERSHIP.  [CHAP.  XIII. 

that  by  the  attainder  the  crown  becomes  entitled  to  all 
the  partnership  effects,  by  virtue  of  its  prerogative  ; 
that  is  to  say,  to  the  moiety  or  share  of  the  convict- 
partner,  by  way  of  forfeiture;  and  to  the  moiety  or 
shares  of  all  the  other  innocent  partners,  upon  the  ex- 
traordinary (if  it  does  not  deserve  the  stronger  epithets 
of  extravagant  and  oppressive)  technical  doctrine,  that 
it  is  beneath  the  dignity  of  the  crown  to  become  a  joint 
tenant,  or  a  tenant  in  common  with  a  subject,  and, 
therefore,  the  king  shall  take  the  whole  by  his  preroga- 
tive.^    No  such  doctrine  has  ever  been  promulgated  in 

1  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  71,  72,  2d  ed. ;  Wats,  on  P.  c.  6,  p. 
377,  2d  ed.;  Gow  on  P.  c.  5,  §  1,  p.  216,  217,  3d  ed.— Mr.  Watson  (p. 
377,  378)  has  stated  the  reasons  of  the  doctrine,  and  its  hardshijj,  in  the 
following  terms  :  "  Before  concluding  this  chapter  upon  the  death  of  part- 
ners, it  may  be  proper  to  consider  the  consequences  of  one  partner  becoming 
civilly  dead,  by  outlawry  or  by  attainder  for  treason  or  felony.  The 
outlaw  or  convict,  being  dead  in  law,  incapable  of  entering  into  any  con- 
tract, bringing  any  suit,  or  holding  any  property,  it  is  clear,  that  a  part- 
nership, in  which  he  was,  is  ipso  facto  dissolved.  He  is  as  incapable  of  the 
functions  of  a  partner  in  trade,  as  if  the  breath  had  left  his  body.  The 
eflFects  of  his  delinquency  are  extremely  severe  upon  his  copartner,  who  re- 
mains a  good  and  lawful  man.  And  here  is  one  of  those  instances,  in  which 
by  our  law  the  innocent  suffer  with  the  guilty  ;  which  rather  shock  us  at  first 
sight,  but  which  may  be  well  contrived  for  the  prevention  of  crimes,  and  the 
general  good  of  the  commonwealth.  Upon  the  outlawry  or  attainder  of  one 
partner,  all  the  partnership  effects  become  vested  in  the  crown.  The  share 
of  the  partner  outlawed  or  attainted  is,  in  the  first  place,  forfeited  to  the 
crown ;  whereby,  if  the  king  were  capable  of  being  so,  he  would  become 
joint  tenant  or  tenant  in  common  of  the  partnership  effects  with  the  other 
partner ;  but  as  this  would  be  inconsistent  with  the  dignity  of  the  monarch, 
he  is  strictly  entitled  to  the  whole.  Sir  Wni.  Blackstone  says  :  '  The  king 
cannot  have  a  joint  property  with  any  person  in  one  entire  chattel,  or  such 
a  one  as  is  not  capable  of  division  or  separation.  But  where  the  titles  of  the 
king  and  the  subject  concur,  the  king  is  entitled  to  the  whole ;  in  like  man- 
ner, as  the  king  cannot,  either  by  grant  or  contract,  become  a  joint  tenant 
of  a  chattel  real  with  another  person ;  but  by  such  grant  or  contract  shall 
become  entitled  to  the  whole  in  severalty.  Thus,  if  a  horse  be  given  to  the 
king  and  a  private  person,  the  king  sliall  have  the  sole  property ;  if  a  bond 
be  made  to  the  king  and  a  subject,  the  king  shall  have  the  whole  penalty ; 
tlie  debt  or  duty  being  one  single  chattel ;  and  so  if  two  persons  have  the 
proi)erty  of  a  horse  between  them,  or  have  a  joint  debt  owing  them  on  bond. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  483 

America ;  and  even  in  England  it  has  become  obsolete 
in  practice,  although  it  is  still  a  subsisting  prerogative, 
which  may  spring  upon  and  produce  the  ruin  of  the 
innocent  and  unwary  partners. 

§  305.  The  same  result  (that  is,  a  dissolution  of  the 
partnership),  without  any  of  the  odious  features  attached 
to  prerogative,  is,  under  the  like  circumstances,  fully  es- 
tablished in  the  Roman  and  foreign  law,  whenever,  by 
a  change  of  the  state  or  condition,  any  one  of  the  part- 
ners is  disabled  from  the  performance  of  the  appropriate 
duties  of  the  partnership,  as  by  the  loss  of  his  personal 
liberty  and  power  of  action  by  banishment,  or  by  bank- 
ruptcy, or  by  insolvency,  or  by  a  judicial  prohibition  to 
act  in  his  business,  or  by  a  confiscation  of  his  property, 
or  by  his  civil  death.^  In  the  Roman  law  a  distinction 
was  taken  between  the  cases  of  great,  and  intermediate, 
and  of  small  disabilities.  The  two  former  dissolved  the 
partnership  ;  the  latter  did  not.  Pariter  (says  Pothier, 
quoting  the  Digest)  solvitur  societas  cajntis  dhninutione 

and  one  of  them  assigns  his  part  to  the  king,  or  is  attainted,  whereby  his 
moiety  is  forfeited  to  the  crown,  the  king  shall  have  the  entire  horse  and  en- 
tire debt.  For,  as  it  is  not  consistent  with  the  dignity  of  the  crown  to  be 
partner  with  a  subject,  so  neither  does  the  king  ever  lose  his  right  in  any 
instance  ;  but,  where  they  interfere,  his  is  always  preferred  to  that  of  another 
person.  From  which  two  principles  it  is  a  necessary  consequence,  that  the 
innocent,  though  unfortunate,  partner  must  lose  his  share  in  both  the  debt 
and  the  horse,  or  in  any  other  chattel  in  the  same  circumstances.'  One  good 
effect  of  this  doctrine,  with  regard  to  partnership,  is,  that  it  may  render  a 
man  cautious  as  to  the  pei'sons  with  whom  he  forms  this  relation,  and  that  it 
renders  it  his  interest  to  strive  to  preserve  them  in  the  path  of  loyalty  and 
virtue.  Besides ;  although  such  are  the  strict  rights  of  the  crown,  in  the 
mild  spirit  of  modern  times,  they  are  not  likely  ever  to  be  enforced,  either 
against  creditors  or  deserving  partners."  This  is  perhaps  the  best  apology 
which  can  be  made  for  the  doctrine  ;  but  it  is  impossible  to  disguise  either 
its  gross  injustice,  or  its  mischievous  tendency.  Why  should  innocent  per- 
sons be  at  the  mercy  of  the  crown,  whether  they  are  to  be  involved  in 
positive  ruin  or  not  ?  The  case  of  the  late  Mr.  Fauntleroy  would  afford  a 
striking  instance  of  the  terrific  results  of  such  a  prerogative. 
*  See  Griswold  i'.  Waddington,  16  Johns.  -ioS,  -491. 


484  PARTNERSHIP.  [CHAP.  XIII. 

socii  maxima  aid  media.  Hinc^  "  Puhlicatione  qiioque 
distrain  societatem  diximus.  Quod  videhcr  spectare  ad 
universorum  honorum  publicationem^  si  socii  bona  pub- 
licentur.  Natn  cum  in  ejus  locum  cdius  succedat,  i^o 
mortuo  habetur''  ^  Minima  autem  capitis  diwdnutione 
non  solvitur.  Quocirca.,  "  8i  filiusfa^inilias  societatem. 
coierit,  deinde  emancipatus  a  patre  fuerit^  apud  JuUa- 
num  quceritur,  an  eadem  societas  duret,  an  vero  cdia  sit, 
si  forte  p)ost  emancip)ationem,  in  societate  duratum  est  f 
Jidianus  scrijosit  (Libro  14  Digestorum),  eandem  socie- 
tcdem  durare ;  initiwn  enim  in  his  contractibus  inspi- 
ciendiim.  Duabus  autem  actionibus  agendimi  esse,  una 
adversus  pcdreon,  altera  adversus  filiiim  ;  cum  patre,  de 
eo,  ciijus  dies  ante  emancipcdionem  cessit ;  nam  ejus 
temporis,  quo  p)ost  emanci2Kdionem  societas  duravit, 
nihil  p)rcestare  pair  em  oportet;  cum  jilio  autem,  de 
utroque  tempore,  id  est,  de  tota  societcde.  Nam  et  si 
quid  [inquit),  socius  filii,  post  emancipationemjilii,  dolo 
feceint,  ejus,  non  pcdri,  sed  Jilio  actio  danda  est.''  ^  Si- 
militer nee  adrogatione  socii  solvetur  societas;  nontameyi 
ad  adrogatorem  transibit.  Hoc  docet  Paulus  ;  "  Socie- 
tas quemadmodum  ad  heredes  socii  non  transit,  ita  nee 
ad  adrogatorem ;  ne  alioquin  invitus  quis  socius  efficia- 
tur,  cui  non  vidt.  Ip)se  autem  adrogatus  socius  perma- 
net ;  nam  et  si  Jiliusfamilias  emancip)atus  fuerit,  perma- 
nebit  socius.'"  ^  Aliud  in  servo ;  nam  cum  personam 
non  habeat,  nee  nisi  ex  p>ersona  domini  socius  esse  pos- 
sit,  sequitur  quod  hujus  manumissione  aut  alienatione 
solvatur  societas.  Hoc  docet  Ulpianus ;  '■'■Si  servus 
mens  societatem  cum  Titio  coierit,  et  alienatus  in  eadem 
perm,anserit,  p)otest  did,  cdienatione  servi  et  prior  em  so- 
cietatem finitain,  et  ex  integro  alteram  inchoata7n  ;  cdcpie 

'  D.  17,  2,  65,  12;  Poth.  Pand.  17,  2,  n.  60. 

2  D.  17,  2,  58,  2;  Poth.  Pand.  17,  2,  n.  01.  ^  Ibid. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  485 

icleo  et  onihi  et  emptori  actionem  pro  socio  com.p)etere. 
Iteni^  tarn  adversiis  tne,  quam  adversus  emi^toreyn,  ex  his 
causis,  quae  ante  alienationem  inciderunt,  dandam  actio- 
nem ;  ex  reliquis,  adversus  emptorem  solum."  ^  Pothier 
asserts  the  same  to  be  the  doctrine  of  the  French  law,^ 
and  it  is  now  positively  affirmed  by  the  Civil  Code  of 
France,^  and  the  Code  of  Louisiana.'* 

'  Poth.  Pand.  17,  2,  n.  60,  61;  Domat,  1,  8,  5,  art.  15;  D.  17,  2,  65, 
22;  Id.  17,  2,  58,  3. — Vinnius  and  Heineccius  Lave  commented  on  this 
subject  in  their  Conmientaries  to  the  Institutes,  3,  26,  7,  p.  774,  ed.  1777. 
The  comment  is  as  follows :  "  Quod  Paulus,  dicta  L.  actione,  65,  §  Puhlica- 
tione,  12  hoc  tit.  unde  hie  locus  desumptus  est,  dicit,  Publicatione  bonorum 
socii  distrahi  societatem,  hoc  Modestinus  et  Ulpianus  dixerunt,  societatem 
solvi  capitis  derainutione,  L.  4,  §  1,  d.  L.  verum.  63,  §  idt.  eocl.  Intelligunt 
enim  capitis  deminutionein  maximam  et  mediam,  cum  soclus  severitate  sen- 
tentise  aut  in  servitutera  redigitur,  aut  in  insulam  deportatur,  quo  casu  bona 
daranati  publicari  solent,  L.  1,  de  hon.  damn.  L.  8,  §  1  &  2,  qui  iestam.fac. 
Poterat  htec  species  dissociationis  etiam  ad  prtecedens  genus  referri,  ad  earn 
videlicet,  quaj  morte  socii  contingit.  Quibus  enim  libertas  aut  civitas  ademp- 
ta  est,  hi  jure  civili  pro  mortuis  habentur ;  eoque  pertinet,  quod  dicitur  in  d. 
L.  verum.  63,  §  ult.  homines  interire  aut  morte,  aut  maxima  et  media  capitis 
deminutione.  Sed  et  alia  ratione  ad  sequens  genus  referri  potest.  ViNX. 
Atqui  si  obseratus  bonis  cedit,  bona  non  publicantur  sed  vendantur ;  nee  is 
pro  mortuo  habetur,  cujus  substantia  veniit,  sed  cujus  bona  ob  delictum 
consecrata  pubhcatave  sunt.  Vide  L.  63,  §  10,  L.  58,  L.  65,  §  1  tfc  2,  ^. 
pro  soc.    Heinecc. 

2  Poth.  de  Soc.  n.  147,  148.  '  Code  Civil  of  France,  art.  1865. 

*  Code  of  Louisiana  (of  1825),  art.  2847.  — It  has  been  held  by  the  Su- 
preme Court  of  Massachusetts,  that  the  absconding  of  one  partner  is  a  dis- 
solution of  the  partnership,  between  the  parties,  and  as  to  third  persons, 
who  had  notice  thereof.  Whitman  v.  Leonard,  3  Pick.  177,  179.  [In  Ar- 
nold V.  Brown,  24  Pick.  89,  94,  it  is  said  :  "  Nor  will  the  voluntary  absence 
of  one  of  the  partners  from  the  State,  produce  a  dissolution.  Some  of  the 
dicta  in  Whitman  v.  Leonard,  3  Pick.  177,  certainly  favor  the  plaintiff's  po- 
sition. But  they  were  not  necessary  to  the  decision  of  the  case,  and  if 
they  were,  must  be  taken  in  connection  with  the  circumstances  of  that  case. 
There  were  facts  enough  to  show  the  note  to  be  grossly  fraudulent,  without 
relying  upon  the  absconding  of  one  of  the  partners.  The  Chief  Justice  says, 
'  here  was  an  absconding  of  one  partner,  which  dissolved  the  partnership.' 
The  absence  was  longer  in  that  case  than  this,  and  attended  with  many  cir- 
cumstances to  distinguish  it  from  this.  It  well  might  be  that  tliere  was  such 
an  absconding  as  would  amount  to  a  dissolution,  and  yet  the  temporary  ab- 
sence in  this  not  produce  the  same  effect.     In  England  the  absconding  would 


486  PARTNERSHIP.  [CHAP.  XIII. 

§  306.  xlgain  ;  the  marriage  of  a  female  partner  will, 
at  the  common  law,  for  the  like  reason,  create  a  disso- 
lution of  the  partnership  by  mere  operation  of  law  ;  for, 
in  the  first  place,  by  the  marriage,  all  her  personal  prop- 
erty and  effects  are  transferred  to  and  belong  to  her 
husband  in  his  own  right,  unless  indeed  there  be  some 
reservation  or  valid  contract  to  the  contrary ;  ^  and  in 
the  next  place,  the  marriage  creates  a  positive  personal 
incapacity  on  her  part  any  further  to  enter  into,  or  to 
bind  herself  by  any  contract.^ 

§  307.  In  the  next  place,  as  to  dissolution  by  a  vol- 
untary assignment  by  one  or  more  of  the  partners  of 
all  his  right,  title,  and  interest  in  the  partnership  prop- 
erty.    It  seems  now  well  established   at  the   common 

be  an  act  of  bankruptcy,  and  the  bankruptcy,  when  determined  by  regular 
adjudication,  would  create  a  dissolution.  But  the  absconding  is  never  relied 
upon,  there,  as  a  dissolution.  And  we  do  not  think  that  the  absence  of  one 
of  the  partners,  under  the  circumstances  disclosed  in  this  report,  amounted 
to  a  dissolution  of  the  partnership."] 

1  1  Bl.  Comm.  442-444;  2  Story,  Eq.  Jur.  §  1367 ;  {§  10-14.} 
-  Ibid. ;  Gow  on  P.  c.  5,  §  1,  p.  226,  3d  ed. ;  Wats,  on  P.  c.  7,  p.  384; 
2  Bell,  Comm.  B.  7,  c.  2,  p.  634,  5th  ed. ;  Griswold  v.  Waddington,  15 
Johns.  57,  82.  —  Mr.  Gow  and  Mr.  Watson  treat  the  point  as  doubtful,  al- 
though their  opinions  coincide  with  that  expressed  in  the  text.  The  point 
seems  to  have  been  directly  decided  by  Lord  Eldon  in  Xerot  v.  Burnand,  4 
Russ.  247,  260.  He  there  said  :  "  The  next  question  is,  when  did  the  part- 
nership terminate  ?  It  was  a  partnership  for  no  definite  period ;  and  either 
party  therefore  might,  at  any  moment,  have  put  an  end  to  it  by  notice. 
Miss  Nerot  married  IVIr.  Burnand,  without  consulting  her  brother,  or,  at 
least,  without  his  assent.  If  she  chose  so  to  change  her  situation,  as  to 
make  Mr.  Nerot,  in  point  of  fact,  if  the  partnership  went  on,  a  partner 
with  Burnand,  Mr.  Nerot  had  a  right,  the  moment  he  received  notice  of 
that  step,  to  act  upon  it,  and  say,  '  Your  marriage  has  put  an  end  to  the 
partnership.'  No  delay  took  place  in  that  respect ;  for  the  bill  was  filed  as 
early  as  Hilary  term,  1820,  the  marriage  having  taken  place  towards  the 
close  of  the  preceding  year.  I  agree,  therefore,  with  the  Vice-Chancellor, 
in  saying,  that  the  partnership  was  dissolved  on  the  16th  of  September, 
1819."  See  also  Gow's  Supplement,  1841,  p.  64.  {In  those  states  in  which 
a  married  woman  has  the  same  rights  and  control  over  her  property  as  if 
she  remained  single,  there  seems  to  be  no  reason  why  her  marriage  should 
dissolve  a  partnership  of  which  she  is  a  member.     See  §  12,  note.} 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  487 

law,  that  if  one  partner  does  make  such  a  volitntary  as- 
signment of  all  right,  title,  and  interest  in  the  partner- 
ship property  and  effects,  that  will  at  once  dissolve  the 
partnership,  and  convert  the  assignee  or  purchaser  into 
a  tenant  in  common  with  the  other  partners.^  If  the 
assignment  be  bona  fide,  and  unexceptionable  in  other 
respects,  this  would  seem  to  be  the  necessary  operation 
of  law  upon  such  an  act ;  for  (as  we  have  already  seen), 
every  partnership  being  founded  in  the  voluntary  con- 
sent of  all  the  parties  thereto,  and  that  consent  being 
founded  upon  a  delectus  personarum^  no  partner  has  any 
right  whatsoever  to  introduce  a  mere  stranger  into  the 
fii-m,  without  the  consent  of  all  the  other  partners  ;  ^  and 
if  such  consent  is  given,  then  it  becomes,  to  all  intents 
and  purposes,  the  substitution  of  a  new  partnership  for 
the  old  one.  And  this  is  equally  the  doctrine  of  our 
law,  and  of  the  Roman  law,  and  of  the  modern  foreign 
law.^  The  Roman  law  states  the  rule  and  the  reason  of 
it  in  very  succinct  and  expressive  terms.  Oimi  enim 
societas  consensu  contrahatur,  socius  mihi  esse  non potest, 
quern  ego  socium  esse  nolui^ 

'  Marquand  v.  N.  Y.  Manuf.  Co.  17  Johns.  525 ;  Keteham  v.  Clark,  6 
Johns.  Hi ;  ante,  §  272  ;  3  Kent,  59  ;  Rodriguez  v.  HefFernan,  5  Johns.  Ch. 
417, 428 ;  NicoU  v.  Mumford,  4  Johns.  Ch.  622,  525.  [But  in  such  case  the 
other  partners  may  hold  possession  of  the  property  as  against  the  assignee, 
for  the  purpose  of  paying  the  debts  and  winding  up  the  business  of  the  con- 
cern. Horton's  Appeal,  13  Penn.  St.  67.]  {A  conveyance,  by  a  partner,  of 
his  intei-est  in  all  the  real  and  personal  estate  of  the  firm  is  evidence  tending 
to  show  a  dissolution,  but  is  not  in  itself  a  dissolution.  Taft  v.  BufFum,  14 
Pick.  322.  Nor  does  a  mortgage,  by  a  partner,  of  his  interest  in  the  person- 
al property  of  the  firm  constitute  a  dissolution.  State  v.  Quick,  10  Iowa, 
451.  So  an  assignment  of  a  partner's  interest  as  security,  it  being  agi-eed 
that  the  assignor  should  act  in  the  partnership  business  as  agent  of  the  as^ 
signee  does  not  operate  as  a  dissolution.  Buford  v.  Neely,  2  Dev.  Eq.  481. 
See  also  Bank  v.  Fowle,  4  Jones,  Eq.  8. } 

2  Ante,  §  5 ;  Inst.  3,  26,  §  5,  8 ;  3  Kent,  59 ;  Ex  parte  Barrow,  2  Rose, 
252-254;  Murray  v.  Bogert,  14  Johns.  318;  Kingman  v.  Spurr,  7  Pick. 
235.     {See  Merrick  v.  Brainard,  38  Barb.  574.} 

3  Ante,  §  5 ;  Inst.  3,  26,  8. 

*  D.  17,  2,  19;  Poth.  Pand.  17,  2,  n.  28;  ante,  §  5. 


488  PARTNERSHIP.  [CHAP.  XIII. 

§  308.  Indeed,  there  never  could  be  any  doubt,  that 
a  general  assignment  by  one  or  more  partners  will 
produce  this  effect,  when  the  partnership  is  for  an 
indefinite  period,  and  determinable  at  will ;  for,  in  such 
a  case,  the  assignment  ^:>er  se  operates  at  once  as  a  dis- 
solution, upon  due  notice  thereof  by  the  party  making 
or  receiving  the  assignment.  The  only  point  open  for 
discussion  seems  to  be,  whether  the  same  conclusion 
ought  to  be  admitted,  when  the  partnership  is  for  a 
fixed  or  definite  period,  and  the  assignment  is  made 
within  that  period,  in  contravention  of  the  partnership 
articles.  And  it  has  been  held,  that  if  the  assignment 
is  made  bona  fide,  it  operates,  ipso  facto,  as  a  dissolution 
of  the  partnership,  since  the  purchaser  is  not  compel- 
lable to  become  a  partner,  nor,  on  the  other  hand,  are 
the  other  partners  compellable  to  admit  him  as  such.^ 

^  Per  Lord  Denman  in  Heath  v.  Sansom,  4  B.  &  Ad.  172 ;  Marquand  v. 
N.  Y.  Manuf.  Co.  17  Johns.  525,  529,  535.  —  On  this  occasion  Mr.  Chan- 
cellor Kent  said :  "The  suit  was  for  a  settlement  of  partnership  accounts, 
on  the  ground  of  its  dissolution  by  the  act  of  Fitch,  one  of  the  partners. 
He  became  indebted  to  the  Xew  York  Manufacturing  Company,  in  a  very 
large  amount,  which  he  was  unable  to  pay,  and  accordingly  on  the  14th  of 
April,  1814,  he  assigned  over  to  them  all  his  share,  or  undivided  estate  and 
interest  in  the  copai'tnership  between  him  and  the  appellants.  In  May  fol- 
lowing, Fitch  actually  stopped  payment,  and  became  insolvent.  It  was  con- 
tended on  the  part  of  the  INIanufacturing  Company,  that  the  copartnership 
was  dissolved  by  the  assignment  in  April,  or,  at  least,  by  the  insolvency  in 
May.  This  was  denied  on  the  part  of  the  appellants,  on  the  gz-ound,  that 
by  the  original  articles  of  copartnership,  it  was  to  continue  until  dissolved 
by  the  death  of  one  of  the  parties,  or  until  two  of  them  should  demand  a 
dissolution.  According  to  the  construction  given  to  the  articles  by  the 
appellants,  they  had  a  right  to  keep  the  capital  of  Fitch  in  their  trade  or 
concern,  notwithstanding  any  assignment  of  his  property  to  his  creditors, 
and  notwithstanding  an  actual  insolvency  on  his  part.  I  was  of  opinion  that 
the  partnership  was  dissolved  by  the  assignment,  and  that  the  appellants 
were  accountable  for  all  the  interest  of  Fitch  in  the  capital  and  in  the  profits 
of  the  concern.  I  do  not  mean  to  say,  that  a  voluntary  assignment  by  Fitch, 
of  his  property  to  his  creditors,  may  not  be  a  breach  of  his  contract  or  cov- 
enant with  his  copartners.  The  question,  as  between  them,  under  their  arti- 
cles of  agreement,  it  was  not  necessary  to  discuss.  But  the  creditors  of  one 
copartner,  who  take  his  property  by  assignment,  or  on  execution,  cannot  be 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  489 

§  309.    The  like  rule  seems  to  have  prevailed  in  the 
Roman   law ;    for   there    an   assignment,    by    a    debtor 

involved  against  their  consent  in  the  responsibilities  of  a  copartnership.  The 
capital  stock,  or  interest  of  a  partner,  is  certainly  liable  to  his  sepai'ate  debts. 
His  creditors  are  entitled  to  it  without  the  risk  and  burden  of  being  partners. 
An  act  of  bankruptcy,  says  Lord  Mansfield  (Cowp.  448),  is  a  dissolution  of 
the  partnership,  not  only  by  virtue  of  the  statutes  of  bankruptcy,  but  from  the 
necessity  of  the  thing,  since  assignees  cannot  carry  on  a  trade.  According 
to  the  doctrine  on  the  part  of  the  appellants,  a  party  may  lock  up  his  capi- 
tal in  a  mercantile  house  by  such  an  agreement  as  the  one  in  this  case,  and 
it  must  remain  untouclied  without  the  consent  of  his  copartners,  during  his 
life.  If  the  creditors  take  it  by  assignment,  they  must  become  partners  in 
the  firm,  and  can  only  touch  the  yearly  profits,  and  must  be  liable  to  the 
yearly  losses,  and  for  all  the  engagements  of  the  firm.  This  doctrine 
appears  to  me  to  be  too  unreasonable,  and  too  inconvenient,  to  be  endured." 
This  decree  was  affirmed  unanimously  by  the  Court  of  Errors ;  and  on  that 
occasion  Mr:  Justice  Woodworth,  in  delivering  the  opinion  of  the  Court, 
said:  "An  assignment  made  by  the  party  himself,  under  circumstances  like 
the  present,  produces  the  same  result ;  in  both  cases,  they  give  rise  to  a 
state  of  things  altogether  incompatible  with  the  prosecution  of  a  partnership 
concern,  commenced,  and  previously  conducted  by  the  bankrupt  and  his 
former  copartner.  It  is  perfectly  clear,  that  a  new  partner  cannot  be  ad- 
mitted without  consent.  This,  ex  vi  termini,  implies,  thatr  even  consent 
would  be  nugatory,  unless  the  assignee  elected  to  become  a  partner ;  where 
he  does  not  so  elect,  but  (as  in  the  present  case)  insists  on  a  division  of  the 
property,  the  demand,  according  to  acknowledged  principles,  cannot  right- 
fully be  denied.  That  a  rule  of  this  kind  will,  in  some  cases,  and  probably 
in  the  present,  bear  hard  on  the  partners  opposed  to  a  dissolution.  Is  not  to 
be  doubted.  But  Its  Inconveniences  are  more  than  counterbalanced,  by  the 
superior  benefits  arising  from  its  application.  There  is  another  insuperable 
difliculty  opposed  to  a  continuance  of  the  partnership,  and  that  arises  froili 
the  character  in  which  the  respondents  are  placed.  How  can  they  become 
partners  with  ]\Iarquand  &  Barton  ?  They  are  a  corporate  body,  and  act  as 
trustees  for  the  benefit  of  the  stockholders.  The  bank  had  no  power  to 
become  partners  with  the  appellants ;  it  was  not  within  their  corporate 
privileges.  It  will  not  be  pretended,  that  in  the  situation  Fitch  was  placed, 
he  had  not  a  right  to  assign  his  interest,  and  that  it  passed  under  the  assign- 
ment to  the  respondents.  I  conclude,  therefore,  that  the  assignment  by 
Fitch,  per  se,  dissolved  the  partnership.  In  the  case  of  Ketcham  v.  Clark, 
6  Johns.  144,  where  one  of  the  partners  had  executed  an  assignment  of  all 
his  right  in  the  partnership  property  and  debts,  it  Is  said,  that '  This  act  was, 
of  itself,  a  termination  of  the  partnership.'  But  there  being  no  evidence  of 
any  public  notice  of  the  dissolution,  nor  any  special  notice  to  the  party 
afterwards  dealing  with  the  firm,  on  that  ground  the  partners  were  held  liable. 
As  between  themselves,  the  point  appeared  to  be  conceded."  See  also  3 
Kent,  i)d. 


490  PARTNERSHIP.  [CHAP.  XIII. 

oppressed  with  debt,  of  all  his  title  and  interest  in 
the  property  of  the  partnership,  for  the  benefit  of  his 
creditors,  was  deemed  a  dissolution  of  the  partnership. 
Item  (say  the  Institutes),  si  quis  ex  sociis,  mole  dehiti 
prcegravatus,  bonis  suis  cesserit,  et  ideo  i^t'oi^ter  pidjUca 
aut  jwivata  debita  substantia  ejus  veneat,  solvitur  socie- 
tas.  Sed,  hoc  casu,  si  adhuc  consentiant  in  societatem, 
nova  videtur  incipere  societas} 

§  310.  The  authority  of  one  partner  voluntarily  to 
assign  a  part  of  the  partnership  property  in  payment 
of,  or  as  security  for,  the  debts  thereof,  has  been 
already  considered,  as  also  has  been  the  authority  of 
one  partner  to  assign  the  entire  partnership  property 
for  the  payment  of  the  debts  due  to  all  creditors  of  the 
partnership.^  No  one  can  doubt,  that  the  former  is 
perfectly  valid  and  obligatory ;  and  that  thereby  the 
property  is  severed  from,  and  ceases  to  belong  to,  the 
partnership.  If  the  latter  be  (as  has  been  strenuously 
contended)  also  valid,  but  of  which  nevertheless  serious 
doubts  may  be  entertained,  especially  where  the  part- 
nership is  for  a  term  of  years,  as  yet  unexpired,  then 
it  must  be  admitted,  that  it  will  amount,  by  operation 
of  law,  to  a  dissolution  of  the  partnership ;  for  the 
case  then  falls  within  the  scope  of  the  doctrine  already 
stated,  in  cases  where  the  entire  thing,  constituting 
the  foundation  and  object  of  the  partnership,  is  ex- 
tinct.^ 

§  311.  The  next  question  is  as  to  the  operation  of 
an  involuntary  assignment,  or  an  assignment  in  invitum, 

•  Inst.  3,  26,  8;  Vinn.  Comm,  ad  Id.,  and  ante,  §  292,  293;  Domat,  1, 
8,  5,  art.  12. 

*  Ante,  §  101,  and  note;  Tapley  v.  Butterfield,  1  Met.  515. 

3  Ante,  §  101,  and  note,  and  §  280,  281;  Havens  v.  Hussey,  5  Paige, 
30,  31;  Hitchcock  v.  St.  John,  1  Hofim.  511;  Anderson  v.  Tompkins,  1 
Brock.  456  ;  Pearpoint  v.  Graham,  4  Wash.  C.  C.  232  ;  Tapley  v.  Butterfield,  1 
Met.  515  ;  [Dana  v.  Lull,  17  Vt.  390.] 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  491 

under  judicial  process  and  proceedings.  We  have 
already  seen,^  that  a  separate  creditor  of  any  one 
partner  may  seize  and  sell  the  right,  title,  and  interest 
of  that  partner  in  the  partnership  goods  and  effects, 
under  a  separate  judgment  and  execution  against  him. 
The  execution  may  be  levied  upon  the  whole  of  the 
tangible  goods  and  effects  of  the  partnership,  or  upon 
a  part  thereof ;  and  in  each  case  it  is  good  to  the  ex- 
tent of  the  judgment  debtor's  right,  title,  and  interest 
therein,  as  it  shall  ultimately  appear  upon  the  final 
adjustment  and  settlement  of  the  partnership  concerns.^ 
But,  as  soon  as  the  levy  and  sale  are  completed  under 
the  execution,  the  purchaser  of  the  goods  or  effects  be- 
comes, by  mere  operation  of  law,  a  tenant  in  common 
thereof  with  the  other  partners  ;  if  the  levy  and  sale 
be  of  a  part  only,  then  of  that  part ;  if  of  the  whole, 
then  of  the  entirety.^  But  in  each  case  the  legal  result 
is  the  same,  that  is  to  say,  it  amounts  to  a  dissolution 
of  the  partnership  to  the  extent  of  the  right,  title,  and 
interest,  levied  upon  and  sold  under  the  execution.  If 
the  levy  is  of  a  part  of  the  partnership  property,  there 
is  a  severance  2^^^^  tanfo^  of  the  partnership  interest 
therein  ;  if  of  the  whole,  then  there  is  a  severance  of 
the  entirety.^ 

^  Ante,  §  261-263,  «  jbifj, 

3  Ante,  §  261-263;  1  Story,  Eq.  Jur.  §  677,  678;  Moody  v.  Payne,  2 
Johns.  Ch.  548;  Dutton  v.  Morrison,  17  Ves.  193,  206;  Allen  v.  Wells,  22 
Pick.  450. 

''  Gow  on  P.  c.  3,  §  1,  p.  229,  3d  ed. ;  3  Kent,  59;  Fox  v.  Hanbury, 
Cowp.  445 ;  Skip  v.  Harwood,  2  Swans.  586,  note ;  Moody  v.  Payne,  2 
Johns.  Ch.  548 ;  [Renton  v.  Chaplain,  1  Stock.  62  ;  ]  Nicoll  v.  Mumford,  4 
Johns.  Ch.  522;  Rodriguez  v.  HelFernan,  5  Johns.  Ch.  417,  428;  jHaber- 
shon  V.  Blurton,  1  De  G.  &  Sm.  121  ;  Aspinall  v.  London  &  N.  W.  Railway 
Co.,  11  Hare,  325;  See  Perens  v.  Johnson,  3  Sm.  &  G.  419};  Dutton  iJ. 
Morrison,  17  Ves.  193,  206. —  In  this  last  case  Lord  Eldon  said:  "  Another 
question  remains,  of  far  more  difficulty,  and  of  as  much  importance,  as  any 
that  has  been  decided.     Where  a  creditor  takes  out  execution  against  the 


492  PARTNERSHIP.  [CHAP.  XIII. 

§  312.  The  doctrine,  in  this  view  of  the  matter,  as 
presented  by  the  common  law,  stands  upon  clear  and 
satisfactory  grounds.  If  the  sale  is  valid  under  the  ex- 
ecution, it  must,  of  course,  subrogate  the  purchaser  to 
all  the  rights  of  the  partner  himself  in  the  property. 
Now,  if  such  be  the  legal  result,  the  purchaser  is  not 
bound  to  become  a  partner ;  nor  are  the  other  partners 
bound  to  admit  him  into  the  partnership.  He  must, 
therefore,  hold  a  common  and  undivided  interest  with 
them  in  the  property  ;  and  this  can  be  only  by  treating 
it  as  a  tenancy  in  common,  created  by  operation  of  law. 

effects  of  an  individual  concerned  in  a  partnership,  it  seems  to  be  a  very 
difficult  thing  to  determine  with  certainty,  how  he  is  to  take  his  execution. 
The  old  cases,  if  they  are  to  govern,  go  in  this  simple  course ;  that  the 
creditor,  finding  a  chattel,  belonging  to  the  two,  laid  hold  of  the  entirety  of 
it,  considering  it  as  belonging  to  the  two ;  and  paying  himself  by  the  applica- 
tion of  one  half,  he  took  no  further  trouble.  It  is  obvious,  that  it  was  very 
difficult  to  maintain  this  as  an  equitable  proceeding,  if  a  due  proceeding  at 
law ;  that  a  creditor  of  one  partner  should,  without  any  attention  to  the 
rights  of  the  partners  themselves,  take  one  half  of  a  chattel  belonging  to 
them;  as  if  it  was  perfectly  clear  that  the  interest  of  each  was  an  equal 
moiety.  On  the  other  hand,  it  may  be  represented,  that  the  world  cannot 
know  what  is  the  distinct  interest  of  each ;  and  therefore  it  is  better,  that  the 
apparent  interest  of  each  should  be  considered  as  his  actual  interest.  But 
Courts  of  Equity  have  long  held  otherwise ;  and  long  before  the  case  of  Fox 
V.  Hanbury,  I  understand  this  Court  to  have  said  that  was  not  equitable ; 
and  to  have  held,  as  is  the  constant  course  at  present,  that  upon  an  execution 
against  one  partner,  or  the  quasi  execution  in  bankruptcy,  no  more  of  the 
property,  which  the  individual  has,  should  be  carried  into  the  partnership, 
than  that  quantum  of  interest  which  he  could  extract  out  of  the  concerns  of 
the  partnership,  after  all  the  accounts  of  the  partnership  were  taken,  and 
the  effects  of  that  partnership  were  reduced  into  a  dry  mass  of  property, 
upon  which  no  person  except  the  partners  themselves  had  any  claim.  In  the 
case  supposed  by  Lord  Mansfield,  a  bill  filed,  where  there  was  an  execu- 
tion at  law,  a  Court  of  Equity  has  no  difficulty  in  managing  it ;  having  the 
means  of  taking  the  complicated  accounts  of  the  partnership,  and  reducing 
the  concern  into  that  state,  in  which  the  property  would  be  devisable  as  clear 
surplus.  But  the  Court  of  King's  Bench  has  repeatedly  held,  with  consider- 
able doubt  of  late  how  the  object  is  to  be  accomplished,  that  a  creditor  taking 
execution  can  take  only  the  interest  his  debtor  had  in  the  property."  {An 
attachment  on  mesne  process  does  not  dissolve  a  partnership.  Arnold  v. 
Brown,  24  Pick.  89.} 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  493 

"Whether  it  might  not  have  been  better,  as  an  original 
question,  to  have  held  at  the  common  law,  that  no  sep- 
arate creditor  should  be  entitled  to  execute  his  judg- 
ment against  the  partnership  property,  leaving  the  lat- 
ter exclusively  liable  to  the  joint  creditors,  it  is  too  late 
to  inquire.  Certain  it  is,  that  the  doctrine  has  very 
many  practical  difficulties  and  mischiefs  attending  it, 
independent  of  the  apparent  wrong  and  injury  which 
may  be  done  to  the  other  partners  by  a  sudden  dissolu- 
tion of  the  partnership  at  the  instance  of  a  third  per- 
son, in  violation  of  the  obligations  of  the  partners'  own 
contract,  that  it  shall  endure  for  a  limited  period.  It  is 
a  strange  anomaly  in  jurisprudence,  that  third  persons 
should  be  entitled  to  dissolve  the  solemn  hona  fide  con- 
tracts of  partners  at  their  own  caprice  and  pleasure, 
however  ruinous  may  be  the  effects  to  the  innocent 
partners  ;  for  the  partnership  may  be  thus  dissolved  in 
the  midst  of  the  progress  of  the  most  successful  adven- 
ture, and  thus  irreparable  losses  may  ensue  therefrom. 
However,  this  is  not  a  peculiar  feature  of  the  common 
law  ;  for  it  is  to  be  found  equally  recognized  in  the 
E,oman  law,  at  least  where  all  the  effects  of  the  partner 
are  sold  to  his  creditors  ;  for  it  is  said :  Item,  bonis  a 
creditorlhus  venditls  unius  socii,  distrain  societatem 
Laheo  ait} 

•  D.  17,  2,  65,  1;  Poth.  Pand.  17,  2,  n.  62;  Domat,  1,  8,  5,  art.  12  ;  2 
Kent,  59.  — No  case  of  this  sort  is  mentioned  by  Pothier.  He  speaks  only  of 
the  dissolution  of  the  partnership  by  the  failure  or  bankruptcy  of  one  part- 
ner; and  (as  it  should  seem)  only  of  a  sale  of  his  effects  consequent  thereon. 
Poth.  de  Soc.  n.  148.  See  also  Domat,  1,  3,  5,  art.  12,  note.  The  Code 
Civil  of  France,  art.  1865,  and  the  Code  of  Louisiana  (of  1825),  art.  2847, 
speak  only  of  a  dissolution  by  failure  or  bankruptcy.  See  also  5  Duver- 
gier,  Droit  Civil  Franc.  §  443-445.  It  seems  doubtful  (to  say  the  least), 
whether  the  Roman  law  contemplated  any  sale  of  the  effects  of  one  partner 
to  be  a  dissolution  of  the  partnership,  except  where  the  entirety  was  ordered 
to  be  sold  by  judicial  process  at  the  instance  of  his  creditors,  or  by  a  ccssio 
honorum  of  all  his  effects  for  the  benefit  of  his  creditors.     See  2  La  Croix, 


49 J:  PARTNERSHIP.  [CHAP.  XIII. 

§  313.  Passing  from  this  to  the  next  case,  which 
stands  upon  a  close  analogy,  that  of  a  dissolution  of  the 
partnership  by  the  bankruptcy  or  insolvency  of  one  or 
more  of  the  partners,  it  may  be  remarked,  that  this  nat- 
urally, and,  indeed,  upon  just  reasoning,  necessarily 
produces  this  effect ;  for  the  bankrupt  partner  is  there- 
by disabled  to  perform  his  portion  of  the  partnership 
contract,  since  all  his  property  is,  by  operation  of  law, 
immediately  upon  the  declaration  of  his  bankruptcy  or 
insolvency,  devested  out  of  him  ;  and  it  passes  by  as- 
signment to  the  persons  who  are  duly  designated  as  the 
assignees  thereof,  to  dispose  of  the  same,  and  to  distrib- 
ute the  proceeds  among  his  creditors.  The  assignees 
are  not,  on  the  one  hand,  compellable  to  become  part- 
ners, nor,  on  the  other  hand,  are  the  other  partners  com- 
pellable to  admit  them  into  the  partnership,  for  the 
reasons  already  suggested  under  the  preceding  head. 
But  a  more  important,  and  an  absolutely  conclusive, 
ground  is,  that  the  further  continuation  of  the  partner- 
ship is  utterly  incompatible  with  the  whole  policy  and 
objects  of  the  bankrupt  and  insolvent  systems.  These 
systems  contemplate  an  immediate  sale  and  distribution 
of  the  assets  among  the  creditors  ;  and  the  assignees 
have  no  authority  whatever  to  enter  into  any  further 
engagements  in  any  trade  or  business  on  account  of  the 
creditors,  or  at  their  risk.^  Hence,  the  common  law, 
the  Roman  law,  and  the  modern  foreign  law  all  concur 
in  the  same  general  result,  that  bankruptcy  or  insol- 

La  Clef  des  Lois  Romaines,  tit.  Soc.  p.  585.     See  also  Mr.  Chancellor  Kent's 
observations  in  Griswold  v.  Waddington,  16  Johns.  491. 

1  Gow  on  P.  c.  5,  §  1,  p.  227,  228,  3d  ed. ;  Coll.  on  P.  B.  1,  c.  2,  §  2,  p. 
69-71  ;  Id.  B.  4,  c.  1,  p.  578,  579,  2d  ed. ;  Fox  v.  Hanbury,  Cowp.  445;  Ex 
parte  Smith,  5  Ves.  295;  Wilson  v.  Greenwood,  1  Swans.  471,482,483; 
Crawshay  v.  Collins,  15  Ves.  218,  223;  Marquand  v.  N.  Y.  Manuf.  Co.  17 
Johns.  525;  Griswold  v.  Waddington,  15  Johns.  57,  82;  s.  C.  16  Johns.  438, 
491  ;  3  Kent,  38,  39.  . 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  495 

veiicy  is,  of  itself/  by  mere  operation  of  law,  a  complete 
dissolution  of  the  partnership.^  A  fortiori,  the  like 
doctrine  applies,  where  all  the  partners  become  bank- 
rupt ;  for  then  the  whole  property  is  devested  out  of  all 
of  them. 

§  314.  Another  question  usually  arises  under  this 
head  ;  and  that  is,  from  what  time  is  the  partnership 
dissolved  by  the  bankruptcy  or  insolvency  of  one  or 
more  of  the  partners "?  Is  it  from  the  act  of  bank- 
ruptcy or  insolvency  ?  Or  from  the  judicial  or  other 
declaration  of  that  fact,  under  the  commission '?  Or 
from  the  time  of  the  assignment  of  the  property  to  the 
assignees  ?  The  rule  now  established,  at  least  in  the 
policy  of  the  British  system  of  bankruptcy,  is,  that  the 
dissolution  takes  effect,  immediately  upon  the  declara- 
tion of  the  bankruptcy  under  the  commission,  by  rela- 
tion back  to  the  time,  when  the  act  of  bankruptcy  was 
committed  ;  so  that  from  that  period  the  bankrupt  is 
deemed  devested  of  all  his  property  and  effects  ;  and, 
by  operation  of  law,  as  soon  as  assignees  are  appointed, 
it  is  vested  in  them  by  relation  from  the   same  period.^ 

^  [In  Massachusetts,  the  mere  insolvency  of  one  or  both  partners,  mean- 
ing thereby  their  inability  to  pay  their  debts,  will  not,  per  se,  and  without 
any  assignment  or  legal  proceedings,  operate  as  a  dissolution  of  the  part- 
nership, although  it  might  furnish  sufficient  ground  for  declai'ing  a  dis- 
solution. Arnold  v.  Brown,  24  Pick.  89,  93.]  { So  Siegel  v.  Chidsey,  28 
Penn.  St.  279.} 

^  D.  17,  2,  6o,  1 ;  Poth.  Pand.  17,  2,  n.  62  ;  Poth.  de  Soc.  n.  148  ;  Civil 
Code  of  France,  art.  1865;  5  Duvergier,  Droit  Civil  Franc.  §  443;  Code  of 
Louisiana  (1825),  art.  2847;  2  Mor.  &  Carlt.  Partidas,  p.  773,  1.  10;  2  Bell, 
Coram.  B.  7,  c.  2,  p.  643,  5th  ed. ;  Vinn.  ad  Inst.  3,  26,  8,  Coram. ;  ante, 
§  309. 

3  3  Kent,  58,  59,  4th  ed. ;  Wats,  on  P.  c.  5,  p.  302-312,  2d  ed. ;  Gow  on 
P.  c.  5,  §  3,  p.  298,  299,  3d  ed. ;  Coll.  on  P.  B.  4,  c.  1,  p.  583-590,  2d  ed. ; 
Fox  V.  Hanbury,  Cowp.  445;  Hague  v.  Rolleston,  4  Burr.  2174;  Ex  paHe 
Smith,  5  Ves.  295 ;  Harvey  v.  Crickett,  5  M.  &  S.  336 ;  Dutton  v.  Morrison, 
17  Ves.  193,  203,  204;  Barker  v.  Goodair,  11  Ves.  78,83;  Thoraason  v. 
Frere,  10  East,  418.     {^y  the  United  States  Bankrupt  Law,  Act  of  March 


496  PARTNERSHIP.  [cHAP. 


XIII. 


How  far,  and  to  what  intents  and  purposes,  it  suspends 
the  rights  and  authorities  of  the  other  solvent  partners 
over  the  partnership,  will  come  under  examination, 
when  we  come  to  consider  what  are  the  consequences 
of  a  dissolution. 

§  315.  In  the  next  place,  as  to  dissolution  by  a  pub- 
lic war  between  the  countries,  of  which  the  partners 
are  respectively  subjects.  Although  this  point  does 
not  seem  to  have  been  discussed  in  our  courts  of  jus- 
tice until  a  comparatively  recent  period,  yet  it  would 
seem  to  be  a  necessary  result  of  principles  of  public 
law,  w^ell  established,  and  clearly  defined.  By  a  decla- 
ration of  war  the  respective  subjects  of  each  country 
become  positive  enemies  of  each  other.  They  can 
carry  on  no  commercial  or  other  intercourse  with  each 
other ;  they  can  make  no  valid  contracts  with  each 
other ;  they  can  institute  no  suits  in  the  courts  of  either 
country  ;  they  can,  properly  speaking,  hold  no  commu- 
nication of  an  amicable  nature  with  each  other  ;  and 
their  property  is  mutually  liable  to  capture  and  confis- 
cation by  the  subjects  of  either  country.^  Now  it  is 
obvious  from  these  considerations,  that  the  whole  ob- 
jects and  ends  of  the  partnership,  the  application  of 
the  joint  funds,  skill,  labor,  and  enterprise  of  all  the 
partners  in  the  common  business  thereof,  can  no  longer 
be  attained.  The  conclusion,  therefore,  would  seem  to 
be  absolutely  irresistible,  that  this  mutual  supervening 

2,  1867,  §  14,  the  assignment  relates  back  to  the  commencement  of  the  pro- 
ceedings in  bankruptcy,  not  to  the  act  of  bankruptcy.} 

'  Potts  V.  Bell,  8  T.  R.  548,  561 ;  The  Rapid,  8  Cranch,  155,  161 ;  The 
Julia,  8  Cranch,  181,  194;  The  Hoop,  1  Rob.  196;  Griswold  v.  Wadding- 
ton,  15  Johns.  57  ;  s.  c.  16  Johns.  438.  — In  this  last  case  all  the  existing 
authorities  upon  the  whole  subject,  foreign  as  well  as  domestic,  were  brought 
together,  and  critically  examined  with  very  great  learning  and  ability.  See 
also  2  Wheat.  App.  p.  27-37 ;  3  Kent,  62 ;  Scholefield  v.  Eichelberger,  7 
Pet.  586.     {See  Clemontson  v.  Blessig,  note,  11  Exch.  135,  §  9,  ante.} 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  497 

incapacity  must,  upon  the  very  principles  applied  to  all 
analogous  cases,  amount  to  a  positive  dissolution  of  the 
partnership. 

§  316.  The  law  of  nations  does  not  even  stop  at  the 
points  already  stated ;  but  it  proceeds  further.  The 
question  of  enemy,  or  not,  depends  not  upon  the  natu- 
ral allegiance  of  the  partners,  but  upon  their  domicile. 
If,  therefore,  the  partnership  is  established,  and,  as  it 
were,  domiciled  in  a  neutral  country,  and  all  the  part- 
ners reside  there,  it  is  treated  as  a  neutral  establish- 
ment, and  is  entitled  to  protection  accordingly.^  On 
the  other  hand,  if  any  one  or  more  of  the  partners,  in 
such  a  case,  is  domiciled  in  an  enemy  country,  he  is 
treated  personally  as  an  enemy,  and  his  share  of  the 
partnership  property  is  liable  -to  capture  and  condem- 
nation accordingly,  notwithstanding  the  partnership 
establishment  is  in  the  neutral  country.^  What,  then, 
is  the  case,  where  the  partnership  is  established,  and, 
as  it  were,  domiciled  in  an  enemy  country  ?  The  rule, 
then,  fully  recognized  as  applicable  to  the  case,  is,  that 
the  partnership  is  to  be  treated  throughout  as  a  hostile 
establishment,  and  the  whole  partnership  property  is 
liable  to  capture  and  condemnation,  as  enemies'  prop- 
erty, notwithstanding  one  or  more  of  the  partners  may 
be  domiciled  in  a  neutral  country.  A  fortiori,  if  some 
of  the  partners  are  domiciled  in  one  of  the  hostile 
countries,  and  the  rest  in  the  other,  it  is  clear  that  the 
partnership  is  hostile,  and  the  partners  are  also  person- 
ally enemies.^  The  just  inference  from  all  these  con- 
siderations  seems,  therefore,  to  be,  that,  in    all    these 

»  The  Venus,  8  Cranch,  253 ;  The  Indian  Chief,  3  Rob.  22 ;  M'Connell 
V.  Hector,  3  B.  &  P.  113 ;  Griswold  v.  Waddington,  15  Johns.  57 ;  s.  c.  16 
Johns.  438. 

2  The  Franklin,  6  Rob.  127. 

'  The  Vigilantia,  1  Rob.  1 ;  Simpson's  Case,  cited  in  the  Franklin,  6  Rob. 
127  ;  The  Friendschaft,  4  Wheat.  105 ;  The  San  Jose  Indiano,  2  Gall.  268. 

32 


498  PARTNERSHIP.  [CHAP.  XIII. 

cases,  there  is  an  utter  incompatibility,  created  by 
operation  of  law,  between  the  partners,  as  to  their 
respective  rights,  duties,  and  obligations,  both  public 
and  private,  and,  therefore,  that  a  dissolution  must 
necessarily  result  therefrom,  independent  of  the  will  or 
acts  of  the  parties.^ 

*  This  whole  subject  came  successively  before  the  Supreme  Court  of  New 
York,  and  the  Court  of  Errors  of  that  State,  in  the  case  of  Griswold  v. 
Waddington,  15  Johns.  57 ;  and  s.  c.  16  Johns.  438.  The  masterly  judg- 
ments of  Mr.  Chief  Justice  Spencer,  and  Mr.  Chancellor  Kent,  delivered  on 
this  occasion,  exhaust  the  whole  learning  and  reasoning  upon  it ;  and  are, 
indeed,  judicial  discussions  of  rare  and  exquisite  ability,  research,  force, 
accuracy,  and  comprehensiveness.  —  The  ultimate  decision  was,  that  the 
partnership  was  dissolved,  by  the  occurrence  of  war  between  the  countries. 
The  following  extract,  from  the  opinion  of  Mr.  Chief  Justice  Spencer, 
presents  a  clear  though  brief  review  of  the  principle.  He  said :  "  Upon 
the  fullest  reflection  which  I  have  been  able  to  give  to  the  subject,  my 
opinion  is,  that  the  declaration  of  war  between  the  United  States  and 
Great  Britain  produced  a  suspension  during  the  war,  or,  ipso  facto,  a  dis- 
solution of  the  partnership  previously  existing  between  the  defendants,  so 
that  the  one  is  not  responsible  upon  the  contract,  express  or  implied,  of  the 
other.  It  will  be  perceived,  that  this  proposition  assumes  the  fact,  that  the 
partnership  between  the  defendants  had  not  become  dissolved  by  the  efflux 
of  time,  or  the  acts  of  either  of  the  partners,  although  this  point  is,  in  itself, 
very  questionable.  The  better  conclusion  from  the  evidence  is,  that  the  co- 
partnership expired  by  its  own  limitation  during  the  war ;  and  the  existence 
of  the  war  would,  at  all  events,  dispense  with  the  public  notice,  which  is,  in 
general,  necessary  to  the  valid  dissolution  of  a  partnership.  The  case  dis- 
closes, that  the  firm  of  Henry  Waddington  &  Co.  consisted  of  Henry  and 
Joshua  Waddington ;  that  Henry  is  a  British  subject,  resident,  before  and 
during  the  war,  in  London,  conducting  the  partnership  concerns  there, 
whilst  the  defendant  was  resident  here.  The  negotiations,  which  gave  rise 
to  the  present  suit,  took  place  in  England,  and  exclusively  with  Henry 
Waddington,  during  the  late  war  between  this  country  and  Great  Britain. 
It  was  admitted  on  the  argument,  and  so  the  fact  undoubtedly  is,  that  the 
proposition  I  have  advanced,  is  neither  supported  nor  denied  by  any  judicial 
decisions  or  elementary  writer  of  the  common  law ;  but,  if  I  mistake  not, 
it  is  supported  by  the  strongest  reasons,  and  by  necessary  analogy  with 
adjudged  cases.  The  first  inquiry  is,  what  are  the  objects  and  ends  of  part- 
nerships? They  are  entered  into  with  a  view,  that  with  the  joint  funds, 
skill,  and  labor,  of  the  several  partners,  the  interests  of  the  concern 
may  be  advanced  and  promoted.  There  may  be,  and  frequently  are, 
different  inducements  influencing  each  partner  ;  one  may  have  more 
capital  and  credit ;  another  may  have  more  skill,  activity,  and  experience. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  499 

§  317.  In  the  next  and  last  place,  as  to  a  dissolution 
by  the  death    of  one   of  the   partners.     There    is   no 

The  one  may  choose  to  be  a  dormant  and  inert  partner,  furnishing  an 
equivalent  for  the  services  and  skill  of  the  other,  and  leaving  the  business 
entirely  to  his  control  and  management.  But  unexplained  as  this  partner- 
ship is,  we  must  understand  it  to  be  an  union  with  a  view  to  the  employ- 
ment of  the  joint  capital,  labor,  and  skill  of  both  the  partners,  for  the 
purposes  of  internal  and  external  commerce  between  this  country  and 
Great  Britain.  That  the  object  of  the  partnership  embraced  both  these 
objects  of  internal  and  external  trade,  would  seem  to  be  unquestionable, 
from  the  local  position  of  the  partners.  That  the  death,  insanity,  or  bank- 
ruptcy of  one  of  the  pai-tners  operates  as  a  dissolution,  was  not  questioned 
in  the  argument ;  and  a  respectable  elementary  wi'iter,  Mr.  Watson,  is  of 
opinion,  that  the  marriage  of  a  ftme  sole  partner  would  produce  the  same 
consequence.  The  cases  of  Pearce  v.  Chamberlain,  2  Ves.  Sr.  33,  and 
Sayer  v.  Bennet,  Wats,  on  P.  382,  and  several  other  cases  cited  by  him,  all 
go  to  establish  the  general  principle,  that  death,  insanity,  and  bankruptcy, 
work  a  dissolution  of  partnerships ;  and  they  proceed  on  the  principle, 
that  the  other  partners  are  not  bound  to  admit  the  representatives  of  a 
deceased  or  insane  partner  into  the  concern,  the  confidence  having  been 
originally  placed  in  the  personal  skill  and  assistance  of  those  no  longer 
able  to  afford  it.  Let  these  principles  be  applied  to  the  present  case,  and 
it  would  seem  that  the  same  result  is  inevitable.  In  what  situation  did 
the  war  put  the  defendants,  as  regarded  each  other?  Most  undeniably, 
the  two  nations,  and  all  their  citizens,  or  subjects,  became  enemies  of  each 
other,  and  the  consequence  of  this  hostility  was,  that  all  intercourse  and 
communication  between  them  became  unlawful.  This  is  not  only  the 
acknowledged  principle  of  the  law  of  nations,  but  is  also  a  part  of  the 
municipal  jurisprudence  of  every  country.  I  need  not  cite  cases  in 
support  of  a  position,  which  has  so  repeatedly  been  recognized  in  the 
English  Courts,  and  in  our  own,  possessing,  as  well  admiralty,  as  common 
law  jurisdiction.  Another  consequence  of  the  war  was,  that  the  shipments 
made  by  each  of  the  partners  would  be  liable  to  capture  and  condemna- 
tion by  the  cruisers  of  the  government  of  the  other.  And  another  very 
serious  evil  attended  them ;  no  debts,  contracted  in  the  partnership  name, 
could  be  recovered  in  the  courts  of  either  nation ;  they  not  having,  in  the 
language  of  the  law,  a  jJersoiia  standi  injudicio,  whilst  they  were  amenable 
to  suits  in  the  Courts  of  both  nations.  The  Hoop,  1  Rob.  196,  201.  It  is 
true,  the  same  disability  to  sue  for  debts  due  the  firm,  antecedent  to  the  war, 
would  exist.  This,  however,  does  not  weaken  the  objection ;  it  remains 
still  an  important  item,  in  considering  whether  a  partnership  exists,  when 
the  new  debts  created  are  to  be  liable  to  the  same  disability.  It  appears, 
that  Joshua  Waddington  is  a  citizen  of  the  United  States ;  and  it  has 
been  already  mentioned,  that  Henry  Waddington  is  a  British  born  subject. 
They  owed  different  allegiances ;  and  it  became  part  of  their  duty  to  lend 


500  PARTNERSHIP.  [CHAP.  XIII. 

doubt,  thati  by  the  principles  of  the  common  law,  the 
death  of  any  one  partner  will  operate  as  a  dissolution 
of  the  partnership,  however  numerous  the  association 
may  be,  not  only  as  to  the  deceased  partner,  but  as 
between  all  the  survivors.^     The  reason  is,  that  upon 

all  tlieir  aid  in  a  vigorous  prosecution  of  the  war,  the  one  to  the  United 
States,  and  the  other  to  Great  Britain.  And  it  appears  to  me,  that  it 
would  not  comport  with  policy  or  morality,  that  the  law  should  imperiously 
continue  a  connection,  when,  by  its  very  continuance,  it  would  afford 
such  strong  inducements  to  a  violation  of  that  fidelity  which  each  owes 
to  his  government.  Again  ;  all  communication  and  intercourse  being  ren- 
dered unlawful,  and  it  being  a  well-established  principle,  that  either  part- 
ner may,  by  his  own  act,  dissolve  a  partnership,  unless  restrained  to  con- 
tinue it  for  a  definite  period  by  compact,  in  what  manner  could  such  intentions 
be  manifested  during  the  war  ?  It  might,  indeed,  be  made  known  to  the 
public  of  one  of  the  countries,  but  it  could  not  be  notified  to  the  public  of 
the  hostile  country ;  and  thus,  unless  the  war  produced  a  dissolution,  he 
would  be  responsible,  notwithstanding  he  had  the  desire  to  dissolve  the  con- 
nection, merely  from  inability  to  make  known  that  determination  ;  an  ina- 
bility produced  by  events  utterly  uncontrollable.  When  the  objects  and 
intentions  of  an  union  of  two  or  more  individuals  to  prosecute  commercial 
business  are  considered;  when  it  is  seen,  that  an  event  has  taken  place, 
without  their  fault,  and  beyond  their  control,  which  renders  their  respect- 
ive nations,  and,  along  with  them,  the  defendants  themselves,  enemies  of 
each  other ;  that  all  communication  and  intercourse  have  become  unlawful ; 
that  they  can  no  longer  co-operate  in  the  conduct  of  their  common  busi- 
ness, by  affording  each  other  advice,  and  are  kept  hoodwinked  as  to  the 
conduct  of  each  other ;  that  the  trade  itself  in  which  they  were  engaged, 
has  ceased  to  exist ;  that  if  they  enter  into  any  contracts,  they  are  incapa- 
ble of  enforcing  their  performance  by  an  appeal  to  the  courts ;  that  their 
allegiance  leads  them  to  support  opposite  and  conflicting  interests ;  I  am 
compelled  to  say,  that  the  law  cannot  be  so  unjust,  as  to  pronounce  that 
a  partnership  so  circumstanced,  when  all  its  objects  and  ends  are  pros- 
trated, shall  continue ;  and,  with  the  clearest  conviction  upon  my  mind,  and 
in  analogy  to  the  cases  to  which  reference  has  been  made,  I  have  come 
to  the  conclusion  that  the  partnership  between  the  defendants  was,  at  least, 
suspended,  and  I  incline  to  the  opinion  that  it  was  ipso  facto  dissolved  by 
the  war,  and  consequently,  that  the  defendant,  J.  W.,  is  not  liable  to  this  ac- 
tion." Mr.  Chancellor  Kent's  opinion  is  far  more  elaborate,  and  sifts  and 
examines  all  the  authorities,  as  well  as  the  reasoning  in  support  of  them.  It 
is  difficult  to  abridge  it  without  diminishing  its  cogency.  He  holds  the  war 
to  be  a  positive  dissolution. 

'  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  72,  73,  2d  ed. ;  Wats,  on  P.  c.  6,  p.  358- 
3G0,  2d  ed. ;  Gow  on  P.  c.  5,  §  1,  p.  219,  220,  3d  ed. ;  Crawshay  v.  Maule,  1 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  501 

the  theory  of  this  branch  of  the  law,  the  personal 
qualities,  skill,  diligence,  and  superintendence  of  each 
one  of  the  partners,  are  justly  presumed  to  enter  into 
and  to  constitute  a  material  consideration  with  all  the 
other  partners  for  engaging  in  the  partnership.  In 
short,  it  is  a  mutual  and  reciprocal  engagement  of  each 
partner  with  all  the  others,  that  the  partnership  shall 
be  carried  on  with  the  joint  aid  and  co-operation  of  all ; 
and,  therefore,  the  survivors  ought  not  to  be  held  bound 
to  continue  the  connection  without  a  new  consent, 
when  the  abilities,  skill,  and  character  of  the  deceased 
partner  either  were,  or  at  least  might  have  been,  a 
strong  inducement  to  the  original  formation  of  the 
partnership.^ 

§  318.  This  is  precisely  the  reason  given  in  the 
Roman  law  for  the  promulgation  and  support  of  the 
like  doctrine,  not  only  as  working  a  dissolution  as  to 
the  deceased  partner,  but  as  between  the  survivors. 
Morte  unius  \socvi\  societas  dissolvihcr,  etsi  consensu 
omnium  co'ita  sit,  plures  vero  siqjersint ;  nisi  in  coeunda 
societate  aliter  convenerit.^  And  again  in  the  Institutes 
it  is  said  :  Solvitur  adhuc  societas  etiam  morte  socii  ; 
quia  qui  societatem  cojitrahii,  certain  j^ersonam  sihi 
eligit.     Sed  et  si  consensu  plurium  societas   contracta 

Swans.  495,  509  ;  Gillespie  v.  Hamilton,  3  Madd.  251 ;  Vulliaiuy  v.  Noble, 
3  Mer.  593, 614 ;  Scholefield  v.  Eichelberger,  7  Pet.  586.  {But  if  by  the  arti- 
cles of  an  unincorporated  trading  association,  it  appears  that  it  was  designed 
to  consist  of  many  members,  who  might  from  time  to  time  cease  to  be  inter- 
ested in  the  concern  by  voluntary  withdrawal  or  death,  and  that  the  same 
business  should  be  continued  by  those  who  should  remain,  and  by  such  as 
might  be  added  to  their  number,  under  the  terms  of  the  articles,  the  death 
of  one  of  them  does  not  relieve  others  from  liability  to  contribute  for  debts 
subsequently  contracted,  without  their  consent  or  knowledge.  Tyrrell  v. 
"Washburn,  6  All.  466. } 

'  3  Kent,  55 ;  Wats,  on  P.  c.  6,  p.  358,  359,  2d  ed.  ;  Coll.  on  P.  B.  1,  c. 
2,  §  2,  p.  72,  73,  2d  ed.  ;  Pearce  t'.  Chamberlain,  2  Ves.  Sr.  33 ;  Gow  on  P. 
c.  5,  §  1,  p.  219,  220,  3d  ed. ;  Scholefield  v.  Eichelberger,  7  Pet.  586,  594. 

"■  D.  17,  2,  ijo,  9 ;  Poth.  de  Soc.  n.  m. 


502  PARTNERSHIP.  [CHAP.  XIII. 

sit,  morte  unius  socii  solvifur,  etsi  i^lures  super sint ;  nisi 
in  coeunda  societate  aliter  convenerit}  So  strictly, 
indeed,  was  this  doctrine  held,  that  (as  we  have  seen) 
even  an  express  agreement,  that  the  partnership  should 
be  prolonged  beyond  the  life  of  a  partner,  and  his  heir 
or  other  representative  should  be  admitted  into  the 
same,  was  held  in  the  Roman  law  to  be  invalid,  as 
defeating  an  essential  ingredient  in  partnership,  the 
right  of  delectus  personce.^  The  Digest  says :  Adeo 
morte  socii  solmtiir  societas,  ut  nee  ah  initio  2^(^icisci 
^yossimus,  ut  heres  etiam  succedat  societati.^  Pothier 
has  still  more  fully  expounded  the  reasons  of  the  doc- 
trine, although  he  admits  at  the  same  time,  that,  so  far 
as  it  respects  the  succession  of  the  heir,  or  personal 
representative,  it  is  not  entirely  decisive,  and  has  more 
of  subtilty  than  of  solidity  in  it.^     There  is,  indeed,  an 

>  Inst.  3,  26,  5. 

^  Ante,  §  5 ;  Crawshay  v.  Maule,  1  Swans.  495,  509,  tbe  Reporter's  note 
(a)  ;  Gow  on  P.  c.  5,  §  1,  p.  220,  3d  ed. ;  Domat,  1,  8,  5,  art.  12. 

3  D.  17.  2,  59 ;  Poth.  Pand.  17,  2,  n.  56. 

■*  Poth.  de  Soc.  n.  141-146.  — Vinnius  also  fully  explains  the  doctrine: 
"Etiam  morte  unius  socii  societas  solvitur.  Et  hoc  genus  distrahendae 
obligationis  societatis  proprium  est,  recedens  ab  illo  communi,  quo  placet, 
heredem  in  eandem  obligationem  et  idem  jus,  quod  defuncti  fuit,  succedere. 
Sed  admissum  in  societate  ex  natura  hujus  contractus  ;  atque  eadem  ratione, 
qua  in  mandato,  quoque  placet  morte  mandatarii  solvi  mandatum ;  nimi- 
rum  quia  in  societate  non  tantum  rei  familiaris,  ut  fere  in  aliis  contractibus, 
verum  insuper  etiam  fidei  et  industrite,  qua;  ad  heredes  non  transeunt,  con- 
templatio  versatur.  Nam,  ut  in  textu  dicitur,  qui  societatem  contraJiit, 
certain  personam  sibi  eligit,  cujus  scilicet  fidem,  industriam,  res,  et  facultates 
sequatur.  Usque  adeo  autem,  morte  socii  dirimi  societatem  placet,  ut  nee 
ab  initio  pacisci  possimus,  ut  heres  in  societatem  succedat;  quasi  et  tale 
pactum  naturas  societatis  repugnet,  ut  quis  invitus  socius  efficiatur,  cum 
non  vult.  Exceptor  tamen  sunt  societates  vectigalium,  in  quibus  hujusmodi 
conventiones  ob  publicam  utilitatem  admissEe ;  manetque  hoc  casu  societas 
etiam  post  mortem,  nisi  forte  is  mortuus  sit,  cujus  contemplatione  potis- 
simum  societas  coita,  aut  sine  quo  ea  administrari  non  possit."  Vinn.  ad 
Inst.  3,  26,  5,  p.  699,  ed.  1726.  Pothier  says  (n.  146)  :  "La  raison  est, 
que  les  qualit^s  personnelles  de  chacun  des  associes  entrent  en  consideration 
dans  le  contrat  de  societe.     Je  ne  dois  done  pas  etre  oblige,  lorsque  Pun 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  503 

exception  to  this  doctrine  in  the  Roman  law,  founded 
upon  public  policy,  and  that  is,  that  the  death  of  one 
partner  does  not  generally  dissolve  the  partnership,  in 
cases  where  the  partnership  is  by  the  farmers  of  the 
public  revenue.^  In  societate  vedlgalluin  nihilominus 
manet  societas,  et post  mortem  alicujus  ;  seel  ita  de7num, 
si  pars  defuncti  ad  personam  heredis  ejus  adscripta  sit, 
lit  heredi  qnoque  conferri  oporteat ;  quod  ipsum  ex 
causa  cest'wiandum  est.^  But  then,  again,  to  this  there 
is,  or  may  be,  an  exception.  Quid  enhn,  si  is  morttms 
sit,  p)rop)ter  cujus  op)eram  7naxime  societas  co'ita  sit? 
Aut  sine  quo  societas  administrari  non  p)ossit  f  ^ 

§  319.  iVnd,  here,  the  question  may  arise  as  to  the 
time  from  which  the  dissolution,  by  the  death  of  any 
partner,  takes  effect ;  w^hether  it  be  from  the  occur- 
rence of  that  event,  or  from  the  period  when  the  other 
partners  have  notice  thereof.  At  the  common  law, 
the  doctrine  seems  clearly  established,  that  it  takes 
effect  in  respect,  as  well  to  the  other  partners,  as  to 
third  persons,  from  the  time  of  the  death,  without  any 
consideration,  whether  they  have  notice  thereof,  or 
not.^     The  Roman  law,  on  the  other  hand,  pursued  a 

de  mes  associes  est  mort,  a  demeurer  en  societe  avec  les  autres,  parce 
qu'il  se  pent  iaire,  que  ce  ne  soit  que  par  la  consideration  des  qualites 
personnelles  de  celui,  qui  est  mort,  que  j'ai  voulu  contracter  la  societe.  Ce 
principe  soufFre  exception  a  Fegard  des  societes  pour  la  ferme  des  revenus 
publics,  lesquelles  subsistent  entre  les  survivans,  lorsque  I'un  des  associes 
vient  k  mourir ;  hoc  ita  in  pnvatis  societatibus  in  societate  vectigalium 
manet  societas  et  post  mortem  alicujus.'''' 

•  D.  17,  2,  59 ;  Poth.  Pand.  17,  2,  n.  57 ;  Poth.  de  Soc.  n.  146. 
""  D.  17,  2,  59,  and  17,  2,  63,  8;  Poth.  Pand.  17,  2,  n.  57. 

3  Ibid. ;  Vinn.  ad  Inst.  3,  26,  5,  p.  699,  ed.  1726. 

*  Vulliamy  v.  Noble,  3  Mer.  693,  614;  Gow  on  P.  c.  5,  §  1,  p.  121,  3d 
ed. ;  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  71,  74;  Id.  B.  3,  c.  3,  §  4,  p.  419, 
2d  ed. ;  3  Kent,  56  ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  639,  5th  ed. ;  |§  336,  343 ; 
Marlett  v.  Jackman,  3  All.  287.  —  In  this  case  Bigelow,  C.  J.,  says  :  "  It  is 
certainly  somewhat  remarkable  that  no  case  can  be  found  either  in  this 
country  or  in  England,  in  which  the  question  has  arisen  and  been  adjudi- 


504  PARTNERSHIP.  [cHAP.  XTII. 

different  course ;  and  as  between  the  partners  them- 
selves adopted  the  same  rule,  which  it  applied  to   cases 

cated,  whether,  in  case  a  copartnership  is  dissolved  by  death,  the  surviving 
partners  are  bound  to  give  notice  of  such  dissolution,  in  order  to  avoid  a 
liability  occasioned  by  the  subsecpent  misuse  of  the  copartnership  name  by 
one  of  the  firm.  The  adjudged  cases  have  gone  no  further  than  to  hold 
that  neither  the  estate  of  the  deceased  partner,  nor  his  heirs  or  personal 
representatives,  can  be  held  on  a  contract  entered  into  in  the  name  of  the  firm 
subsequently  to  his  death,  although  no  notice  of  the  dissolution  of  the  firm 
has  been  given.  VuUiamy  v.  Noble,  3  Mer.  593,  614 ;  Webster  i\  Webster, 
3  Swans.  490,  and  note  ;  Caldwell  v.  Stileman,  1  Rawle,  212  ;  Washburn  v. 
Goodman,  17  Pick.  519,  526.  Two  text  writers,  however,  of  great  learning 
and  authority,  have  laid  down  the  rule,  that,  where  a  copartnership  is  dis- 
solved by  the  death  of  one  of  the  copartners,  no  notice  of  the  dissolution 
is  necessary,  and  that  the  surviving  members  are  not  bound  by  any  new  con- 
tract entered  into  by  one  of  the  firm  in  the  copartnership  name  after  such 
dissolution,  although  it  is  made  with  a  person  who  had  previously  dealt  with 
the  firm,  and  had  no  notice  or  knowledge  that  it  was  terminated  by  the 
death  of  one  of  the  members.  3  Kent,  63,  67;  Story  on  P.  §  319,  336, 
339.  The  same  doctrine  is  stated  by  the  American  editor  of  Coll.  on  P. 
§  120,  538,  3d  Am.  ed. 

On  what  principle,  then,  can  it  be  maintained  that  the  law  fastens 
on  persons  an  obligation  to  answer  for  contracts  entered  into  in  the 
name  of  a  principal  who  has  ceased  to  exist,  by  one  whose  authority 
to  act  is  absolutely  tei-minated?  The  only  answer  that  can  be  made  to 
this  question  by  those  who  seek  to  sustain  the  obligation  of  such  contracts 
on  the  surviving  members  of  the  firm  is,  that  a  duty  is  devolved  on  them 
to  give  notice  of  its  dissolution  by  the  death  of  one  of  their  associates,  and  that 
an  omission  to  give  such  notice  renders  them  liable  in  the  same  manner  as 
if  the  copartnership  had  not  ceased  to  exist.  This  is  doubtless  the  rule  in 
cases  where  the  dissolution  is  effected  by  the  voluntary  act  of  the  parties, 
or  results  from  any  state  of  facts  not  public  or  notorious  in  their  nature, 
and  which  are  more  peculiarly  within  the  knowledge  of  the  members  of  the 
firm.  But  it  rests  on  the  principle,  that  the  copartners  are  guilty  of  negli- 
gence in  leaving  the  world  in  ignorance  of  such  facts,  whicli  third  persons 
cannot  be  supposed  to  have  the  means  of  ascertaining,  and  allowing  them  to 
infer  that  the  copartnership  continues,  and  to  put  faith  and  confidence  in 
the  name  of  the  firm  in  consequence  of  such  belief.  3  Kent,  66 ;  Story  on 
P.  §  160.  In  determining  on  which  of  two  parties  a  burden  or  a  loss  is 
to  rest,  the  law  always  seeks  to  ascertain  whether  either  has  been  guilty  of 
any  neglect  or  omission,  whicli  has  misled  the  confidence  or  operated  to 
deceive  the  other,  and  requires  that  the  responsibility  shall  be  jilaced  on  the 
one  who  has  failed  to  do  that  which  was  necessary  in  the  exercise  of  due 
diligence  or  fair  dealing.  But  this  salutary  principle  is  not  applicable  to 
the  case  of  a  dissolution  of  a  copartnership  by  the  death  of  one  of  its  mem- 


CHAP.   XIII.]  DISSOLUTION    OF    PARTNERSHIP.  505 

of  agency  or  mandate ;  that  is,  the  partnership  is  not 
dissolved  by  the  death  of  any  partner,  until  the  other 

bers.  The  cause  of  such  a  termination  of  the  copartnership  is  not  the 
voluntary  act  of  the  members.  It  does  not  result  from  any  private  trans- 
action between  them,  nor  from  any  occurrence  or  fact  peculiarly  within  the 
knowledge  of  the  surviving  members  of  the  firm.  On  the  contrary,  the  death 
of  a  copartner  may  often  occur  under  circumstances  in  which  the  knowledge 
of  the  event  may  not  come  to  his  associates  for  a  long  period  of  time. 
He  may  have  been  lost  at  sea,  or  have  died  in  a  distant  land.  In  such  a 
case,  if  the  copartnership  is  held  to  continue  as  to  the  surviving  copartners 
until  notice  of  the  death  is  given  by  them,  it  is  obvious  that  they  might  be 
held  liable  on  conti'acts  entered  into  by  one  of  their  number  long  after  the 
copartnership  was  dissolved  among  themselves  by  operation  of  law :  after 
the  estate  and  effects  and  personal  credit  of  the  deceased  copartner  had 
been  withdrawn,  and  the  power  and  authority  of  any  of  the  firm  to  bind 
his  associates  had  been  revoked.  And  this,  too,  without  any  neglect  or 
omission  which  could  be  imputed  to  them,  and  when  they  were  in  the 
position  of  innocent  parties,  who  had  done  no  act  to  mislead  or  deceive 
others,  and  had  not  ever  made  the  contract  on  which  they  are  to  be  held 
liable. 

"  To  parties  thus  situated,  the  more  just  and  reasonable  i-ule  would  seem 
to  be  applicable,  that  where  two  parties  stand  toward  each  other  in  cequali 
jure,  and  neither  has  been  guilty  of  any  negligence  or  want  of  good  faith, 
their  respective  rights  must  be  settled  by  the  application  of  the  strict  rule 
of  law,  without  reference  to  any  supposed  equities  arising  from  the  occur- 
rence of  an  event,  which  neither  party  anticipated  or  could  prevent.  Cer- 
tain it  is,  that  the  reason  of  the  rule  which  requires,  in  cases  of  the  dissolution 
of  a  firm  caused  by  the  voluntary  act  of  the  parties,  or  by  circumstances 
which  would  necessarily  come  within  the  knowledge  of  the  copartners,  but 
might  be  unknown  to  third  persons,  that  notice  of  it  should  be  given,  in 
order  to  relieve  the  members  from  future  responsibility,  does  not  apply  where 
the  copartnership  is  terminated  by  death.  Nor  can  it  make  any  difference  as  to 
this  lialjility  of  the  survivors,  that  they  knew  of  the  death  of  their  copartner, 
and  omitted  to  give  notice  of  it  to  the  person  with  whom  the  new  contract 
was  made.  As  the  fact  of  death  was  not  in  its  nature  private  or  confined 
within  the  knowledge  of  the  members  of  the  firm,  the  presumption  is,  that 
third  persons  also  had  notice  of  it.  Therefore  the  liability  of  survivors 
upon  a  new  contract,  not  entered  into  by  themselves,  but  by  one  of  their 
associates  without  their  knowledge  or  assent  in  the  name  of  the  firm,  cannot 
be  made  to  dejjend  on  the  question  whether  they  had  previous  notice  of  the 
death.  They  ought  not  to  be  held  liable  for  omitting  to  give  notice  of  that 
which  others  are  supposed  to  know.  And  although  the  member  of  the  firm 
who  actually  enters  into  a  contract  may  be  responsible,  as  upon  a  contract 
made  by  himself  individually,  or  on  the  ground  that  by  making  it  in  the 
name  of  the  firm  after  its  dissolution,  he  by  implication  represented  a  fact 


506  PARTNERSHIP.  [cHAP.  XIII. 

partners  have  due  notice  thereof.  Quod  si,  integris 
omnibus  manentihus,  alter  decesserit,  deinde  tunc  sequatiir 
res,  de  qua  societatem  co'ierunt,  tunc  eadem  distinctione 
utemur,  qua  in  mandato  ;  id,  si  quidem  ig?iota  fuerit 
mors  alteiHus,  valeat  societas ;  si  nota,  non  valeat} 
This  also  seems  the  doctrine  of  the  French  law,  as  laid 
down  by  Pothier.^ 

to  be  true  which  he  knew  to  be  false,  or  which  he  did  not  know  to  be  true, 
and  thereby  caused  loss  or  injury  to  an  innocent  third  party,  there  is  no 
good  reason  for  holding  the  other  copartners  liable,  who  have  remained 
passive,  and  done  no  act  by  which  third  parties  have  been  deceived  or 
misled,  or  induced  to  change  their  position,  or  to  part  with  their  prop- 
erty. 

"  The  rule  of  the  civil  law  which  was  referred  to  by  the  counsel  for  the 
plaintiff,  is  essentially  different  from  that  of  the  common  law.  The  effect  of 
the  death  of  a  principal  under  the  civil  law  is  not  to  revoke  the  authority  of  the 
agent.  He  can  bind  tlie  estate  of  his  deceased  principal  until  notice  of 
the  death  is  given.  Following  out  this  analogy  in  cases  of  the  death  of  a 
copartner,  the  rule  of  the  civil  law  is,  that  the  heirs  of  the  deceased  co- 
partner are  liable  on  contracts  made  in  the  name  of  the  firm  by  the  sui-viving 
copartners,  if  they  had  no  knowledge  of  the  death  of  their  associate,  or  if 
the  persons  with  whom  they  dealt  were  ignorant  of  the  dissolution.  Poth. 
de  Soc.  §  156,  157.  It  is  not  necessary  in  the  present  case  to  deter- 
mine whether  a  surviving  copartner,  who  enters  into  a  contract  in  the  name 
of  the  firm  after  its  dissolution  by  death,  can  be  held  liable  in  any  form  to 
the  person  who  in  good  faith,  and  in  ignorance  of  the  fact  that  the  copart- 
nership is  at  an  end,  has  acted  and  dealt  on  the  credit  of  the  firm.  That  is 
not  the  question  which  was  raised  at  the  trial.  But  we  do  decide,  for  the 
reasons  we  have  given,  that  a  surviving  copartner  cannot  be  held  responsible 
on  contracts  made  without  his  assent  or  knowledge  by  another  copartner 
after  the  firm  has  been  dissolved  by  the  death  of  one  of  its  members,  al- 
though no  notice  of  its  dissolution  has  been  given  to  the  person  with  whom 
the  contract  was  made."  But  see  Bank  of  N.  Y.  v.  Vanderhorst,  32  N.  Y. 
653.} 

'  D.  17,  2,  65,  10;  Poth.  Pand.  17,  2,  n.  58;  Story  on  Bailm.  §  203- 
205;  Story  on  Ag.  §  488-500;  Domat,  1,  8,  6,  art.  5. 

^  Poth.  de  Soc.  n.  156,  157.  — It  is  a  curious  coincidence,  that  the  Con- 
solato  del  Mare,  in  treating  of  persons  who  engage  to  build  a  ship  together, 
treats  death,  before  the  building  is  commenced,  as  a  dissolution  of  the  con- 
tract ;  and  gives  as  one  reason,  not  as  the  sole  reason,  that  the  day  that  any 
one  dies,  from  that  moment  every  partnership  in  which  he  is  engaged  is 
dissolved,  because  a  dead  man  cannot  be  a  partner.  See  Consolato  del 
Mare,  c.  4  [49]  ;  2  Pardessus,  Col.  de  Lois  Mar.  51,  52. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  507 

§  319  a.  But,  although,  as  we  have  seen,  a  dissokition 
of  the  partnership  takes  place  by  law  upon  the  death 
of  any  one  of  the  partners,  this  proposition  must  be 
understood  with  the  limitation,  that,  by  the  articles  of 
copartnership  or  other  agreement  between  the  part- 
ners, it  is  not  otherwise  stipulated  by  the  parties.  For 
it  is  entirely  competent  for  the  parties  to  vary  this  gen- 
eral result  of  law  by  an  express  agreement ;  and  if 
such  an  agreement  exists,  it  will  depend  upon  the  par- 
ticular terms  thereof,  to  what  extent  the  estate  of  a 
deceased  partner  may  be  liable  for  debts  contracted  on 
behalf  of  the  partnership  after  his  death,  whether  his 
estate  shall  be  generally  liable  for  all  the  debts,  or 
only  to  the  extent  of  the  property  embarked  and  left 
in  the  partnership  to  be  employed  by  the  survivors.^ 
The  like  questions  may  sometimes  arise  in  cases  of 
testators,  who  direct  the  partnership  to  be  continued 
after  their  death,  if  assented  to  by  the  surviving  part- 
ners. A  testator  may  so  direct  the  continuance  of  the 
partnership  that  his  whole  estate  shall  be  liable  for  the 
postmortuary  debts,  or  only  to  the  amount  of  his  act- 
ual interest  in  the  partnership  debts  at  his  decease  ; 
and  this  sometimes  becomes  a  question  of  great  nicety 
in  the  construction  of  his  words.^  Nothing,  however, 
but  the  clearest  and  most  unambiguous  language,  show- 
ing in  the  most  positive  manner  an  intention  on  the 
part  of  the  testator  to  render  his  general  assets  liable 
for  debts  contracted  after  his  death,  will  justify  a 
Court  in  extending  the  liability  of  his  estate  beyond 
the  actual  fund  employed  therein  at  the  time  of  his 
death,     xlnd  this  rule  obtains  on   account  of   the    ex- 

^  Burwell  v.  Mandeville's  Ex'r,  2  How.  560,  and  the  cases  there  cited. 

^  Burwell  v.  Mandeville's  Ex'r,  2  How.  560 ;  Ex  jjarte  Garland,  10  Ves. 
110;  Ex  parte  Richardson,  3  Madd.  188,  157;  Thompson  v.  Andrews,  1 
Myl.  «fe  K.  116  ;  Pitldn  v.  Titkin,  7  Conn.  307.     {See  §  201  a.  ] 


508  PARTNERSHIP.  [CHAP.  XIII. 

ceeding  inconvenience  and  difficulty  which  would  other- 
wise arise  in  paying  off  legacies  and  distributing  the 
surplus  of  the  property.  Thus,  where  A.  died,  while 
in  partnership  with  B.  ;  and  in  his  will,  made  during 
his  partnership,  he  made  sundry  bequests  of  his  per- 
sonal and  real  estate  to  different  persons,  and  added, 
"And  if  my  personal  property  should  not  cover  the  en- 
tire amount  of  legacies  I  have  or  may  give,  my  executors 
will  dispose  of  so  much  of  my  real  estate  as  will  fully 
pay  the  same  ; "  and  in  a  codicil  to  his  will,  made  also 
during  the  partnership,  he  said  :  "It  is  my  will,  that  my 
interest  in  the  copartnership  subsisting  between  Daniel 
Cawood  and  myself,  under  the  firm,  &c.,  shall  be  con- 
tinued therein  until  the  expiration  of  the  term  limited 
by  the  articles  between  us.  The  business  to  be  contin- 
ued by  the  said  Daniel  Cawood,  and  the  profit  or  loss 
to  be  distributed  in  the  manner  the  said  articles  provide." 
But  before  the  time  limited  for  the  partnership  expired, 
Cawood,  who  carried  on  the  business,  having  failed,  a 
bill  was  brought  against  him  and  the  executors  of  A.  by 
a  creditor  of  the  firm,  upon  debts  contracted  with  him 
by  Cawood,  on  account  of  the  firm  after  the  death  of  A. 
It  was  held,  that  the  general  assets  of  the  testator  were 
not  bound  for  the  debts  contracted  after  his  death,  by 
Cawood,  on  behalf  of  the  partnership,  but  that  the 
rights  of  any  creditor  in  respect  to  such  debts  were 
exclusively  restricted  to  the  funds  actually  embarked 
by  him  in  the  trade,  and  to  the  personal  responsibility 
of  Cawood  himself.^  So,  also,  where  the  testator 
directed  by  his  will  that  "all  his  interest  and  concern 
in  the  hat-manufacturing  business,  &c.,  as  then  conduct- 
ed under  said  firm,  should  be  continued  to  operate  in 
the  same  connection  for  the  term  of  four  years  after  his 

'  Biirwull  V.  Mandeville's  Ex'r,  2  How.  560. 


CHAP.  XIII.]  DISSOLUTION    OF    PARTNERSHIP.  509 

decease  ; "  it  was  held,  that  the  general  assets  of  the 
testator  were  not  liable  to  the  claims  of  any  creditors  of 
the  firm,  who  became  such  after  the  testator's  death, 
and  that  such  creditors  had  no  lien  on  the  estate  in  the 
hands  of  the  devisees  under  the  will,  although  they 
might  eventually  participate  in  the  profit  of  the  trade. ^ 

'  Pitkin  V.  Pitkin,  7  Conn.  307.     See,  also,  Ex  parte  Garland,  lOVes. 
110,  and  Ex  parte  Richardson,  3  Madd.  138. 


510  PARTNERSHIP.  [CHAP.  XIV. 


CHAPTER  XIV. 


EFFECTS    AND    CONSEQUENCES    OF    A    DISSOLUTION. 

[§  320.  Rights  of  partners  on  a  dissolution. 

321.  (1.)  Voluntary  dissolution. 

322.  Dissolution  terminates  the  powers  of  partners. 

323.  In  England  declarations  of  one  partner  after  dissolution  may  bind 

the  firm. 

324.  Difference  of  opinion  in  America. 

324  a.  Such  declarations  not  binding  in  case  of  dissolution  by  death. 
324  &.  Pleading  the  Statute  of  Limitations  after  the  death  of  a  partner. 

325.  Powers  remaining  after  dissolution. 
326-328.  Authority  to  pay  and  to  collect  debts. 

329.  Misconduct  of  a  partner  in  winding  up. 

330.  Appointment  of  a  receiver. 

331.  Partner  cannot  act  for  his  own  benefit  in  winding  up. 
332,333.  French  law. 

334.  Effect  of  dissolution  on  third  persons. 

335.  French  law. 

336.  Notice  of  a  dissolution  by  operation  of  law  unnecessary. 

337.  (2.)  Dissolution  by  bankruptcy. 

338.  Joinder  of  assignees  in  actions  by  or  against  the  partnership. 
339-341.  Bankrupt  partner  loses  all  his  powers.    Powers  of  the  solvent 

partners. 

342.  (3.)  Dissolution  by  death. 

343.  Surviving  partners  cannot  continue  the  partnership. 

344.  But  may  wind  it  up. 

345.  Roman  law. 

346.  Ownership  of  property  in  possession  and  of  choses  in  action. 

347.  Equity  will  enforce  a  sale  and  settlement. 

348.  Accounts. 

348  a.  Advances  only  items  in  account. 

349.  Mode  of  taking  accounts. 

350.  Sale  of  partnership  property  on  dissolution. 

351.  Of  taking  property  at  a  valuation. 

352.  Roman  law. 

353.  354.  French  law. 

355.  Superiority  of  the  rule  in  equity. 

356.  (4.)  Dissolution  by  decree.} 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.         511 

§  320.  Having  ascertained  the  various  causes,  which 
either  positively,  ipso  facto,  produce  a  dissolution  of  the 
partnership,  or  may  justify  an  application  therefor  to  a 
Court  of  Equity,  let  us  now  proceed  to  the  considera- 
tion of  the  effects  and  consequences  of  an  actual  dis- 
solution, as  between  the  partners  themselves,  and  also 
as  between  them  and  third  persons.  And  first,  as  be- 
tween the  partners  themselves.  Although  these  effects 
and  consequences  are  in  all  cases  of  dissolution  of 
partnership,  however  occasioned,  in  many  respects  gov- 
erned by  precisely  the  same  rules  and  principles,  and 
affected  by  the  same  general  considerations ;  yet,  as 
they  are,  at  the  same  time,  in  particular  cases,  liable  to 
be  variously  modified  and  affected  by  peculiar  circum- 
stances attendant  upon  them,  it  will  here  be  proper,  if 
not  absolutely  indispensable,  to  a  full  and  accurate  view 
of  all  the  relations  growing  out  of  the  subject,  to  ex- 
amine it  under  various  heads.  (1.)  Dissolution  by  the 
mere  voluntary  stipulations  or  acts  of  the  parties  inie?' 
vivos.  (2.)  Dissolution  by  bankruptcy.  (3.)  Dissolu- 
tion by  death.  (4.)  Dissolution  by  the  decree  of  a  Court 
of  Equity.  In  each  of  these  cases,  it  may  be  necessary 
to  examine  the  effects  and  consequences  as  between  the 
partners  themselves,  and  also  as  between  them  and  third 
persons. 

§  321.  In  the  first  place,  then,  as  to  a  dissolution  by 
the  voluntary  acts  or  stipulations  of  the  parties  iriter 
vivos.  This  may  arise  in  various  w^ays  ;  as  by  the  re- 
tirement of  one  partner  from  the  partnership,  or  the 
admission  of  a  new  partner  into  the  partnership  ;  or 
by  the  voluntary  separation  of  all  the  partners,  and 
their  final  relinquishment  of  the  whole  business  thereof. 
The  former  is  a  virtual  destruction  of  the  old  partner- 
ship, by  the  substitution  of  a  new  one  among  the  part- 
ners remaining  in,  or  those  coming  into  the  firm  ;  the 


512  PARTNERSHIP.  [CHAP.  XIV. 

latter  is  a  total  destruction  or  extinguishment  thereof. 
The  same  result  will  arise  (as  we  have  seen),  where 
the  partnership  is  dissolved  by  the  mere  efflux  of  time, 
or  by  the  voluntary  change  of  the  state  or  condition 
of  one  or  more  of  the  parties,  or  by  an  assignment  of 
all  the  rights  and  interests  of  one  or  more  of  the  part- 
ners therein.^ 

§  322.  But  in  whatever  manner  the  partnership  is 
actually  ended,  there  are  certam  efiects  and  conse- 
quences of  its  determination,  which  necessarily  result 
from  it  as  between  themselves,  and  will  equally  affect 
their  transactions  with  third  persons,  where  the  latter 
have  notice  of  the  dissolution,  or  where,  as  in  cases  of 
death  and  bankruptcy,  notice  is  not  by  law  required. 
In  the  first  place,  as  between  the  partners  themselves, 
the  dissolution  of  the  partnership  puts  an  end  to  the 
joint  powers  and  authorities  of  all  the  partners,  any 
further  to  employ  the  property,  or  funds,  or  credit  of 
the  partnership  in  the  business  or  trade  thereof,  sub- 
ject to  the  exceptions  hereinafter  stated.  None  of  the 
partners  can  create  any  new  contracts  or  obligations 
binding  upon  the  partnership  ;  none  of  them  can  buy, 
or  sell,  or  pledge  goods  on  account  thereof;  none  of 
them  can  indorse,  or  transfer  the  partnership  securities 
to  third  persons,^  or  in  any  other  way  make  their  acts 
the  acts  of  the  partnership.  In  short,  none  of  them 
can  do  any  act,  or  make  any  disposition  of  the  partner- 
ship property  or  funds,  in  any  manner  inconsistent  with 

'  Ante,  §  278,  280,  303,  304,  306,  307. 

2  [Fellows  V.  Wyman,  33  N.  H.  351]  ;  {§  328,  344  and  notes ;  LInd.  on 
P.  329.  A  bill  of  exchange  drawn  by  a  partnership  and  sent  to  an  agent 
for  sale,  but  sold  by  the  agent  after  dissolution  to  a  purchaser  having  notice 
of  the  dissolution,  does  not  bind  the  firm.  Robb  v.  Mudge,  14  Gray,  534. 
In  Parker  v.  Macomber,  18  Pick.  505,  it  was  held  that  a  partner  authorized 
to  settle  the  partnership  concerns  might  receive,  in  payment  of  a  debt  due  to 
the  firm,  a  note  payable  to  bearer  and  might  transfer  the  same  to  a  third 
person.} 


CHAP.  XIY.]       DISSOLUTION RIGHTS    OF    PARTNERS.  513 

the  primary  duty,  now  incumbent  upon  all  of  them,  of 
winding  up  the  whole   concerns    of   the    partnership.^ 

»  National  Bank  v.  Norton,  1  Hill,  (N.  Y.)   572;    [Palmer  y.   Dodge, 
4  Ohio  St.  21]  ;  Gow  on  P.  c.  5,  §  2,  p.  230,  240,  3d  ed. ;  Id.  p.  251,  252  ;  Ex 
parte  Williams,  11  Ves.  3,  5  ;  Peacock  v.  Peacock,  16  Ves.  49,57  ;  Wilson  v. 
Greenwood,  1  Swans.  471,  480 ;  Crawshay  v.  Maule,  1  Swans.  495, 506  ;  Whit- 
man V.  Leonard,  3  Pick.  177  ;  Coll.  on  P.  B.  1,  c.  2,  §  3,  p.  75,  2d  ed. ;  Id.  B. 
2,  c.  2,  §  1,  p.  130  ;  3  Kent,  03,  64  ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  643,  644,  5th 
ed. ;    Kilgour  v.  Finlyson,   1  H.  Bl.  155;  Brisban  v.  Boyd,  4  Paige,  17; 
[Geortner  v.  Tnistees  of  Canajoharie,  2  Barb.  625.]     The  remarks  of  Lord 
Eldon  on  this  subject,  in  Ci'awshay  v.  Collins,  15  Ves.  218,  226,  present  this 
whole  doctrine  in  a  strong  and  just  light.     "Partnerships  are  regulated," 
said  he,  "  either  by  the  express  contract,  or  by  the  contract,  implied  by  law, 
from  the  relation  of  the  parties.     The  duties  and  obligations  arising  from 
that  relation,  are  regulated,  as  far  as  they  are  touched,  by  the  expi-ess  con- 
tract ;  if  it  does  not  reach  all  those  duties  and  obligations,  they  are  implied, 
and  enforced  by  the  law.     In  the  instance  of  a  partnership  without  articles, 
the  respective  proportions  of  capital  contributed  by  the  partners   and  the 
trade  being  carried  on  either  for  a  certain  period,  or  the  connection  dissolv- 
able at  pleasure,  the  time  being  expired,  or,  in  the  other  case,  notice  to  de- 
termine being  given,  it  cannot  be  contended,  that,  if  the  remaining  part- 
ners choose  to  carry  on  the  trade,  they  can  consider  the  whole  property  as 
their  own,  to  be  taken  at  such  valuation  as  they  think  proper  to  put  upon  it. 
That  is  not  the  law.     The  obligation  implied  among  partners  is,  that  they 
are  to  use  the  joint  property  for  the  benefit  of  all,  whose  property  it  is. 
Many  complicated  cases  may  arise.     There  may  be  a  partnership,  where, 
whether  the  parties  have  agreed  for  the  determination  of  it  at  a  particular 
period,   or  not,   engagements  must,   from  the  nature  of  it,  be  contracted, 
which  cannot  be  fulfilled  during  the  existence  of  the  partnership ;  and  the 
consequence  is,  that  for  the  purpose  of  making  good  those  engagements 
•with  third  persons,  it  must  continue  ;  and  then,  instead  of  being,  as  it  was, 
a  general  partnership,  it  is  a  general  partnership  determined,  except  as  it 
still  subsists  for  the  purpose  only  of  winding  up  the   concerns.     Another 
mode  of  determination  is,  not  by  effluxion  of  time,  but  by  the  death  of  one 
partner;  in  which  case  the  law  says,  that  the  property  survives  to  the  others. 
It  survives  as  to  the  legal  title  in  many  cases ;  but  not  as  to  the  beneficial 
interest.     The  question  then  is,  .whether  the  surviving  partners,  instead  of 
settling  the  accounts,  and  agreeing  with  the  executor  as  to  the  terms,  upon 
which  his  beneficial  interest  in  the  stock  is  still  to  be  continued,  subject  still 
to  the  possible  loss,  can  take  the  whole  property,  do  what  they  please,  and 
compel  the  executor  to  take  the  calculated  value.     That  cannot  be  without 
a  conti'act  for  it  with  the  testator.     The  executor  has  a  right  to   liave  the 
value  ascertained,  in  the  way  in  which  it  can  be  best  ascertained,  by  sale.    If 
the  implied  obligation  is,  that  partners  are  to  use  the  property  for  the  bene- 
fit of  those  whose  property  it  is,  where  is  the  hardship?  ?  I  concur,  therelbre, 

33 


514  PARTNERSHIP.  [cHAP.  XIV. 

§  323.  And  here  the  consideration  natiu'ally  arises 
(which  has  been  akeady  touched  in  another  place^), 
whether  (since  it  is  incompetent  to  any  of  the  partners, 
after  a  dissohition,  by  any  new  acts,  duties,  or  obhga- 
tion,  to  bind  the  partnership)  any  acknowledgments, 
or  declarations,  or  statements,  subsequently  made  by 
any  one  of  the  partners,  respecting  the  real  or  supposed 

with  the  judgment  of  Lord  Rosslyn  upon  that  point,  in  the  case  of  Ham- 
mond V.  Douglas ;  though  I  agree  with  the  doubt,  expressed  by  Sir  Samuel 
Romilly,  upon  the  other  point  there  determined,  that  the  good-will  survives. 
If  the  surviving  partners  think  proper  to  make  that,  which  is  in  equity  the 
joint  propeiiy  of  the  deceased  and  them,  the  foundation  and  plant  of  in- 
creased profit,  if  they  do  not  think  proper  to  settle  with  the  executor,  and 
put  an  end  to  the  concern,  they  must  be  imderstood  to  proceed  upon  the 
principle  which  regulated  the  property  before  the  death  of  their  partner." 
{One  partner,  after  dissolution,  cannot  give  a  note  in  the  firm  name  for  a 
debt  due  from  the  firm.  Lockwood  v.  Comstock,  4  McLean,  383 ;  Perren  v. 
Keene,  19  Me.  355;  Parker  v.  Macomber,  18  Pick.  505;  Haven  v.  Goodel, 
Disney,  26 ;  Chase  v.  Kendall,  6  Ind.  304  ;  Conklin  v.  Ogborn,  7  Ind.  553 ; 
Fowler  v.  Richardson,  3  Sneed,  508 ;  Bower  i\  Douglass,  25  Ga.  714  ;  Cun- 
ningham V.  Bragg,  37  Ala.  436  ;  White  v.  Tudor,  24  Tex.  639.  Nor  re- 
new a  partnership}  note.  Lumberman's  Bank  v.  Pratt,  51  Me.  563  ;  Lusk  v. 
Smith,  8  Barb.  570 ;  Hurst  v.  Hill,  8  Md.  399  ;  Parker  v.  Cousins,  2  Gratt. 
372 ;  Palmer  V.  Dodge,  4  Ohio  St.  21 ;  Lange  v.  Kennedy,  20  Wis.  279 ;  Van 
Valkenburgh  v.  Bradley,  14  Iowa,  108,  overruling  Kemp  v.  Coffin,  3  Greene, 
190.  Nor  accept  a  bill.  Tombeckbee  Bank  v.  Dumell,  5  Mason,  56.  See 
post,  §  344 ;  Robb  v.  Mudge,  14  Gray,  534.  But  one  partner,  after  dissolu- 
tion, may  waive  demand  and  notice.  Darling  v.  March,  22  Me.  184.  And 
one  partner,  after  dissolution,  may  indorse  the  firm  note,  payable  to  himself, 
given  before  dissolution.  Temple  v.  Seaver,  11  Cush.  314.  If  the  part- 
ners on  dissolution  authorize  the  issuing  and  negotiation  of  notes  in  the 
name  of  the  old  firm,  they  will  be  bound.  See  §  160,  note  and  cases  there 
cited.  In  Pennsylvania  it  has  been  held  that  one  partner,  after  dissolution, 
has  authority  to  give  notes  in  the  firm  name  for  partnership  debts.  Robinson 
V.Taylor,  4  Penn.  St.  242.  But  this  doctrine  seems  peculiar  to  that  State. 
See  Houser  v.  Irvine,  3  W.  &  S.  345  ;  Estate  of  Davis  &  Desauque,  5  Whart. 
530 ;  Heberton  v.  Jepherson,  10  Penn.  St.  124.  In  Lewis  v.  Reilly,  1  Q.  B. 
349,  it  was  held  that  a  bill  drawn  by  two  partners,  payable  to  their  own  or- 
der, might  be  indorsed  after  dissolution  in  the  name  of  both  by  one  partner 
to  a  person  who  had  notice  of  the  dissolution.  But  the  correctness  of  this  de- 
cision has  been  much  questioned.  See  Lind.  on  P.  330,  334;  Smith's  Merc. 
Law,  88,  3d  Am.  ed.} 

'  Ante,  §  107  ;  Tassey  v.  Church,  4  Watts  &  S.  141. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  515 

transactions,  or  duties,  or  obligations  of  the  partnership, 
during  the  continuance  thereof,  are  binding  as  evidence 
or  otherwise  upon  the  other  partners,  who  have  not  as- 
sented thereto.^  It  seems  difficult  upon  principle  to 
perceive  how  they  can  be,  any  more  than  the  declara- 
tions, or  acts,  or  acknowledgments  of  any  other  agent 
of  the  partnership  would  be,  after  his  agency  has  ceased.^ 
In  the  latter  case,  they  are  constantly  held  inadmissible 
by  the  Courts  of  common  law,  upon  grounds  which 
seem  absolutely  irresistible.^  And  yet  the  contrary 
doctrine  has  been  constantly  maintained,  as  to  partners, 
for  a  great  length  of  time,  in  the  Courts  of  common 
law  m  England,  founded  apparently  upon  a  mere  un- 
reasoned decision  in  the  time  of  Lord  Mansfield ;  ■*  and 
it  is  but  recently  that  it  has  been  overturned  by  an  Act 
of  Parliament,^  which  has  remedied  some  of  the  mis- 
chiefs inherent  m  it,  but  has  still  left  behind  some  which 
are  as  yet  without  redress.*^  The  doctrine  has  been  es- 
pecially applied  to,  and,  indeed,  is  most  forcibly  illus- 
trated by  cases  of  the  revival  of  partnership  debts, 
which  are  barred  by  the  Statute  of  Limitations,  by  the 
simple    acknowledgment    of    one    partner,  even,  when 

1  3  Kent,  49-51 ;  Parker  r.  MoitgU,  2  Phill.  453,  464,  and  note  ;  {Speake 
V.  White,  14  Tex.  364.} 

^  See  the  able  case  of  Ellicott  v.  Nicliols,  7  Gill,  85. 

^  Ante,  §  134-138.  See  the  reasoning  of  Sir  Wm.  Grant,  in  Fairlie  v. 
Hastings,  10  Ves.  123,  126,  and  of  Mr.  Justice  Kennedy,  in  Hannay  v.  Stew- 
art, 6  Watts,  487.  See,  also,  Garth  v.  Howard,  8  Bing.  451 ;  Story  on  Ag. 
§  135,  136,  and  note. 

■»  Whitcomb  v.  Whiting,  Doug.  652. 

=  See  the  remarks  of  Lord  Tenterden  against  the  decision  in  Whitcomb 
V.  Whiting,  Doug.  652,  in  his  opinion  in  Atkins  v.  Tredgold,  2  B.  &  C.  23, 
28,  and  of  Mr.  Justice  Bayley,  Id.  p.  29,  and  of  Mr.  Justice  Holroyd,  Id. 
p.  30. 

«  Coll.  on  P.  B.  3,  c.  1,  §  4,  p.  282-285,  2d  ed. ;  Id.  B.  3,  c.  3,  §  4,  p. 
417,  418  ;  3  Kent,  50,  51,  and  note  (h)  ;  St.  of  9  Geo.  4,  c.  14  (9th  of  May, 
1828).  See  Braithwaite  v.  Britain,  1  Keen,  206;  Winter  v.  Innes,  4  Myl. 
&  C.  101,  111. 


516  PARTNERSHIP.  [cHAP.  XIV. 

made  at  a  great  distance  of  time  after  all  the  dissolution 
of  the  partnership,  and,  indeed,  long  after  the  partner- 
ship business  has  been  closed  by  an  actual  settlement 
thereof  inter  sese.^ 

§  324.  In  America  no  small  diversity  of  judicial 
opinion  has  been  expressed  upon  the  same  subject.  In 
some  of  the  States  the  English  doctrine  has  been  ap- 
proved ;  in  others  it  has  been  silently  acquiesced  in,  or 
left  doubtful ;  ^  and  in  a  considerable  number  it  has 
been  expressly  overruled.^  The  Supreme  Court  of  the 
United  States  have  not  hesitated,  after  a  most  elaborate 
discussion,  to  overrule  it,  as  unfounded  in  principle  and 
analogy.  In  truth,  the  whole  controversy  must  ulti- 
mately turn  upon  the  single  point,  whether  the  ac- 
knowledgment is  a  mere  continuation  of  the  original 
promise,  or  whether  it  is  a  new  contract,  or  promise, 
springing  out  of,  and  supported  by  the  original  consid- 
eration. It  is  upon  the  latter  ground,  that  the  Supreme 
Court  have   deemed  the  doctrine  wholly  untenable.^ 

1  3  Kent,  49-51 ;  s.  p.  Houser  v.  Irvine,  3  W.  &  S.  345. 

^  Walton  V.  Robinson,  5  Ired.  341 ;  {Ide  v.  Ingraham,  5  Gray,  106  ;  Gay 
V.  Bowen,  8  Met.  100 ;  Houser  v.  Irvine,  3  W.  &  S.  345.  See  Taunton  Iron 
Co.  V.  Richmond,  8  Met.  434. } 

^  3  Kent,  49-51,  where  the  principal  authorities  are  collected.  See,  also, 
Levy  V.  Cadet,  17  S.  «&R.  126  ;  Walden  v.  Sherburne,  15  Johns.  409  ;  Baker 
V.  Stackpoole,  9  Cowen,  420,  423 ;  Brisban  v.  Boyd,  4  Paige,  17 ;  Cady  v. 
Shepherd,  11  Pick.  400;  Bell  w.  Morrison,  1  Pet.  351;  Belote  v.  Wynne, 
7  Yerg.  534;  Tassey  v.  Church,  4  Watts  &  S.  141;  [Van  Keuren  v. 
Parmelee,  2  Comst.  523.  In  the  last  case,  the  decisions  of  the  different 
States  are  reviewed  by  the  New  York  Court  of  Appeals,  and  the  doctrine 
of  Lord  Mansfield  overruled.]  {Exeter  Bank  v.  Sullivan,  6  N.  H.  124; 
Shoemaker  v.  Benedict,  1  Kern.  176 ;  Payne  v.  State,  39  Barb.  634 ;  Rep- 
l^ert  V.  Colvin,  48  Penn.  St.  248.  See  Ostrom  v.  Jacobs,  9  Met.  454 ;  Sage 
V.  Ensign,  2  All.  245  ;  Tajjpan  v.  Kimball,  10  Post.  136  ;  Myers  v.  Standart, 
11  Ohio  St.  29.} 

■•  The  doctrine  was  apparently  first  applied  in  the  case  of  Whitcomb 
V.  Whiting,  Doug.  652,  in  the  case  of  a  joint  and  several  note  of  several 
persons,  not  partners,  upon  the  supposed  analogy  to  the  case  of  payment  by 
one  joint  promisor.     On  that  occasion  Lord  Mansfield  dryly  and  briefly  said  : 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  517 

§  324  a.    But,  however  the  doctrme  may  be  after  a 
dissohition,  m  cases  where  all  the  parties  are  living,  it 

"  Payment  by  one  is  payment  for  all,  the  one  acting  virtually  as  an  agent  for 
the  rest.  And  in  the  same  manner  an  admission  by  one  is  an  admission  by 
all ;  and  the  law  raises  the  promise  to  pay,  when  the  debt  is  admitted  to  be 
due."  A  more  inconclusive  and  unsatisfactory  mode  of  reasoning  can  scarce- 
ly be  imagined.  In  the  first  place  (as  we  see  in  the  text),  payment  by  an 
agent,  after  his  authority  is  withdrawn  by  his  principal,  is  a  payment  which 
binds  the  creditor,  but  certainly  not  the  principal ;  and  the  agent  cannot  re- 
cover the  money  so  paid  from  his  principal ;  although  he  may  not  be  entitled 
(unless,  indeed,  it  is  paid  under  a  sheer  and  mutual  mistake)  to  recover  it 
back  from  the  creditor.  Nor  is  it  true,  that  payment  by  one  partner,  after 
a  dissolution,  of  any  debt,  as  a  supposed  partnership  debt,  binds  the  other 
partners.  On  the  contrary,  they  have  a  right  to  say,  that  it  never  was,  or 
was  not  at  the  time  of  the  payment  thereof,  an  existing  partnership  debt. 
Suppose  it  had  been  already  either  paid,  or  extinguished,  how  is  the  partner- 
ship liable  to  pay  it  again  ?  It  is  assuming  the  very  matter  in  controversy 
to  assert,  that  a  debt,  once  barred  by  the  Statute  of  Limitations,  is  not  ex- 
tinguished, if  voluntarily  revived  by  the  acknowledgment  of  one  partner. 
What  right  or  power  has  an  agent,  after  his  authority  is  dissolved,  to  make 
any  acknowledgment  or  promise  ujion  my  account,  to  bind  me  ?  He  may 
bind  himself,  if  he  pleases  ;  but  it  will  require  some  other  reasoning  to  show 
that  he  can  bind  me.  The  reasoning  against  the  English  rule  will  perhaps 
be  found  as  fully  stated  in  the  case  of  Bell  v.  Morrison,  1  Pet.  351, 
367-374,  as  in  any  other  case.  "It  still  remains  (say  the  Court)  to  con- 
sider, whether  the  acknowledgment  of  one  partner,  after  the  dissolution  of 
the  copartnership,  is  sufficient  to  take  the  case  out  of  the  statute,  as  to  all  the 
partners.  How  far  it  may  bind  the  partner  making  the  acknowledgment  to 
pay  the  debt,  need  not  be  inquired  into.  To  maintain  the  present  action, 
it  must  be  binding  upon  all.  In  the  case  of  Bland  v.  Haselrig,  2  Vent.  151, 
where  the  action  was  against  four,  upon  a  joint  promise,  and  the  plea  of  the 
Statute  of  Limitations  was  put  in,  and  the  jury  found  that  one  of  the  defend- 
ants did  promise  within  six  years,  and  that  the  others  did  not ;  three  Judges, 
against  Ventris,  J.,  held  that  the  plaintiff  could  not  have  judgment  against 
the  defendant  who  had  made  the  promise.  This  case  has  been  explained 
upon  the  ground,  that  the  verdict  did  not  conform  to  the  pleadings,  and  es- 
tablish a  joint  promise.  It  is  very  doubtful,  upon  a  critical  examination  of 
the  report,  whether  the  opinion  of  the  Court,  or  of  any  of  the  Judges,  pro- 
ceeded solely  upon  such  a  ground.  In  Whitcomb  v.  Whiting,  '2  Doug. 
652,  decided  in  1781,  in  an  action  on  a  joint  and  several  note,  brought 
against  one  of  the  makers,  it  was  held,  that  proof  of  payment,  by  one  of  the 
others,  of  interest  on  the  note  and  of  part  of  the  principal,  within  six  years, 
took  the  case  out  of  the  statute,  as  against  the  defendant,  who  was  sued. 
Lord  Mansfield  said :  '  Payment  by  one  is  payment  for  all,  the  one  acting 
virtually  for  all  the  rest ;  and  in  the  same  manner,  an  admission  by  one  is 


518  PARTNERSHIP.  [cHAP.  XIV. 

is  very  clear  that  no  acknowledgment  by  the  surviving 
partners  after  the  death  of  one  of  them  will  revive  the 

an  atknission  by  all,  and  the  law  raises  the  promise  to  pay  when  the  debt 
is  admitted  to  be  due.'  This  is  the  whole  reasoning  reported  in  the  case, 
and  is  certainly  not  very  satisfactory.  It  assumes  that  one  party,  who  has 
the  authority  to  discharge,  has,  necessarily,  also,  authority  to  charge  the 
other;  that  a  virtual  agency  exists  in  each  joint  debtor  to  pay  for  the 
whole;  and  that  a  virtual  agency  exists,  by  analogy,  to  charge  the  whole. 
Now,  this  very  position  constitutes  the  matter  in  controversy.  It  is  true, 
that  a  payment  by  one  does  inure  for  the  benefit  of  the  whole.  But  this 
arises,  not  so  much  from  any  virtual  agency  for  the  whole,  as  by  operation 
of  law ;  for  the  payment  extinguishes  the  debt.  If  such  payment  were  made 
after  a  positive  refusal,  or  prohibition  of  the  other  joint  debtors,  it  would  still 
operate  as  an  extinguishment  of  the  debt,  and  the  creditor  could  no  longer 
sue  them.  In  truth,  he,  who  pays  a  joint  debt,  pays  to  discharge  himself; 
and  so  far  from  binding  the  others  conclusively  by  his  act,  as  virtually  theirs 
also,  he  cannot  recover  over  against  them  in  contribution,  without  such  pay- 
ment has  been  rightfully  made,  and  ought  to  charge  them.  When  the  stat- 
ute has  run  against  a  joint  debt,  the  reasonable  presumption  is,  that  it  is  no 
longer  a  subsisting  debt ;  and,  therefore,  there  is  no  ground  on  which  to 
raise  a  virtual  agency  to  pay  that  which  is  not  admitted  to  exist.  But,  if 
this  were  not  so,  still  there  is  a  great  difference  between  creating  a  virtual 
agency,  which  is  for  the  benefit  of  all,  and  one  which  is  onerous  and  preju- 
dicial to  all.  The  one  is  not  a  natural  or  a  necessary  consequence  from  the 
other.  A  person  may  well  authorize  the  payment  of  a  debt,  for  which  he  is 
now  liable  ;  and  yet  refuse  to  authorize  a  charge,  where  there  at  present 
exists  no  legal  liability  to  pay.  Yet,  if  the  principle  of  Lord  Mansfield  be 
correct,  the  acknowledgment  of  one  joint  debtor  will  bind  all  the  rest,  even 
though  they  should  have  utterly  denied  the  debt  at  the  time  when  such  ac- 
knowledgment was  made.  The  doctrine  of  Whitcomb  v.  Whiting  has  been 
followed  in  England  in  subsequent  cases,  and  was  applied  in  a  strong  man- 
ner, in  Jackson  r.  Fairbank,  2  H.  Bl.  340,  where  the  admission  of  a  credi- 
tor to  prove  a  debt,  on  a  joint  and  several  note,  under  a  bankruptcy,  and  to 
receive  a  dividend,  was  held  sufficient  to  charge  a  solvent  joint  debtor,  in  a 
several  action  against  him,  in  which  he  pleaded  the  statute,  as  an  acknowl- 
edgment of  a  subsisting  debt.  It  has  not,  however,  been  received  without 
hesitation.  In  Clarke  ik  Bradshaw,  3  Esp.  155,  Lord  Kenyon,  at  iiisi 
prius,  expressed  some  doubts  upon  it ;  and  the  cause  went  off  on  another 
ground.  And  in  Brandram  v.  Wharton,  1  B.  &  Aid.  463,  the  case  was 
very  much  shaken,  if  not  overturned.  Lord  Ellenborough  upon  that  occa- 
sion used  language,  from  which  his  dissatisfaction  with  the  whole  doctrine 
may  be  clearly  inferred.  '  This  doctrine,'  said  he,  '  of  rebutting  the  statute 
of  limitations  by  an  acknowledgment,  other  than  that  of  the  party  himself, 
begun  with  tlie  case  of  Whitcomb  v.  Whiting.  By  that  decision,  where, 
however,  there  was  an  express  acknowledgment,  by  an  actual  payment  of  a 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  519 

debt  against  the  estate  of  the  deceased  partner,  and 
no  acknowledgment  by  the  representative  of  the  de- 
part of  the  debt  by  one  of  the  parties,  I  am  bound.  But  that  case  was  full 
of  hardship  ;  for  this  inconvenience  may  follow  from  it.  Suppose  a  person 
liable  jointly  with  thirty  or  forty  others,  to  a  debt ;  he  may  have  actually 
paid  it,  he  may  have  had  in  his  possession  the  document  by  which  that  pay- 
ment was  proved,  but  may  have  lost  his  receipt.  Then,  though  this  was  one 
of  the  very  cases  which  this  statute  was  passed  to  protect,  he  may  still  be 
bound,  and  his  liability  be  renewed,  by  a  random  acknowledgment  made  by 
some  one  of  the  thirty  or  forty  others,  who  may  be  careless  of  what  mischief 
he  is  doing,  and  who  may  even  not  know  of  the  payment  which  has  been 
made.  Beyond  that  case,  therefore,  I  am  not  prepared  to  go,  so  as  to 
deprive  a  party  of  the  advantage,  given  him  by  the  statute,  by  means  of  an 
implied  acknowledgment.'  The  English  cases,  decided  since  the  American 
Revolution,  are,  by  an  express  statute  of  Kentucky,  declared  not  to  be  of 
authority  in  their  Courts ;  and  consec|uently  Whitcomb  v.  Whiting,  in 
Douglas,  and  the  cases  which  have  followed  it,  leave  the  question  in  Ken- 
tucky quite  open  to  be  decided  upon  principle.  In  the  American  Courts,  so 
far  as  our  researches  have  extended,  few  cases  have  been  litigated  upon  this 
question.  In  Smith  v.  Ludlow,  6  Johns.  267,  the  suit  was  brought  against 
both  partners,  and  one  of  them  pleaded  the  statute.  Upon  the  dissolution 
of  the  partnership,  public  notice  was  given,  that  the  other  partner  was 
authorized  to  adjust  all  accounts  ;  and  an  account  signed  by  him,  after  such 
advertisement,  and  within  six  years,  was  introduced.  It  was  also  proved, 
that  the  plaintiff  called  on  the  partner,  who  pleaded  the  statute,  before  the 
commencement  of  the  suit,  and  requested  a  settlement,  and  that  he  then 
admitted  an  account,  dated  in  1797,  to  have  been  made  out  by  him ;  that  he 
thought  the  account  had  been  settled  by  the  other  defendant,  in  whose  hands 
the  books  of  the  partnership  were  ;  and  that  he  would  see  the  other  defend- 
ant on  the  subject,  and  communicate  the  result  to  the  plaintiif.  The  Court 
held,  that  this  was  sufficient  to  take  the  case  out  of  the  statute ;  and  said, 
that,  without  any  express  authority,  the  confession  of  one  partner,  after  the 
dissolution,  will  take  a  debt  out  of  the  statute.  The  acknowledgment  will 
not,  of  itself,  be  evidence  of  an  original  debt ;  for  that  would  enable  one 
party  to  bind  the  other  in  new  contracts.  But  the  original  debt  being 
proved  or  admitted,  the  confession  of  one  will  bind  the  other,  so  as  to  pre- 
vent him  from  availing  himself  of  the  statute.  This  is  evident,  from  the 
cases  of  Whitcomb  v.  Whiting,  and  Jackson  v.  Fairbank ;  and  it  results 
necessarily  from  the  power  given  to  adjust  accounts."  The  Com-t  also 
thought  the  acknowledgment  of  the  partner  setting  up  the  statute  was 
sufficient,  of  itself,  to  sustain  the  action.  This  case  has  the  peculiarity  of  an 
acknowledgment  made  by  both  partners,  and  a  formal  acknowledgment  by 
the  partner  who  was  authorized  to  adjust  the  accounts  after  the  dissolution 
of  the  partnership.  There  was  not,  therefore,  a  virtual  but  an  express  and 
notorious  agency  devolved  on  him,  to  settle  the  account.     The  correctness 


520  PARTNERSHIP.  [cHAP.  XIV. 

ceased  partner  will  revive  the  debt  against  the  survi- 


of  the  decision  cannot,  upon  the  general  view  taken  by  the  Court,  be 
questioned.  In  Roosevelt  v.  Mark,  6  Johns.  Ch.  266,  291,  Mr.  Chancellor 
Kent  admitted  the  authority  of  Whitcomb  v.  Whiting,  but  denied  that  of 
Jackson  v.  Fairbank,  for  reasons  which  appear  to  us  solid  and  satisfactory. 
Upon  some  other  cases  in  New  York  we  shall  have  occasion  hereafter  to 
comment.  In  Hunt  v.  Bridgham,  2  Pick.  581,  the  Supreme  Court  of  Mas- 
sachusetts, upon  the  authority  of  the  cases  in  Douglas,  H.  Blackstone,  and 
Johnson,  held  that  a  partial  payment  by  the  jirincipal  debtor  on  a  note  took 
the  case  out  of  the  statute  of  limitations,  as  against  a  surety.  The  Court 
do  not  proceed  to  any  reasoning  to  establish  the  princijile,  considering  it  as 
the  result  of  the  authorities.  Shelton  v.  Cocke,  3  Munf.  191,  is  to  the 
same  effect ;  and  contains  a  mere  enunciation  of  the  rule,  without  any  dis- 
cussion of  its  principle.  Simpson  v.  Geddes,  2  Bay,  533,  proceeded  upon 
a  broader  ground,  and  assumes  the  doctrine  of  the  case  in  1  Taunt.  104, 
hereinafter  noticed,  to  be  correct.  Whatever  may  be  the  just  influence  of 
such  recognitions  of  the  principles  of  the  English  cases  in  other  States,  as 
the  doctrine  is  not  so  settled  in  Kentucky,  we  must  resort  to  such  recogni- 
tion, only  as  furnishing  illustrations  to  assist  our  reasoning,  and  decide  the 
case  now,  as  if  it  had  never  been  decided  befoi-e.  By  the  general  law  of 
partnership,  the  act  of  each  partner,  during  the  continuance  of  the  partner- 
ship, and  within  the  scope  of  its  objects,  binds  all  the  others.  It  is  consid- 
ered the  act  of  each  and  of  all,  resulting  from  a  general  and  mutual  delega- 
tion of  authority.  Each  partner  may,  therefore,  bind  the  partnership  by 
his  contracts  in  the  partnership  business  ;  but  he  cannot  bind  it  by  any 
contracts  beyond  those  limits.  A  dissolution,  however,  puts  an  end  to  the 
authority.  By  the  force  of  its  terms  it  operates  as  a  revocation  of  all 
power  to  create  new  contracts ;  and  the  right  of  partners,  as  such,  can 
extend  no  further  than  to  settle  the  partnership  concerns  already  existing, 
and  to  distribute  the  remaining  funds.  Even  this  right  may  be  qualified  and 
restrained,  by  the  express  delegation  of  the  whole  authority  to  one  of  the 
partners.  The  question  is  not,  however,  as  to  the  authority  of  a  partner, 
after  the  dissolution,  to  adjust  an  admitted  and  subsisting  debt ;  we  mean, 
admitted  by  the  whole  partnership,  or  unbarred  by  the  statute ;  but 
whether  he  can,  by  his  sole  act,  after  the  action  is  barred  by  lapse 
of  time,   revive    it    against    all   the  partners,   without   any    new    authority 


>  Atkins  V.  Tredgold.  2  B.  «fe  C.  23  ;  Slater  v.  Lawson,  1  B.  &  Ad.  396  ; 
Crallan  v.  Oulton,  3  Beav.  1,  7  ;  Way  v.  Bassett,  5  Hare,  55,  67.  {In Thomp- 
son V.  Waithman,  3  Drew.  628,  payments  by  a  surviving  partner,  who  was 
also  executor  of  the  deceased  partner,  were  held  to  be  made  in  his  chai'acter 
of  surviving  partner,  and  not  of  executor,  and  therefore  a  debt  due  by  the 
firm  was  not  taken  out  of  tlie  statute  as  against  the  estate  of  the  deceased 
partner.  See  Jackson  v.  WooUey,  8  E.  &  B.  778 ;  Whitley  v.  Lowe,  25 
Beav.  421,  s.  c.  2  De  G.  &  J.  704. } 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  521 

§  324  h.    Another  question  has   arisen ;  and  that  is, 
whether,  after  the  decease  of  one  partner,  the  surviving 

communicated  to  him  for  this  purpose.  We  thinii  the  proper  res- 
olution of  this  point  depends  upon  another,  and  that  is,  whether  the 
acknowledgment  or  promise  is  to  be  deemed  a  mere  continuation  of  the 
original  promise,  or  a  new  contract,  springing  out  of  and  supported  by  the 
original  consideration.  We  think  it  is  the  latter,  both  upon  principle  and 
authority ;  and,  if  so,  as  after  the  dissolution  no  one  partner  can  create  a  new 
contract,  binding  upon  the  others,  his  acknowledgment  is  inoperative  and 
void  as  to  them.  There  is  some  confusion  in  the  language  of  the  books,  re- 
sulting from  a  want  of  strict  attention  to  the  distinction  here  indicated.  It 
is  often  said,  that  an  acknowledgment  revives  the  promise,  when  it  is  meant 
that  it  revives  the  debt  or  cause  of  action.  The  revival  of  a  debt  supposes 
that  it  has  been  once  extinct  and  gone;  that  there  has  been  a  period,  in 
which  it  had  lost  its  legal  use  and  validity.  The  act  which  revives  it,  is  what 
essentially  constitutes  its  new  being,  and  is  inseparable  from  it.  It  stands 
not  by  its  original  force,  but  by  the  new  promiSe,  which  imparts  vitality  to 
it.  Proof  of  the  latter  is  indispensable  to  raise  the  assumpsit,  on  which  an 
action  can  be  maintained.  It  was  this  view  of  the  matter,  which  first  created 
the  doubt,  whether  it  was  necessary  that  a  new  consideration  should  be 
proved  to  support  the  promise,  since  the  old  consideration  was  gone.  That 
doubt  has  been  overcome  ;  and  it  is  now  held,  that  the  original  consideration 
is  sufficient,  if  recognized,  to  uphold  the  new  promise,  although  the  statute 
cuts  it  ofi",  as  a  support  for  the  old.  What,  indeed,  would  seem  to  be  deci- 
sive on  this  subject  is,  that  the  new  promise,  if  qualified  or  conditional,  re- 
strains the  rights  of  the  party  to  its  own  terms ;  and  if  he  cannot  recover  by 
those  terms,  he  cannot  recover  at  all.  If  a  person  promise  to  pay,  upon  con- 
dition that  the  other  do  an  act,  performance  must  be  shown  before  any  title 
accrues.  If  the  declaration  lays  a  promise  by  or  to  an  intestate,  proof  of  the 
acknowledgment  of  the  debt  by  or  to  his  personal  representative  will  not 
maintain  the  writ.  Why  not,  since  it  establishes  the  continued  existence  of 
the  debt  ?  The  plain  reason  is,  that  the  promise  is  a  new  one  by  or  to  the 
administrator  himself,  upon  the  original  consideration,  and  not  a  revival  of 
the  original  promise.  So,  if  a  man  promises  to  pay  a  pre-existing  debt,  barred 
by  the  statute,  when  he  is  able,  or  at  a  future  day,  his  ability  must  be  shown, 
or  the  time  must  be  passed,  before  the  action  can  be  maintained.  Why  ? 
Because  it  rests  on  the  new  promise,  and  its  terms  must  be  (iomplied  with. 
We  do  not  here  speak  of  the  form  of  alleging  the  promise  in  the  declaration, 
upon  which,  perhaps,  there  has  been  a  diversity  of  opinion  and  judgment ; 
but  of  the  fact  itself,  whether  the  promise  ought  to  be  laid  in  one  way  or 
another,  as  an  absolute  or  as  a  conditional  promise  ;  which  may  depend 
upon  the  rules  of  pleading.  This  very  point  came  before  the  twelve 
Judges,  in  the  case  of  Hyleing  v.  Hastings,  1  Ld.  Raym.  389,  421,  in 
the  time  of  Lord  Holt.  There,  one  of  the  points  Avas,  '  whether  the 
acknowledgment  of  a  debt  within  six  years  would  amount  to  a  new  prom- 


522  PARTNERSHIP.  [CHAP.  XIV. 

partner  can,  in  a  suit  brought  to  obtain  payment  of  a 
debt  due  to  a  creditor  of  the  fii-m  out  of  the  assets  of 

ise,  to  bring  it  out  of  the  statute ;  and  they  were  all  of  opinion,  that  it 
would  not ;  but  that  it  was  evidence  of  a  promise.'  Here,  then,  the 
Judges  manifestly  contemplated  the  acknowledgment,  not  as  a  continuation 
of  the  old  promise,  but  as  evidence  of  a  new  promise ;  and  that  it  is  the  new 
promise,  which  takes  the  case  out  of  the  statute.  Now,  what  is  a  new  prom- 
ise, but  a  new  contract ;  a  contract  to  pay,  upon  a  pre-existing  consideration, 
which  does  not,  of  itself,  bind  the  party  to  pay,  independently  of  the  con- 
tract? So,  in  Boydell  v.  Drummond,  2  Camp.  157,  Lord  EUenborough, 
with  his  characteristic  precision,  said,  '  If  a  man  acknowledges  the  existence 
of  a  debt,  barred  by  the  statute,  the  law  has  been  supposed  to  raise  a  new 
promise  to  pay  it ;  and  thus  the  remedy  is  revived.'  And  it  may  be  affirmed, 
that  the  general  cuiTent  of  the  English,  as  well  as  the  American  authorities, 
conforms  to  this  view  of  the  operation  of  an  acknowledgment.  In  Jones  v. 
Moore,  5  Binn.  573,  Mr.  Chief  Justice  Tilghman  went  into  an  elabo- 
rate examination  of  this  vfery  point;  and  came  to  the  conclusion,  from  a 
review  of  all  the  cases,  that  an  acknowledgment  of  the  debt  can  only  be  con- 
sidered as  evidence  of  a  new  promise  ;  and  he  added,  '  I  cannot  comprehend 
the  meaning  of  reviving  the  old  debt,  in  any  other  manner  than  by  a  new 
promise.'  There  is  a  class  of  cases,  not  yet  adverted  to,  which  materially 
illustrates  the  right  and  powers  of  partners,  after  the  dissolution  of  the  part- 
nership, and  bears  directly  on  the  point  under  consideration.  In  Hackley 
V.  Patrick,  3  Johns.  536,  it  was  said  by  the  Court,  that,  '  After  a  dissolu- 
tion of  the  partnership,  the  power  of  one  party  to  bind  the  others  wholly 
ceases.  There  is  no  reason,  why  his  acknowledgment  of  an  account  should 
bind  his  copartners,  any  more  than  his  giving  a  promissory  note,  in  the  name 
of  the  firm,  or  any  other  act.'  And  it  was,  therefore,  held,  that  the  plaintiff 
must  produce  further  evidence  of  the  existence  of  an  antecedent  debt,  be- 
fore he  could  recover ;  even  though  the  acknowledgment  was  by  a  partner 
authorized  to  settle  all  the  accounts  of  the  firm.  This  doctrine  was  again 
recognized  by  the  same  Court,  in  Walden  v.  Sherburne,  15  Johns.  409, 
424,  although  it  was  admitted,  that  in  Wood  v.  Braddick,  1  Taunt.  104,  a 
different  decision  had  been  had  in  England.  If  this  doctrine  be  well  found- 
ed, as  we  think  it  is,  it  furnishes  a  strong  ground  to  question  the  efficacy  of 
an  acknowledgment  to  bind  the  partnership  for  any  purpose.  If  it  does  not 
establish  the  existence  of  a  debt  against  the  partnership,  why  should  it  be 
evidence  against  it  at  all  ?  If  evidence,  aliunde,  of  facts  within  the  reach  of 
the  statute,  as  of  the  existence  of  a  debt,  be  necessary  before  the  acknowl- 
edgment binds,  is  not  this  letting  in  all  the  mischiefs,  against  which  the 
statute  intended  to  guard  the  parties  ;  viz.  the  introduction  of  stale  and 
dormant  demands,  of  long  standing,  and  of  uncertain  proof  ?  If  the  ac- 
knowledgment, per  se,  does  not  bind  the  other  partners,  where  is  the  pro- 
priety of  admitting  proof  of  an  antecedent  debt,  extinguished  by  the  statute 
as  to  them,  to  be  revived  without  their  consent?     It  seems  difficult  to  find  a 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    TARTNERS.  523 

tliG  deceased  partner,  in  which  suit  the  surviving  part- 
ner is  made  a  party,  set  up  the  Statute  of  Limitations 

satisfactory  reason,  -vvhy  an  acknowledgment  should  raise  a  new  promise, 
when  the  consideration,  upon  which  alone  it  rests,  as  a  legal  obligation,  is 
not  coupled  with  it  in  such  a  shape  as  to  bind  the  parties  ;  that  the  parties 
are  not  bound  by  the  admission  of  tlie  debt,  as  a  debt ;  but  are  bound  by  the 
acknowledgment  of  the  debt,  as  a  promise  upon  extrinsic  proof.  The  doctrine 
in  1  Taunt.  104,  stands  upon  a  clear,  if  it  be  a  legal  ground ;  that,  as  to  the 
things  past,  the  partnership  continues  and  always  must  continue,  notwithstand- 
ing the  dissolution.  That,  however,  is  a  matter  which  we  are  not  prepared  to 
admit,  and  constitutes  the  very  ground  now  in  controversy.  The  light  in  which 
we  are  disposed  to  consider  this  question,  is,  that  after  a  dissolution  of  a  part- 
nership, no  partner  can  create  a  cause  of  action  against  the  other  partners, 
except  by  a  new  authority  communicated  to  him  for  that  purpose.  It  is 
wholly  immaterial  what  is  the  consideration,  which  is  to  raise  such  cause  of 
action  ;  whether  it  be  a  supposed  pre-existing  debt  of  the  partnership,  or 
any  auxiliary  consideration  which  might  prove  beneficial  to  them.  Unless 
adopted  by  them,  they  are  not  bound  by  it.  When  the  statute  of  limitations 
has  once  run  against  a  debt,  the  cause  of  action  against  the  partnership  is 
gone.  The  acknowledgment,  if  it  is  to  operate  at  all,  is  to  create  a  new 
cause  of  action ;  to  revive  a  debt  which  is  extinct ;  and  thus  to  give  an  ac- 
tion, which  has  its  life  from  the  new  promise,  implied  by  law  from  such  an 
acknowledgment,  and  operating  and  limited  by  its  purport.  It  is  then,  in 
its  essence,  the  creation  of  a  new  right,  and  not  the  enforcement  of  an  old 
one.  We  think  that  the  power  to  create  such  a  right  does  not  exist,  after  a 
dissolution  of  the  partnership,  in  any  partner.  There  is  a  case  in  the  Ken- 
tucky Reports,  not  cited  at  the  bar,  which  coincides,  as  far  as  it  goes,  with 
our  own  views  ;  and  if  taken  as  a  general  exposition  of  the  law,  according 
to  its  terms,  is  conclusive  on  this  point.  It  is  the  case  of  Walker  v.  Du- 
berry,  1  Marsh.  189.  It  is  very  briefly  reported,  and  the  opinion  of  the 
Court  was  as  follows.  '  We  are  of  opinion,  that  the  Court  below  improp- 
erly admitted,  as  evidence  against  Walker,  the  certificate  of  J.  T.  Evans, 
made  after  the  dissolution  of  the  partnership,  between  Walker  and  Evans, 
acknowledging  that  the  partnership  firm  was  indebted  to  the  defendant 
Duberry  in  the  sum  demanded,  in  the  action  brought  by  him  in  the  Court 
below.'  It  cites  3  Johns.  536  ;  3  Munf.  191.  It  does  not  appear  what 
was  the  state  of  facts  in  the  Court  below,  nor  whether  this  was  an  action 
in  which  the  statute  of  limitations  was  pleaded,  or  only  non  assunipsit 
generally.  But  the  position  is  generally  asserted,  that  the  acknowledg- 
ment of  a  debt  by  one  partner  after  a  dissolution  is  not  evidence  against 
the  other.  Whether  the  Court  meant  to  say  in  no  case  whatever,  or  only 
when  the  debt  itself  was  proved  aliunde,  does  not  appear.  The  language 
is  general,  and  would  seem  to  include  all  cases ;  and  if  any  qualification 
were  intended,  it  would  have  been  natural  for  the  Court  to  express  that 
qualification,  and  have  confined  it  to  the  circumstances  of  the  case.  The 
only  room  for  doubt  arises  from  the  citations  of  3  Johnson,  and  3  JNIun- 


524  PARTNERSHIP.  .  [cHAP.  XIV. 

as  a  bar  to  a  demand  against  the  assets  of  the  deceased ; 
and  it  has  been  held  that  he  cannot.^  And  it  yet  re- 
mains a  matter  of  doubt,  whether  the  representatives 
of  the  deceased  partner  can  in  such  a  suit  set  up  the 
Statute  of  Limitations  as  a  bar,  so  long  as  the  surviving 
partner  continues  liable  to  the  payment  of  the  debt,  as 
the  deceased's  estate  is  liable  to  be  called  upon  by  the 
surviving  partner  for  contribution  in  case  the  latter 
pays  the  debt.^ 

ford.  The  former  has  been  already  adverted  to ;  and  the  latter,  Shelton 
V.  Cocke,  3  Munf.  191,  recognized  the  distinction  asserted  in  3  Johns. 
536,  as  sound.  These  citations  may,  however,  have  been  referred  to  as 
mere  illustrations,  going  to  establish  the  proposition  of  the  Court  to  a 
certain  extent,  and  not  as  limitations  of  its  extent.  In  any  view,  it  leads 
us  to  the  most  serious  doubts,  whether  the  State  Courts  of  Kentucky 
would  ever  adopt  the  doctrine  of  Whitcomb  v.  Whiting,  in  Douglas ;  es- 
pecially so,  as  the  early  case  in  2  Vent.  151,  carries  an  almost  irresisti- 
ble presumption,  that  the  Courts,  at  that  time,  held  a  doctrine  entirely 
inconsistent  with  the  case  in  Douglas."  See  also  ante,  §  107;  {Bateman 
V.  Pinder,  3  Q.  B.  574.} 

^  Winter  v.  Innes,  4  Myl.  &  C.  101. 

2  Winter  v.  Innes,  4  Myl.  &  C.  101,  111.  —  Lord  Cottenham  said  :  "  When 
the  simple  case  shall  occur  of  the  representatives  of  a  deceased  partner  setting 
up  the  Statute  of  Limitations  against  a  claim  by  a  creditor  of  the  firm,  it  will 
be  to  be  considered  whether  such  a  defence  can  prevail  whilst  the  surviving 
partner  continues  liable,  and  the  estate  of  the  deceased  partner  continues 
liable  to  contribution  at  the  suit  of  the  surviving  partner.  If  the  equity  of 
the  creditor  to  go  against  the  estate  of  the  deceased  j^artner  is  founded  upon 
the  equity  of  the  surviving  partner  against  that  estate,  it  would  seem  that  the 
equity  of  the  creditor  ought  not  to  be  barred,  so  long  as  the  equity  of  the  sur- 
viving party  continues,  as  that  would  be  to  create  that  circuity,  which  it  is 
the  object  of  the  rule  to  prevent.  In  Braithwaite  v.  Britain,  the  Master  of  the 
Rolls  thought  that  the  statute  did  not  operate,  although  nine  years  had  elapsed. 
In  this  case  it  is  not  necessary  to  consider  that  general  question  ;  Mr.  Bailie 
was  himself  a  trustee  and  executor  of  the  will  of  the  deceased  partner,  and 
did  not  renounce  till  1830  ;  and  Mr.  Innes,  who  had  the  property,  acted 
throughout  on  behalf  of  the  estate  of  the  deceased.  And  who  now  set  up 
the  Statute  of  Limitations  ?  Not  the  executors  of  the  deceased  partner,  who 
are  not  bound  to  plead  the  statute,  but  may,  if  they  please,  pay  a  just  debt, 
though  barrablc  by  the  statute  ;  nor  any  one  interested  in  his  estate,  but 
those  who  stand  in  the  place  of  Mr.  Innes  as  surviving  partner.  I  think,  there- 
fore, that  their  defence  cannot  prevail."  [But  see  Way  v.  Bassett,  5  Hare,  55, 
68 ;  Braithwaite  v.  Britain,  1  Keen,  206.     But  after  a  dissolution  of  partnership. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  525 

§  325.  On  the  other  hand,  notwithstanding  the  dis- 
solution of  the  partnership,  there  still  remain  certain 
rights,  duties,  powers,  authorities,  and  relations  between 
them,  which  the  law  recognizes  and  supports,  because 
they  are,  or  may  be,  indispensable  to  the  complete 
arrangement  and  final  settlement  of  the  affairs  of  the 
partnership  ;  and,  therefore,  in  a  qualified  and  limited 
sense,  the  partnership  may  be  said  for  those  purposes 
to  continue  between  the  parties,  until  such  arrange- 
ment and  settlement  take  place. ^  Indeed,  as  has  been 
well  said  by  a  learned  author  on  this  subject,  from  the 
very  nature  of  the  partnership,  engagements  may  be  con- 
tracted, which  cannot  be  fulfilled  during  its  existence, 
exposed  as  it  is  to  sudden  and  arbitrary  terminations ; 
and  the  consequence,  therefore,  must  be,  that,  for  the 
purpose  of  making  good  outstanding  engagements,  of 
taking  and  settling  all  the  accounts,  and  converting  all 
the  property,  means,  and  assets  of  the  partnership,  ex- 
isting at  the  time  of  the  dissolution,  as  beneficially  as 
may  be  for  the  benefit  of  all  who  were  partners,  accord- 
ing to  their  respective  shares  and  proportions,  the  legal 
interest  must  subsist,  although,  for  all  other  purposes, 
the  partnership  is  actually  determined.^ 

by  death  or  otherwise,  the  surviving  or  continuing  partners  of  the  firm  are,  in  a 
suit  against  them  by  persons  claiming  to  be  creditors  of  the  partnership,  en- 
titled to  the  protection  of  the  Statute  of  Limitations,  although  as  between 
themselves  and  retired  partners,  or  the  estates  of  deceased  partners,  the  part- 
nership accounts  are  unsettled  ;  and  the  reti  red  partners,  or  the  executors  of 
a  deceased  partner,  are  in  such  a  suit  against  them  entitled  to  the  like  protec- 
tion. Way  V.  Bassett,  5  Hare,  55,  68  ;  Brown  v.  Gordon,  16  Beav.  302;  15 
Eng.  L.  &  Eq.  340.     See  ante,  §  233,  note.] 

'  Govv  on  P.  c.  5,  §  2,  p.  231,  3d  ed. ;  Wilson  v.  Greenwood,  1  Swans. 
471,  480,  481  ;  Crawshay  v.  Maule,  1  Swans.  495,  506,  507  ;  Peacock  v.  Pea- 
cock, 16  Ves.  49,  57;  Ex  parte  Williams,  11  Ves.  3,  5 ;  Ex  parte  RufHn,  6 
Ves.  119,  126,  127  ;  post,  §  328,  note;  Murray  v.  Mumford,  6  Cowen,  441  ; 
Cruikshank  v.  M'Vic'ar,  8  Beav.  106;  [Geortner  v.  Trustees  of  Canajoharie, 
2  Barb.  625.] 

*  Gow  on  P.  c.  5,  §2,  p.   231. —  Substantially  the  same   language  was 


526  PARTNERSHIP.  [CHAP.  XIV. 

§  326.  Besides ;  as  we  have  already  seen,^  each  part- 
ner, upon  the  dissolution  of  the  partnership,  has  a  per- 
fect right,  in  the  first  place,  to  require  that  the  partner- 
ship funds  shall  be  directly  and  regularly  applied  to 
the  discharge  of  the  partnership  debts  and  liabilities ; 
and,  after  these  are  discharged,  to  have  his  share  of  the 
residue  of  the  partnership  funds. ^  This  right  is  a  privi- 
lege or  lien  on  those  funds,  fully  recognized  and  en- 
forced by  Courts  of  Equity;  and,  through  this  right 
of  the  partners  themselves,  is  worked  out  the  known 
equity  of  the  joint  creditors,  to  have  a  priority  of  pay- 
ment of  their  debts  out  of  the  same  funds,  in  opposition 
and  preference  to  the  separate  creditors  of  each  part- 
ner.^    It  is  easy  to  perceive,  that  this  right  would  be  a 

used  by  Lord  Eldon,  in  Crawsbay  v.  Collins,  15  Ves.  226.     See  also  Natusch 
V.  Irving,  Gow  on  P.  App.  p.  398,  404,  3d  ed. 

1  Ante,  §  97,  and  note  1 ;  1  Story,  Eq.  Jur.  §  675,  676  ;  Ex  parte  Ruffin, 
6  Ves.  119,  126;  Ex  parte  Williams,  11  Ves.  3,  5;  Holderness  v.  Shackel, 
8  B.  &  C.  612  ;  [KIrby  v.  Schoon maker,  3  Barb.  Ch.  46.] 

2  Gow  on  P.  c.  5,  §  2,  p.  235,  236,  3d  ed. 

^  Ex  parte  RufBn,  6  Ves.  119;  S.  c.  ante,  §  97,  note;  Ex  parte  Fell, 
10  Ves.  347  ;  [Allen  v.  Center  Valley  Co.  21  Conn.  130]  ;  Ex  parte  Wil- 
liams, 11  Ves.  3, 5.  —  In  the  latter  case  Lord  Eldon  said :  "  I  have  frequently, 
since  I  decided  the  case  Ex  parte  Ruffin,  considered  it;  and  I  approve  that 
decision.  In  a  subsequent  case  the  dissolution  took  place  only  a  week 
before  the  question  arose ;  and  the  true  question,  I  thought,  was  upon 
the  bona  fides  of  the  transaction ;  whether  that  which  had  been  joint 
estate,  had  become  separate  estate.  The  grounds  upon  which  I  went, 
in  Ex  parte  Ruffin,  were  these.  Among  partners  clear  equities  subsist, 
amounting  to  something  like  lien.  The  property  is  joint ;  the  debts 
and  credits  are  jointly  due.  They  have  equities  to  discharge  each 
of  them  fi'om  liability,  and  then  to  divide  the  surplus  according  to 
their  proportions  ;  or,  if  there  is  a  deficiency,  to  call  upon  each  other  to 
make  up  that  deficiency,  according  to  their  proportions.  But,  while  they 
remain  solvent,  and  the  partnership  is  going  on,  the  creditor  has  no  equity 
against  the  effects  of  the  partnership.  He  may  bring  an  action  against  the 
partners,  and  get  judgment ;  and  may  execute  his  judgment  against  the 
effects  of  the  i)artnership.  But,  when  he  has  got  them  into  his  hands,  he 
has  them  by  force  of  the  execution,  as  the  fruit  of  the  judgment ;  clearly, 
not  in  respect  of  any  interest  he  had  in  the  partnership  effects,  while  he  was 
a  mere  creditor,  not  seeking  to  substantiate,  or  create,  an  interest  by  suit. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  527 

mere  dead  claim  or  inert  title,  if  the  mere  dissolution 
of  the  partnership  would  of  itself  prevent  the  partners 
from  applymg  the  joint  funds  in  an  appropriate  manner 
to  those  very  purposes ;  at  least  if  a  Court  of  Equity 
did  not  interpose  to  enforce  it.  And  why  should  a 
Court  be  called  upon  to  do  the  very  acts,  which,  upon 
principles  of  common  sense  and  common  justice,  the 
partners  themselves  might  reasonably  be  left  to  do  for 
themselves,  without  such  a  dilatory  and  inconvenient 
process  ^ 

§  327.  Moreover,  it  is  plain,  that  if  a  total  extinction 
of  all  rights,  powers,  and  authorities  of  the  partners  to 
deal  with  the  partnership  property,  funds,  and  effects, 
immediately  followed  upon  the  dissolution  of  the  part- 
nership, it  would  amount  to  a  complete  suspension  of 
all  right  and  authority  to  apply  any  part  thereof  to 
the  payment  and  discharge  of  the  existing  partnership 
debts,  or  to  collect  the  debts  due  to  the  partnership,  or 
to  adjust  unsettled  accounts,  or  even  to  close  any  out- 
standing adventures,  or  inchoate  operations.  The  mis- 
chiefs, therefore,  would  be  positive  and  irreparable, 
without  the  intervention  of  a  Court  of  Equity  to  corn- 
There  are  various  ways  of  dissolving  a  partnership ;  effluxion  of  time  ;  the 
death  of  one  partner ;  the  banki-uptcy  of  one,  which  operates  like  death ; 
or,  as  in  this  instance,  a  dry,  naked  agreement,  that  the  partnership  shall 
be  dissolved.  In  no  one  of  these  cases  can  it  be  said,  that  to  all  intents 
and  purposes  the  partnership  is  dissolved ;  for  the  connection  still  remains 
until  the  affairs  are  wound  up.  The  representative  of  a  deceased  partner, 
or  the  assignees  of  a  bankrupt  partner,  are  not  strictly  partners  with  the 
survivor,  or  the  solvent  partner.  But  still,  in  either  of  those  cases,  that 
community  of  interest  remains  that  is  necessary,  until  the  affairs  are  wound 
up ;  and  that  requires,  that  what  was  partnership  property  before,  shall 
continue  for  the  purpose  of  a  distribution,  not  as  the  rights  of  the  creditors, 
but  as  the  rights  of  the  partners  tliemselves  require.  And  it  is  through  the 
operation  of  administering  the  equities,  as  between  the  partners  themselves, 
that  the  creditors  have  that  opportunity ;  as  in  the  case  of  death,  it  is  the 
equity  of  the  deceased  partner  that  enables  the  creditors  to  bring  forward 
the  distribution."     See  also  Gow  on  P.  c.  5,  §  2,  p.  235,  236,  3d  ed. 


528  PARTNERSHIP.  [CHAP.  XIV. 

pel  the  parties  to  do  that,  which  the  law  has  wisely 
allowed  without  compulsion,  or  to  appoint  a  receiver, 
who  should  perform  the  like  functions  in  a  slow,  and 
expensive,  and,  for  the  most  part,  a  less  active  and  skil- 
ful manner. 

§  328.  Hence  it  is  now  the  admitted  doctrine  of  the 
common  law,  that  although  the  dissolution  of  the  part- 
nership disables  any  one  of  the  partners  from  contract- 
ing new  debts,  or  buying  or  selling  or  pledging  goods 
on  account  of  the  firm,  in  the  course  of  the  former 
trade  thereof;  yet,  nevertheless,  it  leaves  every  part- 
ner in  possession  of  the  full  power  (unless,  indeed, 
upon  the  dissolution  it  has  been  exclusively  confided 
and  delegated  to  some  other  partner  or  person)  ^  to 
pay  and  collect  debts  due  to  the  partnership ;  ^  to  apply 
the  partnership  funds  and  effects  to  the  discharge  of 
their  own  debts ;  to  adjust  and  settle  the  unliquidated 
debts  of  the  partnership  ;  to  receive  any  property 
belonging  to  the  partnership ;  and  to  make  due  acquit- 
tances, discharges,  receipts,  and  acknowledgments  of 
their  acts  in  the  premises.^     For  all  these  acts,  if  done 

1  2  Bell,  Comm.  B.  7,  c.  2,  p.  643,  644,  5th  ed. ;  Gow  on  P.  c.  5,  §  1,  p. 
227,  228,  3d  ed. ;  Id.  c.  5,  §  3,  p.  305,  306. 

^  [And  the  insolvency  of  one  partner,  and  his  misapplication  of  the  funds 
collected,  will  not  affect  the  validity  of  a  bona  fide  payment  to  him  by  a 
debtor  of  the  firm.     Major  v.  Hawkes,  12  111.  298.] 

3  Coll.  on  P.  B.  1,  c.  2,  §  3,  p.  75 ;  Id.  B.  2,  c.  2,  §  8.  p.  130 ;  Id.  B. 
4,  c.  1,  p.  582-588,  2d  ed. ;  Fox  v.  Hanbury,  Cowp.  445 ;  [Ide  v.  Ingra- 
ham,  5  Gray,  106  ;  Milliken  v.  Loring,  37  Me.  408]  ;  Harvey  v.  Crickett,  5 
M.  &  S.  336 :  Woodbridge  v.  Swann,  4  B.  &  Ad.  633 ;  Smith  v.  Oriell,  1 
East,  368;  1  Mont,  on  P.  App.  Note  2  M.  p.  135 ;  2  Bell,  Comm.  B.  7,  c. 
2,  p.  643 ;  Id.  p.  637,  5th  ed. ;  Combs  v.  Boswell,  1  Dana,  473 ;  Murray  v. 
Mumford,  6  Cowen,  441 ;  [Gannett  v.  Cunningham,  34  Me.  56]  ;  Houser  v. 
Irvine,  3  Watts  &  S.  345 ;  [Robinson  v.  Taylor,  4  Penn.  St.  242]  ;  {§  339, 
341 ,  344 ;  Lind.  on  P.  332 ;  Butchart  v.  Dresser,  10  Hare,  453 ;  s.  c.  4 
De  G.  M.  &  G.  542 ;  Ptobbins  v.  Fuller,  24  X.  Y.  570 ;  Huntington  v. 
Potter,  32  Barb.  300;  Bass  v.  Taylor,  34  Miss.  342.  See  Ault  v.  Good- 
rich, 4  Russ.  430.  Xor  can  one  partner  by  notice  to  the  debtor  deprive  the 
other  partner  of  power  to  receive  payment,  after  dissolution,  of  a  debt  due 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  529 

hona  fide,  are  for  the  advancement  and  consummation 
of  the  great  objects  and  duties  of  the  partners  upon 

to  the  firm.  Granger  v.  McGilvra,  24  111.  152.  It  has  been  held  in  Penn- 
sylvania, that  after  dissolution  one  partner  has  power  to  borrow  money  to 
pay  the  debts  of  the  firm.  Estate  of  Davis  &  Desauque,  5  Whait.  530. 
On  the  power  of  a  partner  after  dissolution  to  bind  the  firm  bj'^  negotiable 
paper,  see  §  322  ante.}  In  Harvey  v.  Crickett,  5  M.  &  S.  336-344:,  the 
question  was  much  considered.  On  that  occasion,  Mr.  Justice  Bayley 
expounded  the  doctrine  in  the  following  manner:  "If  this  action  is  main- 
tainable, the  consequence  would  be,  that  after  an  act  of  bankruptcy  com- 
mitted by  one  partner,  the  partnership-house  must  immediately  be  closed. 
But  such  a  consequence  is  directly  contrary  to  the  cases  of  Fox  v.  Hanbury, 
and  Smith  v.  Oriell.  If  several  persons  enter  into  partnership,  either  for  a 
definite  or  an  indefinite  time,  each  partner  is  at  liberty  to  apply  the  joint 
funds  in  payment  of  the  partnership  debts ;  and  each  has  a  lien  on  those 
funds  for  his  own  indemnity,  limited  to  their  being  applied  to  the  payment 
of  partnership  debts.  When  one  of  several  partners  becomes  bankru23t,  he 
puts  himself  by  that  act  Out  of  the  partnership,  and  ceases  to  have  any 
further  control  over  the  partnership  property.  The  whole  of  his  rights 
pass  to  his  assignees.  But  this  does  not  prevent  the  remaining  partners 
from  exercising  the  control,  which  rests  with  them  over  the  property,  to 
take  care  that  it  is  duly  applied  in  liquidation  of  the  partnership  debts. 
If  this  wei'e  not  so,  in  what  a  situation  would  the  solvent  partners  be 
placed  .f*  For  if,  in  this  case,  a  creditor  had  applied  to  M.  B.  Harvey  for 
pajTnent  of  a  partnership  debt,  and  he  were  precluded  by  the  bankruptcy 
of  J.  W.  Harvey  from  paying  it,  the  consequence  would  be,  that  having 
funds  of  the  partnership  in  his  hands,  fully  sufficient  to  satisfy  the  demand, 
he  must,  nevertheless,  become  liable  to  arrest,  and  to  be  detained  in  prison. 
And  the  creditor  also  would  be  in  this  dilemma,  that,  having  funds  to  look 
to  for  the  discharge  of  his  debt,  he  could  not  obtain  payment,  because  he 
could  not  properly  receive  what  the  other  was  unable  to  pay.  The  solvent 
partner  would  say,  that  he  was  liable  to  account  with  the  assignees  of  the 
bankrupt  partner,  and  thus  leave  the  partnership  creditor  unpaid.  This 
seems  to  me  to  be  a  consequence,  the  inconvenience  of  which  is  sufliciently 
obvious.  It  is  argued,  that  a  distinction  is  to  be  made  in  the  ^iresent  case, 
because  both  M.  B.  Harvey  and  the  defendants  were  aware  of  the  act  of 
bankruptcy.  But  I  ask,  whether  this  was  not  a  hona  fide  payment  to  a 
person  who  is  entitled  to  receive  it  ?  If  it  were,  the  knowledge  which  they 
possessed  of  the  act  of  bankruptcy  does  not,  as  it  seems  to  me,  distinguish 
the  case  from  those  of  Fox  v.  Hanbury,  and  Smith  v.  Oriell.  In  Smith 
0.  Oriell,  Lord  Kenyon  considered  that  the  whole,  and  not  a  moiety  only, 
of  the  partnership  pi-operty,  delivered  by  the  solvent  partner  in  satisfaction 
of  a  partnership  debt,  passed  by  the  transfer."  The  other  Judges  con- 
curred in  his  views.  Mr.  Bell  (2  Bell,  Connn.  B.  7,  c.  2,  p.  643,  5th  ed.) 
has    summed   up   the   general    doctrine,    both   as   to    authority   and   prin- 

34 


530  PARTNERSHIP.  [cHAP.  XIV. 

the  dissolution,  to  wind  up  the  whole  partnership  con- 
cerns, and  to  divide  the  surplus,  if  any,  among  them, 

ciple,  in  the  following  terms.  "When  a  partnership  expires,  whether 
by  death,  or  by  lapse  of  time,  or  by  bankruptcy,  the  partnership  is 
considered,  in  one  sense,  as  determined,  but  in  a  sense  also  as  con- 
tinued, that  is,  continued,  till  all  the  affairs  are  settled.  After  this  no 
act  can  be  eifectually  done,  or  contract  entered  into,  in  the  name  of  the 
firm,  as  in  partnership ;  but  every  act  of  administration,  which  is  necessary 
for  winding  up  the  concern,  may  efiectually  be  done.  1.  A  receipt  to  a 
debtor  of  the  company,  by  the  signature  of  the  firm,  seems  to  be  valid,  if 
no  other  mode  of  settling  the  affairs  has  been  appointed  and  made  known. 
2.  If  by  the  dissolution  and  notice  the  debts  are  to  be  paid  to  a 
particular  person,  partner,  or  other  receiver,  no  other  can  validly  discharge 
the  debt ;  especially  if  there  be  any  evident  marks  of  collusion ;  as  paying 
by  an  offset  against  the  partner,  who  grants  the  I'eceipt.  3.  After  disso- 
lution, no  valid  draft,  acceptance,  or  indorsation,  can  be  made  by  the  firm ; 
and  it  is  no  authority  to  do  so,  if  one  partner  is  in  the  notice  empowered 
to  receive  and  -pay  the  debts  of  the  company.  The  indorsation,  draft,  or 
acceptance,  must  be  done  by  all  the  partners,  or  by  one  especially  em- 
2)owered  so  to  act  for  them.  4.  If  after  dissolution  a  partner  accept  a 
bill  in  the  name  of  the  company,  bearing  date  before  the  dissolution,  it  has 
been  held  in  England,  that  the  other  partners  are  not  bound.  But  a  dis- 
tinction has  been  taken,  where,  before  the  dissolution,  skeleton  or  blank  bills 
have  been  signed  by  the  firm,  and  those  are  filled  up  subsequently  to  the 
dissolution,  but  a  date  inserted  prior  to  the  dissolution ;  in  that  case  the  bill 
has  been  held  effectual  to  bind  the  partners.  Such  a  case  occurred  in  Scot- 
land, but  it  has  not  yet  been  decided,  in  which,  after  the  dissolution,  it  ap- 
peared that  certain  skeleton  bills,  which  the  company  had  been  in  use  of 
granting,  were  filled  up  and  antedated,  so  as  to  fall  within  the  period  of  part- 
nership." [On  the  other  hand,  in  Buckley  v.  Barber,  6  Exch.  164,  181,  1 
Eng.  L.  &  Eq.  506,  Baron  Parke  said :  "  In  our  law  this  rule  (of  the  civil 
law)  does  not  exist  with  respect  to  agents  of  deceased  principals;  and  with 
respect  to  surviving  partners,  though  there  are  expressions  of  text-writers 
(Story  on  P.  §  344  ;  3  Kent,  63),  and  also  of  judges  (Harvey  v.  Crickett,  5  M.  & 
S.  336  ;  Woodbridge  v.  Swann,  4  B.  &  Ad.  633  ;  Beak  v.  Beak,  3  Swans.  627  ; 
Lord  Nottingham's  MSS.,  and  1  Swans.  507,  note),  which  have  that  aspect, 
there  is  no  clear,  satisfactory  authority  that  the  surviving  jiartner  has  a  power, 
by  virtue  of  the  partnershiji  relation  onl}',  to  transfer  the  legal  title  to  the 
share  belonging  to  the  executors  of  the  deceased,  to  a  third  person,  leaving 
the  executors  to  pursue  their  remedy  against  the  survivor,  if  that  authority 
is  improperly  exercised.  It  is  clear  that  the  legal  title  to  the  share  of  the 
survivor  passes,  and  the  purchaser  therefore  is  at  all  events  tenant  in  common 
with  the  executor ;  and  as  the  law  allows  no  right  of  action  to  one  tenant  in 
common  against  another,  so  long  as  the  subject  of  the  tenancy  exists,  and  is 
capable  of  recaption,  that  circumstance  will  explain   all  the  decisions  on  the 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.         531 

after  all  debts  and  charges  are  extinguished.^  In  cases 
of  the  dissolution  of  a  partnership  by  the  death  of  one 
of  the  partners,  the  same  rights  and  duties  (as  we 
shall  presently  see)  attach  to  the  surviving  partners. 
The  survivors  are  entitled  to  close  up  the  affairs  of  the 
fii'm,  to  collect  and  adjust  the  debts  due  to  it,  and  to 
pay  its  debts  and  discharge  its  liabilities.  They  are 
also  bound  to  apply  the  partnership  property  to  the 
like  purposes  with  reasonable  diligence.  If  they  are 
negligent  in  the  discharge  of  their  duties  in  these 
particulars,  Courts  of  Equity  will  interfere,  and,  upon 
the  application  of  the  representatives  of  the  deceased 
partner,  appoint  a  receiver,  and  order  a  sale  of  the 
partnership  property,  and  wind  up  the  affairs  of  the 
firm.^ 

§  329.  And  here  is  seen  the  beneficial  operation  of 
the  jurisdiction  of  Courts  of  Equity.  AVhile  they  will 
protect  each  partner  in  the  due  exercise  of  these  rights 
and  authorities,  notwithstanding  a  dissolution  ;  they 
will,  on  the  other  hand,  watch  over  and  guard  the 
interests  of  the  partnership  itself,  and  take  care  that 

subject,  including  Harvey  v.  Crickett,  5  M.  &  S.  336  ;  see  Woodbridge  v. 
Swann,  4  B.  &  Ad.  633.  In  Harvey  v.  Crickett,  the  dicta  of  the  judges  go 
much  further;  probably  Mr.  Justice  Bayley  mistook  the  opinion  of  Lord 
Kenyon  in  Smith  v.  Oriell,  1  East,  368,  and  we  doubt  whether  surviving 
partners  have  a  power  to  sell,  and  give  a  good  legal  title  to  the  share  belong- 
ing to  the  executors  of  the  deceased  partner,  when  they  sell  in  order  to  pay 
the  debts  of  the  deceased  and  of  themselves ;  but,  be  that  as  it  may,  we  think 
it  clear,  that  the  survivors  could  have  no  power  to  dispose  of  it  otherwise 
than  to  pay  such  debts,  certainly  not  to  mortgage  that  share  together  with 
their  own  (for  that  is  the  real  nature  of  this  transaction),  as  a  security  for  a 
debt  principally  due  from  the  surviving  partners,  and  in  part  only  from  the 
deceased,  and  in  order  to  enable  them  to  continue  their  trade.  At  all  events, 
therefore,  this  transaction  was  not  within  the  scope  of  any  implied  authority 
which  the  surviving  partners  may  have,  to  wind  up  the  affairs  of  the  partner- 
ship ;  and  therefore  this  conveyance  did  not  pass  the  share  of  the  deceased  to 
the  plaintiiFs,  by  virtue  of  any  implied  authority  in  the  survivors."] 

'  Note,  Ibid. ;  [Drury  v.  Roberts,  2  Md.  Ch.  Dec.  157.] 

-  Ibid.  ;  Evans  v.  Evans,  9  Paige,  178 ;  post,  §  344. 


532  PARTNEKSHIP.  [CHAP.  XIV. 

he  shall  not,  by  any  misconduct,  or  abuse,  or  excess  in 
the  exercise  of  his  own  rights  and  authorities,  prejudice 
those  of  the  other  partners.  Hence,  Courts  of  Equity 
will  interfere  and  prohibit  and  control,  by  an  injunction, 
any  improper  sale  or  other  misapplication  of  the  funds 
of  the  partnership  by  any  partner  to  the  payment  of 
his  own  private  and  separate  debts.  So  they  will,  in 
like  manner,  prevent  him  from  subsequently  trading 
with  the  partnership  funds ;  or  from  interfering  injuri- 
ously with  the  settlement  of  the  partnership  affairs ;  or 
from  excluding  the  other  partners  from  their  just  share 
of  the  management  thereof ;  ^  or  from  doing  any  other 
act,  or  making  any  use  of  the  property  of  the  partner- 
ship, inconsistent  with  the  purpose  of  winding  up  the 
concerns  thereof,  in  the  manner  most  beneficial  to  all 

>  Gow  on  P.  c.  5,  §  2,  p.  231,  232,  3d  ed. ;  Harding  v.  Glover,  18  Ves. 
281 ;  Crawshay  v.  Maule,  1  Swans.  495,  507  ;  Heathcote  v.  Hulme,  1  Jac.  & 
W.  122,  128 ;  Wilson  v.  Greenwood,  1  Swans.  471 ;  Dacier.  John,  1  McCle. 
206  ;  s.  c.  13  Price,  446 ;  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  235 ;  Id.  B.  4,  c.  1, 
p.  579,  587,  509,  2d  ed. ;  De  Tastet  v.  Bordenave,  Jac.  516;  1  Story,  Eq. 
Jur.  §  671;  Allen  v.  Kilbre,  4  Madd.  464;  {Deveau  v.  Fowler,  2  Paige, 
400.  See  §  99,  100,  344.  In  Davis  v.  Amer,  3  Drew,  64,  and  Marshall  v. 
Watson,  25  Beav.  501,  an  injunction  was  refused.}  — Mr.  Collyer  (Coll.  on 
P.  B.  2,  c.  3,  §  7,  p.  245,  note  b)  seems  to  think,  that  a  Court  of  Equity 
would  refuse  an  injunction  to  restrain  the  use  of  the  partnership  name  by 
one  partner  after  a  dissolution  ;  and  he  founds  himself  upon  the  doctrine  of 
Lord  Thurlow,  in  Ryan  v.  Mackmath,  3  Bro.  C.  C.  15,  that  a  Court  of  Eq- 
uity would  not  decree  a  written  instrument  to  be  delivered  up  and  cancelled 
upon  which  no  action  could  be  maintained  at  law.  Lord  Thurlow's  opinion 
upon  the  general  doctrine  seems  now  abandoned ;  aud  the  contrary  rule,  as 
to  written  instruments,  generally  established.  See  Mr.  Belt's  note  (1)  to  3 
Bro.  C.  C.  15  ;  2  Story,  Eq.  Jur.  §  699-702,  and  the  cases  there  cited.  But, 
as  between  partners,  the  doctrine  of  Lord  Thurlow  would  seem  (even  if  it 
were  admissible  in  common  cases)  to  be  unsatisfactory,  and  inconsistent 
with  sound  principles  ;  for  every  such  use  of  the  partnership  name  after  the 
dissolution  may  expose  the  other  partners  to  the  hazard  of  a  suit  at  law,  and 
perhaps  to  a  recovery  against  them,  where  actual  knowledge  of  the  disso- 
lution could  not  be  brought  home  to  the  holder,  if  it  be  a  negotiable  instru- 
ment. But  see  Webster  v.  Webster,  3  Swans.  490,  note,  and  Lewis  v. 
Langdon,  7  Sim,  421.  See  also  ante,  §  224-227.  {Ante,  §  99,  100  ;  Chur- 
ton  I'.  Douglas,  H.  R.  V.  Johns.  174.} 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  533 

the  parties.^  If  any  partner  has,  after  the  dissohition, 
misapplied  the  partnership  funds,  and  made  profits 
thereby,  he  will  be  made  accountable  for  all  such 
profits ;  but  the  losses,  if  any,  must  be  borne  by  him- 
self.^ 

§  330.  If  it  shall  become  expedient  and  proper 
more  efi"ectually  to  attain  any  or  all  of  these  purposes, 
Courts  of  Equity  will  appoint  a  manager  or  receiver 
to  collect  the  partnership  funds,  and  wind  up  the  whole 
concern  in  the  manner  most  beneficial  to  all  the  par- 
ties, either  exclusive  of  all  the  partners,  or  by  making 
one  or  more  of  them  the  exclusive  managers  or  receiv- 
ers. To  induce  Courts  of  Equity,  however,  to  interfere 
m  this  last  strong  and  summary  manner,  some  fraud- 
ulent breach  of  contract  or  duty  must  be  shown,  or 
some  urgent  and  pressing  necessity.^ 

^  Crawshay  ij.  Maule,  1  Swans.  495,  507 ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p. 
130,  2d  ed. 

2  Ante,  §  174,  233  ;  {post,  §349} ;  Heatlicote  r.  Hulme,  1  Jac.  &  W.  122, 
128  ;  Stougliton  v.  Lynch,  1  Johns.  Ch.  467,  469,  471  ;  Crawshay  v.  Collins, 
15  Ves.  218;  Gow  on  P.  c.  5,  §  4,  p.  354,  3d  ed. ;  Brown  v.  Litton,  1  P. 
Wms.  140 ;  Brown  v.  De  Tastet,  Jac.  284  ;  1  Valin,  Comm.  Lib.  2,  tit.  8,  art. 
5,  p.  578,  ed.  1766  ;  Willett  v.  Blanford,  1  Hare,  253,  263.  {Post,  §  331,  341, 
343,.  349;  Lind.  on  P.  830.  See  Watney  v.  Wells,  Law  Rep.  2  Ch.  250.} 
[But  if  the  partners  of  a  solvent  partnership  agree  to  dissolve  and  divide 
their  joint  property,  and  to  own  their  respective  parts  in  severalty,  neither 
has  any  remedy  in  equity  against  the  other,  and  no  lien  on  the  other  part- 
ner, because  of  his  liability  for  the  debts  of  the  fii'm,  or  his  payment  of 
them.  Holmes  v.  Hawes,  8  Ired.  Eq.  21 ;  Lingen  v.  SimiDSon,  1  Sim.  &  St. 
600 ;  Hickerson  v.  McFaddin,  1  Swan,  258.] 

3  Gow  on  P.  c.  2,  §  4,  p.  114;  Id.  c.  5,  §  2,  p.  231,  232,  3d  ed. ;  Hard- 
ing i\  Glover,  18  Ves.  281 ;  Crawshay  v.  Maule,  1  Swans.  495,  507  ;  Heathcote 
V.  Hulme,  1  Jac.  &  W.  122, 128 ;  Wilson  v.  Greenwood,  1  Swans.  471 ;  Dacie  v. 
John,  McCle.  206 ;  De  Tastet  v.  Bordenave,  Jac.  516  ;  Coll.  on  P.  B. 
2,  c.  3,  §  6,  p.  240-244;  Id.  B.  4,  c.  1,  §  2,  p.  579,  587,  588,  2d  ed. ;  1 
Story,  Eq.  Jur.  §  672  ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  645,  5th  ed.;  ante,  §  228, 
229,  231.  {Lind.  on  P.  852  ;  post,  §  344  ;  Roberts  v.  Eberhardt,  Kay,  148  ; 
Sheppard  v.  Oxenford,  1  Kay  &  J.  491  ;  Blakeney  r.  Dufaur,  15  Beav.  40; 
Davis  V.  Amer,  3  Drew,  64 ;  Evans  v.  Coventry,  3  Drew,  75 ;  s.  c.  5  De  G. 
M.  &  G.  911  ;  AValker  v.  Trott,  4  Edw.  Ch.  38  ;  Drury  v.  Roberts,  2  Md. 
Ch.  157  ;  Speights  v.  Peters,  9  Gill,  472  ;  Chancellor  Walworth  held  in  Law 


534  PARTNERSHIP.  [CHAP.  XIV. 

§  331.  Courts  of  Equity  proceed  still  further  in  the 
enforcement  of  their  principles.  If  any  partner,  after 
the  dissolution,  should  make  any  composition  of  the 
debts  due  to  or  from  the  partnership,  he  will  not  be  at 
liberty  to  avail  himself  of  any  private  benefit  there- 
from, but  it  will  properly  belong  to  the  partnership ; 
for  whatever  act  he  does,  it  is  his  duty  to  perform  it 
not  for  his  own  personal  advantage,  but  for  the  utmost 
advantage  of  the  concern.^  Hence,  also,  if,  under  an 
agreement  for  a  lease  for  the  partnership,  one  partner, 
after  the  dissolution  of  the  partnership,  should  obtain 
the  lease  in  his  own  name,  he  will  be  restrained  from 
disposing  of  it  otherwise  than  for  partnership  pur- 
poses.^ So  fixed,  indeed,  is  this  duty  still  to  continue 
to  act  for  the  benefit  of  the  partnership,  that  no  partner 
is  allowed  to  claim  any  particular  reward  or  compen- 
sation for  his  trouble  or  services,  in  thus  assisting  in 
the  arrangement  and  winding  up  of  the  concerns 
thereof,  unless  it  be  specially  stipulated.^ 

V.  Ford,  2  Paige,  310 ;  and  Marten  v.  Van  Schaick,  4  Paige,  379,  that  on  a 
disagreement  between  partnei-s  a  receiver  -would  be  appointed  of  course,  and 
these  cases  have  been  approved  in  Whitman  v.  Robinson,  21  Md.  30,  but  the 
courts  of  New  Jersey  have  declined  to  follow  them.  Rentonu.  Chaplain,  1 
Stock.  62  ;  Birdsall  v.  Colie,  2  Stock.  63.  Wilson  v.  Fitchter,  3  Stock.  71  ; 
Cox  V.  Peters,  2  Beasl.  39.  See  Gowan  v.  Jeffries,  2  Ashm.  296.  In  Hale 
V.  Hale,  4  Beav.  369,  on  a  bill  for  the  dissolution  of  a  partnership  between 
brewers,  there  was  no  charge  of  misconduct,  but  the  defendant  denied  that 
the  plaintiff  who  was  a  clergyman  could  lawfully  be  a  partner  in  such  a  busi- 
ness, a  receiver  was  appointed. } 

>  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  130,  2d  ed. ;  Beak  v.  Beak,  3  Swans.  627  ; 
1  Story,  Eq.  Jur.  §  316 ;  Gow  on  P.  c.  6,  §  2,  p.  255 ;  Crawshay  v.  Collins, 
15  Ves.  218,  229  ;  Beak  v.  Beak,  Rep.  Temp.  Finch,  190 ;  ante,  §  174-186  ; 
{ ante,  §  329 ;  post,  §  343, 349  ;  Lees  v.  Laforest,  14  Beav.  250 ;  Perens  v.  John- 
son, 3  Sm.  &  G.  419.} 

^  Coll.  on  P.  B.  2,  c.  3,  §  5,  p.  235,  2d  ed. ;  Aiders.  Fouracre,  3  Swans. 
489  ;  Elliot  v.  [Brown,  3  Swans.  489,  note ;  Gow  on  P.  c.  5,  §  4,  p.  349,  3d 
ed. ;  ante,  §  174-186  ;  {Clegg  v.  Fishwick,  1  Macn.  &  G.  294;  Clements  v. 
Hall,  24  Beav.  333  ;  s.  c.  2  De  G.  &  J.  173 ;  Washburn  v.  Goodman,  17  Pick. 
519;  Leach  ».  Leach,  18  Pick.  68.} 

'  Ante,  §  182 ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  130,  2d  ed. ;  Id.  B.  2,  c.  2, 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  535 

§  332.  The  French  law  has,  to  a  certain,  but  not  to 
the  full  extent,  adopted  these  doctrines  of  the  common 
law.  It  treats  the  dissolution  of  the  partnership,  in 
whatever  way  it  may  happen,  when  brought  to  the 
knowledge  of  the  partners,  as  a  virtual  determination 
of  their  powers  to  act  for  the  partnership  in  any  future 
operations ;  unless,  indeed,  so  far  as  may  be  necessary 
to  complete  acts  and  concerns  already  entered  into  on 
account  of  the  partnership,  but  incomplete  and  in  pro- 
gress at  the  time  of  the  dissolution.  These  are  treated 
as  matters  of  positive  and  indispensable  obligation; 
and  they,  therefore,  may  be  finished  by  the  same  part- 
ner who  was  authorized  to  begin  and  complete  them.^ 
And  this  is  but  following  out  the  precept  of  the  Ro- 
man law,  which  required,  in  such  cases,  where  the 
dissolution  was  occasioned  by  the  death  of  one  partner, 
that  the  business  begun  by  him  should  be  completed 
by   his    heir.      Heres   socii,    quamvis    socius  non   est, 

§  2,  p.  151 ;  Heathcote  v.  Hulme,  1  Jac.  &  W.  122  ;  Whittle  v.  M'Farlane, 
1  Knapp,  311.  —  On  tbis  last  occasion  (which  was  an  appeal  from  Jamaica) 
the  Master  of  the  Rolls  (Sir  John  Leach)  said :  "  It  is  impossible  to  main- 
tain the  charge  for  commission,  because  it  is  in  truth  a  charge  by  a  partner 
for  the  collection  of  a  partnership  debt.  How  can  a  partner  charge  com- 
mission against  a  partner  for  the  collection  of  a  partnership  debt,  in  which 
both  of  them  are  interested  ?  It  is  a  misapprehension  entirely,  and  there 
does  not  appear  any  pretence  for  saying  that  there  is  any  local  usage  in  the 
island  to  sanction  such  a  charge.  If  commission  cannot  be  charged,  of 
course  interest  upon  commission  cannot  be  charged.  The  Court  will,  there- 
fore, refer  it  back  to  the  Court  below,  with  a  declaration,  that  no  commis- 
sion could  be  charged,  either  for  the  collection  of  the  debts  of  first  or 
second  partnership."  See  also  Franklin  v.  Robinson,  1  Johns.  Ch.  157; 
Bradford  v.  Kimberly,  3  Johns.  Ch.  431  ;  Thornton  v.  Proctor,  1  Anst. 
94 ;  Burden  v.  Burden,  1  Ves.  &  B.  170 ;  Caldwell  v.  Leiber,  7  Paige,  483 ; 
{Stocken  v.  Dawson,  6  Beav.  371;  Lyman  v.  Lyman,  2  Paine,  C.  C.  11; 
Washburn  v.  Goodman,  17  Pick.  519;  Bradley  v.  Chamberlin,  16  Vt.  613; 
Dougherty  v.  Van  Nostrand,  Hoff.  68 ;  Beatty  v.  AVray,  19  Penn.  St. 
516.  See  Newell  v.  Humphrey,  37  Vt.  265;  Porter  v.  Wheeler,  Id. 
28L} 

'  Poth.  de  Soc.  n.  155,  156. 


536  PARTNERSHIP.  [CHAP.  XIV. 

tamen  ed,  quce  per  defundum  inchoata  sunt,  2Der  heredem 
explicari  debent} 

§  333.  But  in  other  respects  the  French  law  does 
not  seem  to  have  followed  out  this  just  policy,  and 
these  enlarged  principles  of  the  common  law,  as  to 
the  rights  of  the  partner  upon  the  dissolution  of  the 
partnership.  On  the  contrary,  it  seems  silently,  if 
not  submissively,  to  have  followed  out  the  dictates  of 
the  E-oman  law  on  the  subject  of  mandates  or  agency, 
and  the  powers  of  partners  ;  ^  so  that  the  dissolution 
of  the  partnership,  in  any  manner  whatsoever,  is  held 
to  amount  to  a  revocation  of  the  implied  powers  and 
authorities  of  each  partner,  any  further  to  admin- 
ister the  concerns  of  the  partnership,  as  the  delegate 
or  agent  of  the  others.  Accordingly,  Pothier  lays  it 
down  as  clear,  that,  immediately  after  notice  of  the 
dissolution  of  the  partnership,  the  power  of  each  part- 
ner to  act  as  the  administrator  thereof  ceases ;  and 
even  a  payment  to  one  partner  of  the  debts  due  to  the 
partnership  will  be  invalid,  if  the  debtors  have  notice 
of  the  fact  of  the  dissolution  at  the  time  of  such  pay- 
ment.^ Nay,  the  doctrine  is  pressed  further ;  and  if 
the  partnership  expires  by  its  own  limitation,  or  by 
mere  efflux  of  time,  the  like  payment  will  be  invalid, 
even  without  such  notice  ;  because  (it  is  said)  those, 
who  have  any  business  with  a  partnership,  ought  to 
inform  themselves  of  the  tenure  or  duration  of  that 
partnership.'*  So  that,  in  fact,  from  the  time  of  the 
dissolution,  the  partners  become  tenants  in  common 
of  the  property   engaged    in   the   partnership  ;   and  if 

'  D.  17,  2,  40;  Poth.  Pand.  17,  2,  n.  59. 

2  Ante,  §  95,  102,  109,  and  note ;  Story  on  Ag.  §  425-429 ;  Potb.  de 
Soc.  n.  156,  157. 

3  Poth.  de  Soc.  n.  157 ;  Id.  n.  155,  156. 
*  Poth.  de  Soc.  n.  157. 


CHAP.  XIV. 1       DISSOLUTION RIGHTS    OF    PARTNERS.  537 

% 

the  whole  belonged  to  one,  he  is  forthwith  entitled  to 
the  whole  profits  and  proceeds  thereof.^  They  can  no 
longer  proceed  to  administer  the  same  separately ;  and 
all  that  they  can  do  is  to  require  either  an  amicable 
and  voluntary  adjustment,  and  settlement,  and  division 
of  the  partnership  concerns  ;  or,  in  default  thereof,  to 
apply  to  the  proper  tribunal  for  that  remedial  justice 
which  is  required  to  accomplish  the  same  purpose. 
Each,  therefore,  has  in  effect  an  action  or  suit,  like  that 
of  the  Roman  action,  P7'0  socio,  or  the  Roman  action, 
Communi  dividundo.^  Indeed,  as  we  have  seen,  the 
Roman  law  did  not,  during  the  continuance  of  the 
partnership,  clothe  any  partner,  unless  the  power  was 
specially  delegated  to  him,  with  the  power  to  adminis- 
ter the  entire  concerns  and  business  of  the  partnership, 
or  with  any  power  to  dispose  of  any  part  of  the  prop- 
erty thereof,  except  his  own  particular  share.^ 

§  334.  The  foregoing  considerations  apply  to  the 
effects  and  consequences,  as  between  the  partners 
themselves,  of  a  voluntary  dissolution  by  their  own 
mere  act  or  will,  or  in  conformity  to  their  original 
stipulations.  Let  us,  then,  in  the  next  place,  proceed 
to  consider  the  effects  and  consequences  of  such  a  dis- 
solution in  relation  to  third  persons.  And,  here,  the 
preceding  statements,  respecting  the  liabilities  of  part- 
ners to  third  persons,'^  will  greatly  abridge  whatever 
might  otherwise  have  been  appropriate  in  this  place. 
In  the  first  place,  the  dissolution  of  a  partnership, 
whether  it  be  by  the  voluntary  act  or  will  of  the  par- 
ties, or   by  the    retirement  of  a  partner,  or  by  mere 

1  Poth.  de  Soc.  n.  158,  160;  Civil  Code  of  France,  art.  1865,  1872. 
^  Poth.  de  Soc.    n.  161-180 ;  Civil  Code  of  France,  art.   1872 ;    ante, 
§  223,  230. 

3  Ante,  §  95,  102,  109,  and  note ;  Story  on  Ag.  §  425-429. 
*  Ante,  §  126-168. 


538  PARTNERSHIP.  [CHAP.  XIV. 

efflux  of  time,  will  not  in  any  manner  change  the 
rights  of  third  persons,  as  to  any  past  contracts  and 
transactions  with,  or  on  account  of  the  firm ;  but  their 
obligation  and  efficacy  and  validity  will  remain  the 
same,  and  be  binding  upon  the  partnership  in  the 
same  manner,  as  if  no  dissolution  had  taken  place. ^ 
In  the  next  place,  such  a  dissolution  will  not  absolve 
the  partners  from  liabilities  to  third  persons,  for  the 
future  transactions  of  any  partners,  acting  for  or  on 
account  of  the  firm,  unless  some  one  or  more  of  the 
following  circumstances  occur.  (1.)  That  the  third 
persons  dealing  with,  or  on  account  of  the  firm,  have 
due  notice  of  the  dissolution ;  ^  or,  (2.)  That  they  have 
had  no  transactions  whatsoever  with  the  firm  until 
after  the  dissolution;^  or,  (3.)  That  the  partnership 
was  not  general,  but  limited  to  a  particular  purchase, 
adventure,  or  voyage,  and  terminated  therewith  before 
the  transaction  took  place ;  ■*  or,  (4.)  That  the  new 
transaction  is  not  within  the  scope  and  business  of 
the  original  partnership ;  ^  or,  (5.)  That  it  is  illegal, 
or  fraudulent,  or  otherwise  void  from  its  defective  na- 
ture or  character ;  ^  or,  (6.)  That  the  partner,  sought 
to  be  charged,  is  a  dormant  partner,  to  whom  no  credit 
was  actually  given,  and  who  retired  before  the  transac- 
tion took  place.''' 

'  Coll.  on  p.  B.  1,  c.  2,  §  3,  p.  75,  2cl  ed. ;  Ault  v.  Goodrich,  4  Russ. 
430  ;  Gow  on  P.  c.  5,  §  2,  p.  240,  241,  3d  ed. 

2  Ante,  §  160-164 ;  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  74,  2d  ed. ;  2  Bell, 
Coram.  B.  7,  c.  2,  p.  638-640,  5th  ed. ;  Gow  on  P.  c.  1,  p.  20;  Id.  c.  5, 
§  2,  p.  240,  248-251,  3d  ed. ;  Wats,  on  P.  c.  7,  p.  384,  385,  2d  ed. ;  Na- 
tional Bank  v.  Norton,  1  Hill,  (N.  Y.)  572  ;  [Conro  v.  Port  Henry  Iron  Co. 
12  Barb.  27.] 

*  Ante,  §  160,  161.  But  see  2  Bell,  Coram.  B.  7,  c.  2,  p.  641,  642,  5th 
ed.     See,  also.  Parkin  v.  Carruthers,  3  Esp.  248. 

*  Ante,  §  280,  321-323.  '  Ante,  §  126-128,  130. 
«  Ante,  §  130-132 ;  Id.  §  6. 

'  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  74,  2d  ed. ;  Id.  B.  3,  c.  3,  §  3,  p.  370, 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  539 

S  335.  The  same  rule  as  to  the  necessity  of  notice 
is  adopted  in  the  French  law.  And  accordingly  Pothier 
says,  that  if  traders  and  artisans,  who  have  been  accus- 
tomed to  furnish  supplies  to  a  partnership,  continue,  in 
good  faith,  after  the  dissolution  of  the  partnership,  of 
which  they  are  ignorant,  to  furnish  the  like  supplies  to 
one  of  the  partners  on  account  of  the  partnership,  all 
of  the  partners  and  their  heirs  will  be  bound  therefor.^ 
It  is  observable,  that  Pothier  puts,  by  implication,  the 
very  qualification  which  is  insisted  on  in  the  preceding 
section  ;  for  he  confines  the  liability  to  the  cases  of  per- 
sons, who  had,  before  the  dissolution,  been  accustomed 
to  deal  with  the  partnership.  The  same  result,  how- 
ever, would  probably  arise  in  all  cases,  where,  notwith- 
standing the  dissolution,  the  partners  should  still  hold 
themselves  out  as  partners,  either  expressly,  or  by 
allowing  their  names  to  stand  openly  as  a  part  of  the 
firm.^ 

§  336.  In  respect  to  the  necessity  of  such  a  notice, 
the  cases  of  a  voluntary  dissolution  of  the  partnership, 
in  any  of  the  ways  above  mentioned,  diff"er  essentially 
from  the  cases  of  a  dissolution  by  the  death,  or  the 
bankruptcy  (duly  declared  by  public  proceedings),  of 
one  or  more  of  the  partners  ;  for,  in  these  latter  cases, 
no  notice  whatsoever  is  necessary  to  be  given  of  the 
dissolution  to  third  persons,  in  order  to  exempt  their 
estates  from  all  responsibility  for  the  acts  and  contracts 
of  the  other  partners ;  since  the  partnership  is  thereby 
dissolved    by    mere    operation    of    law.^     The    reason 

371 ;  Evans  v.  Drummond,  4  Esp.  89 ;  Brooke  v.  Enderby,  2  Brod.  &  B. 
70:  Heath  v.  Sansom,  4  B.  &  Ad.  172;  Gow  on  P.  c.  4,  §  2,  p.  251,  3d 
ed. ;  ante,  §  159. 

>  Poth.  de  Soc.  n.  157. 

-  Ante,  §  ICO,  161;  Williams  v.  Keats,  2  Stark.  290;  Parkin  v.  Car- 
ruthers,  3  Esp.  248. 

»  Coll.  on  P.  B.  1,  c.  2,  §  2,  p.  74;  Id.  B.  3,  c.  3,  §  4,  p.  419,  2d  ed. 


540  PARTNERSHIP.  [CHAP.  XIV. 

seems  to  be,  that  the  parties  are  thereby  either  totally 
incapable  of  acting  at  all,  or  at  least  of  binding  their 
estates  ;  and  it  is  against  public  policy  to  allow  the 
acts  of  the  other  partners  to  bind  any  persons,  who  are 
incapable  either  of  acting  at  all,  or  of  continuing  any 
authority  for  such  a  purpose,  or  whose  estates  may 
otherwise  be  subjected  to  irreparable  injury,  or  even  to 
ruin.  The  same  principle  would  probably  be  held  to 
apply  to  other  cases,  creating  by  mere  operation  of  law 
a  positive  incapacity  ;  such  as  the  marriage  of  a  female 
partner,  or  the  attainder  of  a  partner  of  felony,^  or 
the  dissolution  of  the  partnership  by  a  public  war.^ 

§  337.  With  these  brief  remarks,  w^e  may  dismiss  the 
consideration  of  the  effects  and  consequences  of  a  disso- 
lution of  the  partnership  by  the  voluntary  acts  or  stip- 
ulations of  the  partners,  and  may,  in  the  next  place, 
proceed  to  the  consideration  thereof  in  cases  of  bank- 
ruptcy.^    Bankruptcy   (as  we  have  seen)  puts  an   end 

Vullianiy  v.  Noble,  3  Mer.  593,  614;  2  Bell,  Comm.  B.  7,  c.  2,  p.  638,  639, 
5th  ed. ;  Gow  on  P.  c.  5,  §  2,  p.  248 ;  Id.  c.  5,  §  4,  p.  348,  3d  ed, ;  ante,  §  162. 
—  Perhaps,  in  the  case  of  bankruptcy,  the  reason  why  notice  is  not  positively 
required  to  be  given  after  the  declaration  of  the  bankruptcy,  is  its  supposed 
notoriety,  and  that  all  the  world  are  bound  to  take  notice  of  it.  Certainly 
there  is  no  pretence  to  say,  that  a  mere  secret  act  of  bankruptcy,  upon 
which  no  public  proceedings  have  been  or  can  now  be  had,  will  produce 
the  like  effect,  unless  notice  be  given.  See  Lacy  v.  Woolcott,  2  Dow.  & 
R.  458.  See  ante,  §  313;  2  Bell,  Comm.  B.  7,  c.  2,  p.  641,  5th  ed. ;  Gow 
on  P.  c.  5,  §  3,  p.  306,  8d  ed. ;  Thomason  v.  Frere,  10  East,  418 ;  Franklin 
V.  Lord  Brownlow,  14  Ves.  550,  557,  558 ;  {ante,  §  319 ;  post,  §  343 ;  per  Big- 
elow,  C.  J.,  in  Marlett  v.  Jackman,  3  All.  287,  296  :  "  The  true  distinction 
is  not  that  no  notice  is  requisite  when  the  dissolution  takes  place  by  opera- 
tion of  law,  but  only  when  it  is  effected  by  circumstances  or  an  event  of 
a  public  or  notorious  nature,  of  which  all  men  in  the  exercise  of  due  dili- 
gence are  required  to  take  notice."} 

'  .Ante,  §  303,  306. 

"  Griswold  V.  Waddington,  15  Johns.  57 ;  s.  c  16  Johns.  438 ;  ante, 
§  .303,  304,  306,  315. 

^  It  is  not  within  the  scope  or  objects  of  these  Commentaries  to  treat  of 
the  various  topi('s  connected  with  the  issuing  of  the  commission  in  bank- 
ruptcy, tlie  proof  of  debts,  and  other  proceedings  thereon.     They  properly 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTJSERS.  541 

to  the  partnership  by  operation  of  law,  and  immedi- 
ately, upon  the  due  declaration  thereof,  by  relation 
back  from  the  time  when  the  act  of  bankruptcy  was 
committed.^  From  that  period,  therefore,  the  bankrupt 
ceases  *to  have  any  power  or  dominion  over  his  prop- 
erty and  effects  in  the  partnership ;  and  it  is  trans- 
ferred to  the  assignees,  who  are  appointed  under  the 
commission,  and  tliey  succeed  to  all  his  rights  and 
interests  therein.^  From  the  same  period  also  the  as- 
signees are  deemed  tenants  in  common  with  the  other 
partners  in  all  such  property  and  effects,  subject  to  the 
rights  and  claims  of  the  other  partners.^ 

§  338.  Another  consequence,  flowing  directly  from 
the  preceding  considerations,  is,  that  all  future  actions 
at  law,  to  be  brought  on  account  of  the  partnership 
property,  or  contracts,  or  rights,  must  be  brought 
jointly  in  the  names  of  the  solvent  partners,  and  the 
assignees  of  the  bankrupt,  who  succeed  equally  to  his 
rights  of  action,  as  well  as  to  his  rights  of  property  ; 
for  the  assignment  not  only  transfers  the  property  of 
the  bankrupt,  but  also  all  his  rights  of  action,  to  the 

belong  to  a  different  Treatise,  upon  the  practice  in  bankruptcy.  The  dis- 
cussion of  the  subject  of  joint  and  several  commissions  in  bankruptcy,  and 
the  proceedings  thereon,  seems  also  properly  to  belong  to  sitch  a  Treatise. 
Those  who  wish  for  more  information  thereon,  can  consult  Coll.  on  P.  B.  4, 
c.  2,  §  1-11,  p.  595-678,  2d  ed.,and  Id.  B.  4,  c.  3,  §  1-8,  p.  686-718,  and 
Gow  on  P.  c.  5,  §  3,  p.  256-348,  3d  ed. ;  {also  Avery  &  Hobbs  on  the 
U.  S.  Bankrupt  Law,  §  36.} 

»  Ante,  §  313,  314;  Gow  on  P.  c.  5,  §  1,  p.  227,  228,  3d  ed. ;  Id.  c.  5, 
§3,  p.  305-307;  Coll.  on  P.  B.  4,  c.  1,  p.  590,  591,  2d  ed. ;  Barker  v. 
Goodair,  11  Ves.  78;  Dutton  v.  Morrison,  17  Ves.  193;  la  re  Wait,  1  Jac. 
&W.  605;  Thomason  v.  Frere,  10  East,  418.  {By  the  U.  S.  Bankrupt 
Law  of  1867,  §  14,  the  assignment  relates  back  only  to  the  conmiencement 
of  the  proceedings  in  bankruptcy. } 

-  Ante,  §313,  314;  3  Kent,  58;  Gow  on  P.  c.  5,  §  1,  p.  227,  228,  3d  ed. ; 
Id.  c.  5,  §  3,  p.  298,  299 ;  Thomason  v.  Frere,  10  East,  418. 

3  Ante,  §  313,  314;  3  Kent,  bS,  59;  Gow  on  P.  c.  5,  §  3,  p.  266,  267, 
3d  ed. ;  Id.  c.  5,  §  3,  p.  299,  305 ;  Coll.  on  P.  B.  4,  c.  1,  p.  579,  580,  2d 
ed. ;  Holderness  v.  Shackels,  8  B.  &  C.  612. 


542  PARTNERSHIP.  [cHAP.  XIV. 

assignees.^  On  the .  other  hand,  all  actions  at  law  by 
third  persons  against  the  partnership,  may  be,  and, 
indeed,  ordinarily  should  be,  brought  against  all  the 
partners,  including  the  bankrupt ;  and  the  assignees 
should  not  in  general  be  made  parties  thereto,  since  they 
are  not  liable  thereto,  but  are  to  account  only  under  the 
proceedings  in  bankruptcy.^  The  case  may  be,  and 
often  is,  very  different  in  suits  in  equity,  brought  by 
or  against  the  assignees.^ 

§  339.  On  the  other  hand,  from  the  time  of  the  act 
of  bankruptcy,  and  by  relation  thereto,  the  bankrupt 
becomes  incapable  of  acting  for,  or  binding  the  part- 
nership by  his  acts  ;  and  in  a  general  sense,  and  with 
few  exceptions,  all  his  acts  become  from  henceforth 
void  and  inoperative.  He  cannot  in  any  manner  sell, 
or  otherwise  dispose  of  the  partnership  effects ;  he 
cannot  contract  debts  or  other  engagements,  binding 
on  the  partnership  ;  and  he  cannot  compel  any  pay- 
ments to  the  firm,  or  give  any  receipt  or  release  there- 
for.^    In   respect   to    the    other    solvent    partners,  they 

1  Gow  on  P.  c.  5,  §  3,  p.  341,  342,  3d  ed. ;  CoU.  on  P.  B.  3,  c.  5,  §  1, 
p.  471 ;  Id.  B.  4,  c.  1,  p.  579 ;  Id.  B.  4,  c.  5,  p.  696,  697,  701,  702,  2d  ed. 
Thomason  v.  Frere,   10  East,  418 ;  Graham  v.  Robertson,  2  T.  'R.  282 
Franklin  v.  Lord  Brownlow,  14  Ves.  557  ;  1  Chitty  on  PL  p.  27,  28,  6th  ed. 
Com.  Dig.  Banh-upt,  D.  29 ;    {U.  S.  Bankrupt  Act  of  1867,  §  16.} 

2  1  Chitty  on  PI.  p.  62,  63,  6th  ed. ;  Id.  p.  104 ;  Id.  p.  176 ;  Wats,  on 
P.  c.  8,  p.  434,  2d  ed. 

'  See  Story,  Eq.  PI.  §  153-158,  439  ;  Cook's  Bankrupt  Law,  Vol.  1,  c.  14, 
§  1-3,  p.  553-561,  4th  ed. ;  Gow  on  P.  c.  5,  §  4,  p.  352,  3d  ed. ;  Bailey  v. 
Vincent,  5  Madd.  48. — The  full  considei-ation  of  this  subject  properly  be- 
longs to  a  Treatise  on  Pleading,  and  is  therefore  omitted  in  this  place. 

*  Ante,  §  313,  314;  Gow  on  P.  c.  5,  §  1,  p.  227,  228,  3d  ed. ;  Id.  c.  5, 
§3,  p.  299,  304-306;  Coll.  on  P.  B.  4,  c.  1,  p.  589,  590,  2d  ed.  — ]Mr. 
Gow  has  very  well  stated  the  general  doctrine,  and  cited  some  cases  to 
illustrate  it.  "  We  have  seen,"  says  he,  "  in  a  former  part  of  this  work,  that 
an  act  of  bankruptcy  committed  by  one  partner,  when  followed  by  a  com- 
mission, dissolves  the  partnership  by  relation  to  the  time  when  the  act  of 
bankruptcy  was  committed.  The  partner,  therefore,  who  has  committed 
the  act  ol"  bankruptcy,  cannot  afterwards  communicate  to   strangers  any 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  543 

also  are,  by  the  bankruptcy,  disabled  from  engaging 
in  any  new  dealings  in  future  on  account  of  the  part- 
nership.^    But  in  respect   to   past  transactions,  which 

rights,  either  against  the  firm,  or  the  joint  property  ;  because  the  commission 
and  assignment  retrospectively  deprive  him  of  all  capacity  of  acting.  They 
determine  his  power  to  bind  the  firm  by  relation  to  the  date  of  his  bank- 
ruptcy, and  all  his  rights,  from  that  time,  passing  to  his  assignees,  he  ceases 
to  have  any  further  control  over  the  partnership,  or  the  joint  property. 
And  the  statutes  concerning  bankrupts  make  an  entire,  not  a  partial  avoid- 
ance of  the  bankrupt's  acts,  as  well  in  respect  of  his  partner's  moiety  as 
his  own.  Therefore,  Avhere  a  partner,  on  the  eve  of  his  bankruptcy,  volun- 
tarily deposited  goods  with  a  third  person  for  a  creditor  of  the  firm,  and  the 
deposit  falsely  purported  to  be  founded  upon  a  supposed  sale,  the  creditor, 
after  the  bankruptcy  of  the  partner,  having  received  information  of  the 
deposit,  declared  his  acceptance  of  it ;  and  in  an  action  of  trover  by  the  as- 
signees under  a  joint  commission  to  recover  the  goods,  it  was  held,  that  the 
creditor  could  not  resist  their  claim,  inasmuch  as  the  deposit  was  not  com- 
pleted until  after  the  bankruptcy  of  the  party  depositing,  at  which  time  the 
partnership  was  at  an  end.  So,  where  two  of  three  partners  affecting,  but 
without  authority,  to  bind^the  firm,  by  deed  assigned  a  debt  due  to  them 
from  a  correspondent  abroad,  without  his  privity,  to  a  creditor  at  home, 
and  afterwards,  by  the  direction  of  such  correspondent,  drew  a  bill  of 
exchange  in  the  name  of  the  firm,  upon  his  agent  here,  which  was  accepted, 
payable  to  their  own  order,  for  the  amount  of  the  debt ;  and  then  the  two 
partners,  having  in  the  mean  time  committed  acts  of  bankruptcy,  indorsed 
such  bill  to  the  creditor  of  the  firm  in  part  satisfaction  of  his  debt,  and 
afterwards  separate  commissions  were  sued  out  against  the  two  partners, 
who  were  declared  bankrupts,  and  their  effects  assigned,  the  other  partner 
being  all  the  time  abroad,  it  was  held,  that  by  such  an  indorsement  of  the 
bill  by  the  two,  after  acts  of  bankruptcy  committed  by  them,  though  before 
the  commission  issued,  nothing  passed  to  the  creditor ;  for  the  bankrupt 
partners  had,  by  relation,  ceased,  at  the  time  of  such  indorsement,  to  have 
any  conti'ol  over  the  joint  stock  as  partners,  and  therefore  could  not  bind 
either  the  property  of  their  assignees,  or  of  their  solvent  partner."  Gow 
on  P.  c.  5,  §  3,  p.  304-306,  3d  ed.  ;  Hague  v.  Rolleston,  i  Burr.  2174 ; 
Thomason  v.  Frere,  10  East,  418.  But  see  Lacy  v.  Woolcott,  2  Dow.  &  R. 
458  ;  Coll.  on  P.  B.  4,  c.  1,  p.  582-588,  2d  ed.  The  exceptions  to  the  gen- 
eral doctrine  stand  principally  upon  the  statutes  of  bankruptcy,  saving  from 
the  operation  of  the  general  rule  bona  Jide  contracts,  and  payments  made 
by  the  bankrupt  to  and  with  persons  who  have  no  notice  of  the  act  of  bank- 
ruptcy.    Coll.  on  P.  B.  4,  c.  1,  p.  589,  590,  2d  ed. 

'  Ante,  §  313,  314 ;  Gow  on  P.  c.  5,  §  3,  p.  306,  307,  3d  ed. ;  Fox  v.  Han- 
bury,  Cowp.  445 ;  Harvey  v.  Crickett,  5  M.  &  S.  336 ;  Murray  v.  Murray, 
5  Johns.  Ch.  60,  78;  Hoxie  v.  Carr,  1  Sumn.  173;  Coll.  on  P.  B.  4,  c.  1, 
p.  587,  588,  2d  ed. ;  Thomason  v.  Frere,  10  East,  418. 


544  PARTNERSHIP.  [cHAP,  XIV. 

were  consummated  at  the  time  of  the  bankruptcy,  they 
are  not  prevented  from  exercismg  a  due  control  over 
the  partnership  eflfects,  and  of  applying  them  honafide 
to  the  payment  and  discharge  of  the  partnership  debts 
and  obligations.^ 

§  340.  Indeed,  so  completely  does  the  bankruptcy 
of  one  partner  sever  the  joint  rights  and  interests  of 
the  partnership,  that  even  an  execution,  issued  against 
the  partnership  effects,  subsequently  to  the  act  of  bank- 
ruptcy, will  be  invalid  and  inoperative  upon  those 
effects  ;  for  the  act  of  bankruptcy  overreaches  the  ex- 
ecution ;  and  it  is  not  competent  for  the  execution 
creditors  to  disappoint  the  arrangements,  made  in 
bankruptcy,  for  the  equal  distribution  of  the  effects  of 
the  partnership  among  all  the  creditors  ;  since  it  would 
defeat  the  just  policy  of  the  bankrupt  laws.^  The  sub- 
ject of  the  due  administration  of  the  partnership  assets, 
and  other  incidental  topics,  will  hereafter  occur  in 
another  connection,  when  we  come  to  treat  of  the  final 
adjustment  and  settlement,  and  winding  up  of  the  part- 
nership concerns. 

§  341.  As  to  the  solvent  partners,  in  case  of  the 
bankruptcy  of  one  or  more  of  the  partners,  it  is  clear, 
that  they  retain  all  their   original    rights,  powers,  and 

>  Ante,  §  325-328  ;  Gow  on  P.  c.  5,  §  1,  p.  227,  228,  3d  ed. ;  Coll.  on  P. 
B,  4,  c.  1,  p.  579-588,  2d  ed.  — It  seems  that  the  assignees  of  the  bankrupt 
are  clothed  with  the  like  reciprocal  rights  and  authorities.  Coll.  on  P.  B.  4, 
c.  1,  p.  578-580,  2d  ed.  See,  also,  Gow  on  P.  c.  5,  §  3,  p.  298-300,  3d  ed. ; 
Id.  p.  308,  309  ;  {Lind.  on  P.  950 ;  Ex parte^ohmson,  3  Deac.  &  Ch.  376  ; 
Fraser  v.  Kershaw,  2  Kay  &  J.  496  ;  Morgan  v.  Marquis,  9  Exch.  145.  But 
see  Lind.  on  P.  948;  Alien  v.  Kilbre,  4  Madd.  464.} 

=*  Coll.  on  P.  B.  4,  c.  1,  p.  590-592,  2d  ed. ;  Gow  on  P.  c.  5,  §  3,  p.  308, 
309,  3d  ed. ;  Barker  v.  Goodair,  11  Ves.  78;  Button  v.  Morrison,  17  Ves. 
193  ;  In  re  Wait,  1  Jac.  &  W.  605.  {An  attachment  of  the  property  of  a 
partnership  by  the  trustee  process  is  not  dissolved  by  the  subsequent  bank- 
ruptcy of  one  of  the  partners  after  a  dissolution  of  the  partnership.  Fern 
V.  Gushing,  4  Cush.  357.} 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  545 

authorities  over  the  management  of  the  concerns  of 
the  partnership,  excepting  only,  that  they  are  not  at 
liberty  any  further  to  carry  on  the  business  of  the 
partnership,  or  to  make  any  new  contracts  or  other  en- 
gagements, or  to  incur  any  liabilities  on  account  there- 
of, or  to  employ  the  capital  stock  in  trade.  If  they  do, 
it  will  be  a  violation  of  duty,  and  at  their  own  risk  ; 
and  they  may,  at  the  option  of  the  assignees,  be  com- 
pelled to  account  for  the  profits,  if  any  are  thereby 
made,  or  be  charged  with  interest  upon  the  share  of  the 
bankrupt,  and  they  must  bear  all  the  losses.^     But  the 

>  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  221-227,  2d  ed. ;  Gow  on  P.  c.  5,  §  3,  p. 
306-308,  3d  ed. ;  Crawsbay  v.  Collins,  15  Ves.  218 ;  s.  c.  2  Russ.  325 ; 
Brown  v.  De  Tastet,  Jac.  284;  {Lind.  on  P.  954-957}  ante,  §  325-328. 
—  In  Brown  v.  De  Tastet,  Jac.  295,  Lord  Eldon  used  the  following  lan- 
guage: "The  Master,  in  the  execution  of  the  decree,  has,  I  am  informed, 
proceeded  upon  the  case  of  Crawshay  v.  Collins.  In  that  case,  three  per- 
sons, Collins,  Noble,  and  Boughton,  carried  on  the  business  of  pump  and 
engine  manufacturers  in  partnership  together.  In  1804,  a  commission  of 
bankrupt  issued  against  Noble,  and  in  1805  the  bill  was  filed  by  his  as- 
signees, claiming  three-eighths  of  the  profits  of  the  business,  which  remained 
unaccounted  for  at  the  time  of  the  bankruptcy,  or  which  had  accrued  since, 
and  also  of  two  patents,  and  the  profits  derived  from  them.  The  question, 
therefore,  was,  whether  the  assignees  of  Noble  were  entitled  to  the  same 
relief,  that  he  himself  would  have  been  entitled  to,  if  he  had  not  become  a 
bankrupt ;  a  bankruptcy  dissolving  a  partnership  in  the  same  manner  as 
death,  in  this  respect  only,  that  assignees  have  rights  somewhat  similar  to 
those  which  the  rejiresentatives  have,  where  the  partnership  is  dissolved  by 
death.  It  was  argued,  that  in  both  cases  the  demand  to  be  made  by  the  rep- 
resentatives of  a  deceased  partner,  or  the  assignees  of  a  bankrupt,  was  lim- 
ited to  that  sum  of  money,  which,  if  the  account  had  been  taken  at  the  dis- 
solution, would  have  been  found  due  from  the  surviving  or  solvent  partner, 
leaving  all  the  property  in  their  hands.  On  the  other  hand,  it  was  argued 
that,  in  many  cases,  that  could  not  be  the  law  ;  for  instance,  if  immediately 
after  the  bankruptcy,  all  the  stock,  which  in  that  case  consisted  of  manufac- 
tured goods,  pumps,  and  such  things  had  been  sold  for  a  sum  of  money, 
three-eighths  of  which  would  have  been  more  than  what  was  due  to  the  bank- 
rupt, taking  the  account  as  matter  of  debt,  then  the  assignees,  being  certainly 
tenants  in  common  till  the  stock  was  converted,  and  the  identical  stock  being 
sold,  and  three-eighths  of  it  yielding  more  than  what  was  due  to  the  bank- 
rupt at  the  time  of  his  bankruptcy,  as  the  calculated  value,  what  pretence 
could  there  be  for  saying  that  the  assignees  should  not  have  a  proportion  of 

35 


546  PARTNERSHIP.  [cHAP.  XIV. 

solvent  partners  have  a  lien  upon  the  partnership  prop- 
erty and  effects  for  the  payment  of  all  the  debts  and 
charges  due  by  the  partners,  as  well  as  for  their  own 
distributive  share  of  the  surplus.^  They  may,  therefore, 
notwithstanding  the  act  of  the  bankruptcy  of  the  partner 
is  known  to  them,  proceed,  bona  fide,  to  make  payments 
out  of  the  partnership  funds  in  discharge  of  the  joint 
debts  and  other  obligations  of  the  partnership  ;  ^  al- 
though, if  they  are  guilty  of  any  excess,  in  this  partic- 
ular, injurious  to  the  rights  of  the  assignees,  they  may 
be  restrained  by  an  injunction  by  a  Court  of  Equity.^ 

§  342.  In  the  next  place,  then,  as  to  the  effects  and 
consequences  of  a  dissolution  by  the  death  of  one  of 
the  partners.     This  subject  may  properly  be  considered 

what  it  sold  for  ?  But  it  is  asked,  Will  you  say,  that  in  all  cases,  where 
there  is  a  jiartnership,  such  is  to  be  the  consequence  of  carrying  on  the  busi- 
ness, that  the  profits  shall  be  divisible  in  the  same  way  as  if  the  partner  had 
not  died,  or  had  not  become  bankrupt  ?  I  say,  no ;  I  do  not  mean  to  say, 
that  it  will  be  so  in  all  cases ;  but  on  the  other  hand,  I  will  not  deny  that  it 
may  be  the  law  in  some  cases.  The  general  principle,  I  should  say,  ought 
to  be  this ;  that,  as  it  is  quite  competent  to  the  parties  to  settle  the  accounts 
and  to  mark  out  the  relation  between  themselves,  as  creditors  or  debtors,  so 
where  there  is  a  non-settlement  of  the  account  (though  a  settlement  may 
sometimes  introduce  great  hardships  and  difficulties),  yet  those  who  choose 
to  employ  the  property  of  another  for  the  purposes  of  their  trade,  exposing 
it  to  all  the  risks  of  insolvency  or  bankruptcy,  have  no  right  to  say  that  the 
account  shall  not  be  taken,  if  it  can  be  taken  without  incurring  difficulties 
which  might  embarrass  the  house  to  such  an  extent  as  to  make  it  unjust  to 
demand  it."  [Neither  has  the  solvent  partner  an  absolute  legal  right  to  the 
sole  administration  of  the  assets  ;  although  a  Court  of  Equity  would  ordinarily 
appoint  him  receiver,  if  his  capacity  and  integrity  were  unquestioned.  Hub- 
bard r.  Guild,  1  Duer,  662.]  {See  Freeland  v.  Stansfeld,  2  Sm.  & 
G.  479.| 

»  Ante,  §  326  ;  Jpost,  §  405-408;  Parker  v.  Muggridge,  2  Story,  334.} 
2  Coll,  on  P.  B.  4,  c.  1,  p.  582-589,  2d  ed.;  Harvey  v.  Crickett,  5  M.  & 
S.  336;  ante,  §  325-328,  339,  and  note,  fin  Murray  r.  Murray,  5  Johns. 
Ch.  60,  it  was  held,  that  solvent  partners  have  no  right  to  have  partner- 
ship funds  in  the  possession  of  the  assignee  of  a  bankrujit  partner  given  up 
to  them,  and  that  the  equity  of  the  assignee  is  at  least  as  high  as  that  of  the 
solvent  partners.} 

'  Ante,  §  224,  225,  329,  341,  and  note. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  547 

under  two  aspects  ;  (1.)  As  to  the  partners  themselves; 
(2.)  As  to  third  persons.  In  the  first  place,  as  to  the 
partners  themselves.  And,  here,  the  remark  already 
made  becomes  important ;  that  a  partnership  is  not, 
strictly  speaking,  either  a  joint-tenancy  or  a  tenancy 
in  common  ;  and  that  it  is  an  universally  established 
principle  of  the  whole  commercial  -WDrld,  that  the  prop- 
erty and  effects  thereof  do  not  belong  exclusively  to 
the  survivors ;  but  they  are  to  be  distributed  between 
them  and  the  representatives  of  the  deceased,  in  the 
same  manner  as  they  would  have  been  upon  a  volun- 
tary dissolution  inter  vivos. ^  In  short,  the  universally 
acknowledged  maxim  on  this  subject  is  :  Jus  accrescendi 
inter  mercatoresi^ro  heneficio  commercii  locum  nonhahet? 
The  niaxinl  has  been  since  expanded,  and  is  now  con- 
stantly construed,  so  as  to  embrace  all  sorts  of  partner- 
ships between  two  or  more  persons  for  their  joint  ac- 
count and  benefit,  whether  they  are  merchants  or  not, 
and  whatever  may  be  the  nature  of  the  trade,  or  busi- 
ness, or  employment,  in  which  they  are  engaged.^ 

1  Aute,  §  89,  90.  ^  Co.  Litt.  182,  a. 

^  Ante,  §  90  ;  JefFereys  v.  Small,  1  Vern.  217.  [In  a  late  case  in  the  Ex- 
chequer, it  was  extended  to  manufacturers  and  to  trade  fixtures.  Baron 
Parke,  in  a  learned  judgment  observed  :  "  In  the  earlier  books  we  do  not 
find  any  trace  of  the  doctrine  of  survivorship  inter  viercatores,  in  chattels, 
but  some  against  the  now  admitted  doctrine  of  survivorship  as  to  remedies  or 
choses  in  action.  The  first  cited  is  from  the  Year  Book,  38  Edw.  3,  7,  tit. 
'Accompt'  (which  is  the  authority  mentioned  in  Br.  Ab.,  '  Joint-tenants,' 
pi.  11).  There  Kirton,  a  sergeant,  arguing  that  in  an  action  of  account 
against  a  bailiff  of  two,  not  merchants,  the  executors  of  both  ouglit  to  join, 
says,  that  if  two  merchandise  in  common,  the  executors  of  each  shall  have  a 
moiety,  so  they  ought  in  the  case  of  an  action.  But  Knyvet,  J.,  says, '  It  is 
not  alike  of  a  chattel  in  possession  and  a  chattel  in  action,  for  the  action  can- 
not be  severed,  and  his  executors  cannot  join  in  the  action  with  the  other 
who  survived.'  The  language  indeed  is  '  Taut  ne  poit  my  est'  seve,'  but  '  I'aut' 
seems  a  false  jjrint  —  it  may,  however,  mean  the  '.  other,'  or  '  latter,'  i.  e.,  the 
chose  in  action.  It  is  afterwards  said  that  the  writ,  which  was  by  the  execu- 
tors of  the  survivor,  was  adjudged  good;  and  a  sentence  is  added,  which  must 
be  either  a  misprint,  or  refer  to  the  right  of  action  —  it  is  said,  '  and  this  is  the 


548  PARTNERSHIP.  [CHAP.  XIV. 

§  343.    We  have  already  seen,  that  a  dissohition  by 
death  puts  an  end  to  the  partnership,  from  the  time  of 

law  of  two  merchants  who  have  goods  in  common  ;  if  one  die,  the  other  shall 
have  the  whole  by  survivorship.'  The  next  authority  is  Lord  Coke,  1  Inst. 
182,  a,  who  puts  the  joint  wares  and  merchandise,  debts  and  duties,  of  merchants 
on  the  same  footing,  and  so  does  Noy,  55  ;  and  it  is  argued,  that  if  they  be 
on  the  same  footing,  as  the  remedy  clearly  survives,  the  title  to  the  chattels 
does  also.  But  Lord  Coke  clearly  means,  in  the  case  of  merchants,  not  to 
allow  a  survivorship  in  both  wares  and  duties,  but  to  disallow  it  in  each ;  and 
it  was  afterwards  made  a  question,  notwithstanding  what  is  said  in  the  Year 
Book,  38  Edw.  3,  whether  the  survivor  and  executor  of  the  deceased  ought 
not  to  join  in  an  action  for  a  chose  in  action  in  the  lifetime  of  the  deceased. 
It  was  held  by  the  Court,  in  Hall  v.  Huff  am,  2  Lev.  188,  in  consideration  of 
the  authority  of  Lord  Coke  in  this  passage,  that  they  ought  to  join  in  an  ac- 
tion for  goods  sold  by  two  joint  merchants ;  also,  there  is  a  precedent  in  Lutw. 
1493,  of  an  action  by  the  executors  of  a  joint  merchant  joining  with  the  sur- 
vivor for  taking  the  goods  of  the  partnership  in  the  life  of  the  deceased. 
Subsequently,  in  the  case  of  Martin  v.  Crompe,  1  Ld.  Raym.  340 ;  1  Salk. 
444,  it  was  held  to  be  clear,  in  accordance  with  the  doctrine  in  the  Year 
Book,  38  Edw.  3,  that  the  right  of  action  of  two  merchants  survived,  that 
the  survivor  should  take  the  whole,  and  account  to  the  adminish-ator  of  the 
deceased,  and  that  the  administrator  could  not  join ;  for  Lord  Holt  said  that 
it  would  make  strange  confusion,  that  one  should  sue  in  his  own  right,  and  the 
other  in  another's  ;  and  it  has  been  undoubted  law,  ever  since  that  decision 
that  the  remedy  survives.  Lord  Eldon,  in  Ex  parte  Kuffin,  6  Ves.  119,126,  says, 
that '  in  the  law  of  merchants,  the  legal  title  in  some  respects,  in  all  the  equi- 
table title,  remains,  notwithstanding  the  survivorship ; '  and  the  same  doctrine 
was  acted  upon  in  the  Court  of  King's  Bench,  in  the  case  of  The  King  v. 
The  Collector  of  Customs  at  Liverpool,  2  M.  &  S.  223,  which  case  proceeded 
entirely  on  the  ground  that  the  legal  title  did  not  survive  in  the  case  of  a  part- 
nership in  ships.  On  the  other  hand,  the  authority  is  very  slender,  that  the 
title  survives  at  law,  and  that  the  executor  of  the  deceased  person  can  only 
claim  in  equity.  The  most  direct  is  a  note  of  Loi-d  Tenterden's  in  his  Trea- 
tise on  Shipping  (p.  97),  in  which  it  is  said,  the  tvXq '■  Jus  accrescendi  inter 
mercatores  locum  nonhabet,'  is  only  enforceable  in  a  Court  of  Equity, —  but 
there  is  no  prior  authority  quoted  for  that  position.  Mr.  Justice  Story  (p.  68, 
Am.  ed.  of  Abbott)  says  that  this  note  was  not  written  by  Lord  Tenterden, 
but  that  seems  not  to  be  the  case,  from  a  note  of  my  brother  Shee  (p.  97,  c. 
3,  7th  ed.).  This  note  may  have  been  founded  on  the  authority  of  the  doc- 
trine in  some  equity  reports  where  a  Court  of  Equity  has  granted  relief  on 
survivorship.  For  instance,  in  Lake  v.  Gibson,  1  Ab.  Ca.  Eq.  291,  the  Master 
of  the  Rolls,  Sir  Joseph  Jokyll,  says,  that  '  in  all  cases  of  a  joint  undertaking, 
either  in  trade  or  any  other  dealinj,  the  joint  owners  are  to  be  considered  as  ten- 
ants in  common,  and  the  survivors  as  trustees  for  those  who  are  dead  ; '  but  this 
observation  follows  a  statement  respecting  a  joint  purchase  of  land,  where  the 


CHAP.  XIV. J       DISSOLUTION RIGHTS    OF   PARTNERS.  549 

the  occurrence  of  that  event,  whether  known  or  un- 
known,  or  whether  third  persons    have    or   have   not 

difference  is  pointed  out  between  purchasing  in  equal  shares,  where  there  is  a 
survivorship,  and  where  the  portions  are  not  equal,  where  there  is  none  in 
equity,  however  the  legal  estate  may  survive  at  law.  The  latter  indicates 
that  the  joint-tenants  do  not  mean  to  have  an  equal  chance  of  survivorship, 
but  that  one  shall  hold  ■  in  trust  for  the  other  in  proportion  to  his  share. 
There  is  no  didnni  that  there  is  a  survivorship  at  law,  in  all  cases,  between 
merchants.  A  similar  doctrine  to  that  in  Lake  v.  Gibson  had  been  laid  down 
before  in  Jeffereys  v.  Small,  1  Yern.  21 7,  a.  d.  1 683,  by  Lord  Keeper  Guildford, 
who  is  evidently  treating  of  equities  only,  and  who  states  the  rule  of  equity  to  be, 
that  if  two  persons  are  joint-tenants  by  gift  or  devise,  there  is  a  survivorship ;  the 
parties  are  liable  to  all  the  consequences  of  the  law ;  —  but  as  to  any  joint  un- 
dertaking, in  the  way  of  trade  or  the  like,  it  was  otherwise  ;  and  he  decreed 
that  the  plaintiff  should  be  relieved.  The  dida  of  judges  in  some  subse- 
quent cases  were  cited,  which  admit  of  the  same  explanation.  Lord 
Eldon,  indeed,  in  Crawshay  v.  Collins,  15  Ves.  218,  227,  speaking  of  partner- 
ship, says  it  determines  '  by  the  death  of  one  partner,  in  which  case  the 
law  says  that  the  property  survives  to  the  others.  It  survives  as  to  the 
legal  title  in  many  cases;  but  not  as  to  the  beneficial  interest.'  Now  if  Lord 
Eldon  is  speaking  of  choses  in  action,  it  is  perfectly  correct,  and  it  is  by  no 
means  clear  that  he  meant  any  thing  more.  Upon  the  whole,  there  is  no  sat- 
isfactory authority  for  the  position  that  the  title  to  partnership  chattels  sur- 
vives at  law,  and  the  authorities  the  other  way  greatly  predominate.  It  may 
be  added  that  Mr.  Justice  Story  on  Partnership,  §  342,  treats  it  as  the  uni- 
versally acknowledged  rule,  that  upon  the  dissolution  of  the  partnership  by 
death,  the  property  and  effects  thereof  do  not  belong  exclusively  to  the  sur- 
vivors, but  they  are  to  be  distributed  between  them  and  the  representatives 
of  the  deceased,  in  the  same  manner  as  they  would  have  been  upon  a  volun- 
tary dissolution  inter  vivos.  We  consider,  therefore,  that  the  first  point  made 
on  the  part  of  the  plaintiffs  ought  to  be  decided  against  them.  The  next 
question  is,  whether  the  same  law  which  excepts  the  goods  of  vierchants,  for 
the  benefit  of  commerce,  from  the  general  law  of  joint-tenancy,  extends  to 
those  oi  mannfadurers.  At  a  very  early  period  the  term  '  merchant '  was 
very  liberally  construed  —  it  was  held  to  include  shopkeepers.  2  Brownl.  99. 
The  same  principle  of  the  encouragement  of  trade  applies  to  manufacturers, 
in  partnership  and  every  other  description  of  trade.  Story,  §  342.  It  is 
then  said  that  it  does  not  extend  to  fixtures.  But  trade  fixtures,  which  are 
removable,  are  part  of  the  stock  in  trade,  and  clearly  fall  within  the  rule  as 
to  partnership  stock,  and  all  these  fixtures  were  of  that  character.  There- 
fore we  are  of  opinion  that  one  third  of  the  fixtures  seized  belongs  to  the 
executors  of  William,  and  that  they  would  be  seizable  under  an  execution 
by^.  fa.  against  his  executor  de  bonis  testatoris,  if  there  were  no  other  cir- 
cumstances in  the  case.  But  it  was  urged  on  behalf  of  the  plaintiffs,  that 
though  the  right  to  the  chattels  does  not  survive,  the  surviving  partner  or 


550  PARTNERSHIP.  [cHAP.  XIV. 

notice  thereof.^  So  that  it  completely  puts  an  end  to 
the  power  and  authority  of  the   surviving  partners  to 

partners  have  of  necessity  a  jus  dispoiiendi,  for  the  purpose  of  winding  up  the 
partnership  concerns,  and  that  the  conveyance  by  Abraham  was  within  the 
scope  of  that  authority,  and  transferred  Ihe  legal  title  in  all.  In  the  civil  law 
such  a  jus  clisponendi  prevails,  in  the  case  of  both  agents  and  partners  of 
deceased  persons.  '  Si,  vivo  Titio,  negotia  ejus  administrare  ccepi,  inter- 
mittere,  mortuo  eo,  non  debeo :  nova  tamen  inchoare  necesse  mihi  non  est ; 
Vetera  explicare,  ac  conservare  necessarium  est ;  ut  accidit,  cum  alter  ex 
sociis  mortuus  est :  nam  qufecunque  prioris  negotii  explicandi  causa  geruntur, 
nihilum  refert,  quo  tempore  consummentur,  sed  quo  tempore  inchoarentur.' 
D.  3,  0,  21,  2.  In  our  law,  this  rule  does  not  exist  with  respect  to  agents 
of  deceased  principals  ;  and  Avith  respect  to  surviving  partners,  though  there 
are  exjiressions  of  text-writers  (Story  on  P.  §  34:4 ;  3  Kent,  63) ,  and  also  of 
Judges  (Harvey  v.  Crickett,  5  M.  &  S.  336  ;  see  Woodbridge  v.  Swann,  4  B.  & 
Ad.  633 ;  Beak  v.  Beak,  3  Swans.  627  ;  Lord  Nottingham's  MSS.,  and  1  Swans. 
507,  note),  which  have  that  aspect,  there  is  no  clear,  satisfactory  authority 
that  the  surviving  partner  has  a  power,  by  virtue  of  the  partnership  relation 
only,  to  transfer  the  legal  title  to  the  share  belonging  to  the  executors  of 
the  deceased,  to  a  third  person,  leaving  the  executors  to  pursue  their  reme- 
dy against  the  survivor,  if  that  authority  is  improperly  exercised.  It  is 
clear  that  the  legal  title  to  the  share  of  the  survivor  passes,  and  the  pur- 
chaser, therefore,  is  at  all  events  tenant  in  common  with  the  executor ;  and 
as  the  law  allows  no  right  of  action  to  one  tenant  in  common  against  anoth- 
er, so  long  as  the  subject  of  the  tenancy  exists,  and  is  capable  of  recaption, 
that  circumstance  will  explain  all  the  decisions  on  the  subject,  including 
Harvey  v.  Crickett,  5  M.  &  S.  336 ;  see  Woodbridge  v.  Swann,  4  B.  &  Ad. 
633.  In  Harvey  v.  Crickett  the  dicta  of  the  Judges  go  much  further ;  prob- 
ably Mr.  Justice  Bayley  mistook  the  opinion  of  Lord  Kenyon  in  Smith  v. 
Oriell,  1  East,  3G8,  and  we  doubt  whether  surviving  partners  have  a  power 
to  sell,  and  give  a  good  legal  title  to  the  share  belonging  to  the  executors 
of  the  deceased  partner,  when  they  sell  in  order  to  pay  the  debts  of  the 
deceased  and  of  themselves ;  but,  be  that  as  it  may,  we  think  it  clear,  that 
the  survivors  could  have  no  power  to  dispose  of  it  otherwise  than  to  pay 
such  debts,  certainly  not  to  mortgage  that  share  together  with  their  own 
(for  that  is  the  real  nature  of  this  transaction),  as  a  security  for  a  debt 
principally  due  from  the  surviving  partners,  and  in  part  only  from  the  de- 
ceased, and  in  order  to  enable  them  to  continue  their  trade.  At  all  events, 
therefore,  this  transaction  was  not  within  the  scope  of  any  implied  authori- 
ty which  the  surviving  partners  may  have,  to  wind  up  the  affairs  of  the  part- 
nership ;  and  therefore  this  conveyance  did  not  pass  the  share  of  the  de- 
ceased to  the  plaintiffs,  by  virtue  of  any  implied  authority  in  the  survivors." 
Buckley  v.  Barber,  6  Exch.  164 ;  1  Eng.  L.  &  Eq.  506.] 

'  Ante,  §  319,  336.  —  There  seems  to  be  an  exception  as  to  the  necessi- 
ty of  such  a  notice,  when  the  surviving  partners  or  one  of  them  are  execu- 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  551 

carry  on  for  the  future  the  partnership  trade  or  busi- 
ness, or  to  engage  in  new  transactions,  contracts,  or 
liabilities  on  account  thereof.^  It  is,  therefore,  the 
duty  of  the  surviving  partners  henceforth  to  cease 
altogether  from  carrying  on  the  trade  or  business 
thereof ;  ^  and  if  they  act  otherwise,  and  continue  the 
trade  or  business,  it  is  at  their  own  risk,  and  they  will 
be  liable,  at  the  option  of  the  representatives  of  the 
deceased  partner,  to  account  for  the  profits  made 
thereby,^  or  to  be  charged  with  interest  upon  the  de- 
ceased partner's  share  of  the  surplus,  besides  bearing 
all  the  losses."* 


tors  of  the  deceased  partner ;  for  then,  in  order  to  exonerate  his  estate 
from  future  liability,  it  is  said,  that  due  notice  ought  to  be  given  of  his 
death  to  the  creditors  of  the  firm,  because  in  the  absence  of  such  notice, 
the  executor  partner,  in  his  character  of  personal  representative  of  the  de- 
ceased, has  power  to  bind  his  estate.  Vulliamy  v.  Noble,  S  Mer.  593,  614. 
But  is  this  doctrine  maintainable,  except  in  cases  where  the  usual  articles  of 
agreement  authorized  the  executor  to  carry  on  the  partnership  ?  What  au- 
thority otherwise  can  he  have  to  bind  the  testator's  estate  ? 

•  Gow  on  P.  c.  5,  §  4,  p.  351,  352,  3d  ed. ;  2  Bell,  Comm.  B.  7,  c.  2,  p. 
637,  638,  643,  644;  3  Kent,  63. 

2  [See  Travis  v.  Milne,  9  Hare,  141.] 

^  [See  Chambers  v.  Howell,  11  Beav.  6,  when  they  will  not  be  liable  for 
profits.] 

*  See  Willett  v.  Blanford,  1  Hare,  253;  Coll.  on  P.  B.  2,  c.  1,  §  1,  p. 
79,  2d  ed. ;  Id.  B.  2,  c.  3,  §  4,  p.  221-226  ;  Booth  v.  Parks,  1  Molloy,  465 ; 
Crawshay  v.  Collins,  15  Ves.  218;  s.  c.  2  Russ.  325;  Brown  v.  Litton,  1  P. 
Wms.  140;  [Ogden  v.  Astor,  4  Sand.  311  ;  Goodburn  v.  Stevens,  1  Md.  Ch. 
Dec.  420 ;]  Hammond  v.  Douglas,  5  Ves.  539 ;  Brown  v.  De  Tastet,  Jacob, 
284,  292;  Heathcote  v.  Hulme,  1  Jac.  &  W.  122;  3  Kent,  64;  ante,  §  329; 
{§  341,  349.  On  advantages  derived  from  the  ^partnership  name  and  good-will 
see  §  99,  100.  See  also  Lind.  on  P.  830;  Willett  v.  Blanford,  1  Hare.  253 ; 
Stocken  v.  Dawson,  6  Beav.  371;  s.  c.  9  Beav.  239;  17  Law  J.  n.  s.  Ch. 
282;  Rice  v.  Gordon,  11  Beav.  265;  Wedderburn  v.  Wedderburn,  2  Keen, 
722;  s.  c.  4  Myl.  &  C.  41 ;  22  Beav.  84;  Featherstonhaugh  v.  Turner,  25 
Beav.  382;  Simpson  v.  Chapman,  4  De  G.  M.  &  G.  154;  Townend  v. 
Townend,  1  Giff.  201 ;  Washburn  v.  Goodman,  17  Pick.  519  ;  Shelly  v.  Hiatt, 
7  Jones,  Law,  509.}  —  Where  an  election  is  made  to  have  a  decree  for  a  share 
of  the  profits,  there  it  would  seem  that  the  surviving  partners  are,  or  at  least 
may  be,  entitled  to  all  just  allowances  and  deductions,  and  even  to  some  com- 


552  PARTNERSHIP.  [cHAP.  XIV. 

§  344.  But  here,  also,  the  same  qualifications  and 
limitations  of  the  doctrine  already  stated,  with  refer- 
ence to  the  rights,  duties,  powers,  and  authorities  of 
the  partners,  in  cases  of  a  dissolution  by  voluntary 
consent,  or  by  efflux  of  time,  or  by  bankruptcy,  apply 
to  cases  of  the  surviving  partners.^  Although,  as  to 
future  dealings,  the  partnership  is  terminated  by  the 
death  of  one  partner ;  yet  for  some  purposes  it  may 
be  said  to  subsist,  and  the  rights,  duties,  powers,  and 
authorities  of  the  survivors  remain,  so  far  as  is  neces- 
sary to  enable  them  to  wind  up  and  settle  the  affairs 
of  the  partnership.^  And  the  ordinary  rule  is,  that 
upon  the  dissolution  of  a  partnership  by  death,  the 
surviving  parties  are  entitled  to  close  up  the  afi"airs  of 

pensation  for  their  skill  and  personal  services.  {§331.}  Lord  Eldon,  in  Craw- 
shay  V.  Collins,  2  Russ.  325,  345,  said  :  "  And  I  cannot  bring  myself  to  think, 
that,  if  it  be  clearly  made  out,  that  a  business  is  carried  on  with  the  property, 
which  belonged  to  a  deceased  partner,  for  instance,  by  the  surviving  partner, 
and  no  particular  circumstances  occur  to  vary  the  rule,  the  mere  accident  of 
one  man  surviving  the  other  can  authorize  him  to  say,  '  I  shall  carry  on  the 
trade  by  the  application  of  the  funds  of  the  partnership,  at  the  hazard  of  the 
funds  of  the  partnership,  and  I  shall  have  the  whole  of  the  profits,  and  you 
shall  have  no  share  of  them.'  There  may,  undoubtedly,  be  occasion  for 
making  claims  in  the  nature  of  just  allowances;  but  I  cannot  bring  myself  to 
think,  that  the  interest,  which  at  law  survives  in  a  continuing  partnership, 
survives  in  such  a  sense  as  to  cut  down  the  rule  of  equity,  and  that  the  con- 
tinuing partners  shall  have  to  account  for  nothing,  but  the  value  of  what 
the  share  was  at  the  time  of  the  death  or  bankruptcy  of  the  other  partner. 
Even  if  you  were  to  lay  down  the  rule,  in  that  way,  still  you  would  have  to 
ask  yourself,  how  is  that  value  to  be  ascertained  ?  It  cannot  be  done  by  the 
surviving  partner  choosing  to  say,  '  I  shall  take  it  at  such  a  value.'  There 
must  be  some  way  of  valuing  it,  so  as  to  give  the  party  retiring  the  complete 
value ;  and  there  must  be  some  way,  in  which  this  Court  will  direct  that 
valuation  to  be  made."  See  also  the  remarks  of  the  same  learned  Judge 
in  Crawshay  v.  Collins,  15  Ves.  218,  226-228,  and  2  Russ.  325,  cited  ante, 
§  322,  note,  and  ante,  §  343,  note;  Gow  on  P.  c.  5,  §  2,  p.  254,  3d  ed. ;  Id. 
c.  5,  §  4,  p.  355 ;  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  226,  228,  229,  2d  ed. 

*  Ante,  §  324-328.  }  On  the  dissolution  of  a  firm  of  attorneys  by  the 
death  of  one  of  the  members,  see  McGill  v.  McGill,  2  Metcalfe,  (Ky.)  258.} 

-  Evans  v.  Evans,  9  Paige,  178;  ante,  §  328  a.  {See  Bank  of  N.  Y.  v. 
Vanderhorst,  32  N.  Y.  553;  Hebcrton  v.  Jeijherson,  10  Penn.  St.  124.} 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  553 

the  firm.^  They  have,  therefore,  a  right  to  receive  the 
debts  due  to  the  partnership,^  and,  on  the  other  hand,  to 
apply  the  partnership  assets  and  effects  in  discharge  of 
the  debts  and  other  obhgations  due  by  it.^  However, 
if  there  be  any  danger  of  abuse  or  positive  misappli- 
cation of  those  funds  by  the  surviving  partners,  a 
Court  of  Equity  will  interpose,  and  restrain  it  by 
injunction,  and  even  appoint  a  receiver,  upon  the 
application  of  the  representatives  of  the  deceased.^ 

'  Evans  v.  Evans,  9  Paige,  178. 
2  {Philips  V.  Philips,  3  Hare,  281.} 

*  Ante,  §  325-328,  341;  2  Bell,  Comm.  B.  7,  c.  2,  p.  637,  638,  643, 
644,  oth  ed.  and  §  328,  note,  where  the  language  of  Mr.  Bell  is  cited.  Coll. 
on  P.  B.  2,  c.  2,  §  2,  p.  130,  2d  ed. ;  Wood  v.  Braddick,  1  Taunt.  104 ; 
Hutchinson  v.  Smith,  7  Paige,  26 ;  Evans  v.  Evans,  9  Paige,  178.  [See 
Buckley  v.  Barber,  6  Exch.  164;  1  Eng.  L.  &  Eq.  506.]  {In  Missouri  it 
has  been  held  that  a  surviving  partner  can  transfer  a  promissory  note  given 
to  the  partnership.  Bredow  v.  Mutual  Savings  Inst.  28  Mo.  181.  Secus,  if 
the  dissolution  be  voluntary  and  not  caused  by  death,  though  one  of  the 
partners  die  after  dissolution  and  before  transfer.  Mutual  Savings  Inst.  v. 
Enslin,  37  Mo.  453.  A  note  payable  to  the  order  of  a  firm  was  indorsed 
in  the  name  of  the  firm  by  one  of  the  partners  who  afterwards  died :  Held, 
that  the  delivery  of  such  note  by  the  surviving  partner  did  not  pass  the  title. 
Glasscock  V.  Smith,  25  Ala.  474.  In  Pennsylvania  it  has  been  held,  that  a 
surviving  partner  may  sell  goods  consigned  to  the  firm  for  sale  before  the 
death  of  his  co-partner,  so  as  to  bind  the  estate  of  such  partner  for  the 
price  received  for  such  goods.  Heberton  v.  Jepherson,  10  Penn.  St.  124. 
See  §  322,  and  notes.  | 

*  Gow  on  P.  c.  5,  §  2,  p.  230,  231,  3d  ed. ;  Id.  c.  5,  §  4,  p.  356,  357; 
Philips  V.  Atkinson,  2  Br.  C.  C  272,  and  Mr.  Belt's  note ;  Coll.  on  P.  B.  2, 
c.  3,  §  4,  p.  226,  2d  ed. ;  Id.  B.  2,  c.  3,  §  5,  p.  235 ;  Id.  B.  4,  c.  1,  p.  588 ; 
Hartz  17.  Schrader,  8  Ves.  317;  Estwick  v.  Conningsby,  1  Vern.  118; 
Burden  v.  Burden,  1  Ves.  &B.  170;  3  Kent,  63 ;  2  Bell,  Comm.  B.  7,  c.  2, 
p.  645,  5th  ed. ;  1  Story,  Eq.  Jur.  §  672 ;  ante,  §  228,  231 ;  Evans  v.  Evans, 
9  Paige,  178 ;  {§  330  ;  Morison  v.  Moat,  9  Hare,  241 ;  Madgwick  v.  Wim- 
ble, 6  Beav.  495  ;  Hawkins  v.  Hawkins,  4  Jur.  x.  s.  1044 ;  Walker  v.  House, 
4  Md.  Ch.  39  ;  Bilton  v.  Blakely,  7  Grant,  (U.  C.)  214.  If  the  estate  of  a 
deceased  person  consists  of  his  share  in  a  business  which  he  was  carrying 
on  in  partnership  at  the  time  of  his  death,  and  which  the  surviving  partner 
continues  to  carry  on,  an  administrator  pendente  lite  will  not  be  appointed  by 
the  probate  court  against  the  wishes  of  such  partner,  unless  a  strong  case 
is  made,  that  he  is  dealing  improperly  with  the  business.  Horrell  v.  Witts, 
Law  Rep.  IP.  &  D.  103.} 


554  PARTxXERSHIP.  [cHAP.  XIV. 

§  345.  And,  here,  we  have  an  analogous  rule  promul- 
gated in  the  Roman  law  in  the  case  of  agency,  as  well 
as  in  the  case  of  partnership.  Si,  vivo  Titio,  negotia 
ejus  administrcu^e  ccepi,  intermittere,  mortuo  eo,  non 
debeo.  jVova  tanien  inchoare  necesse  miki  non  est; 
Vetera  explicare  ac  conservare  necessarium  est ;  ut  acci- 
dit,  cum  alter  ex  sociis  mortuus  est  Nam  qucecunque 
prioris  negotii  explicandi  causa  geruntur.  niliUum  refert, 
quo  tempore  consummentur,  sed  quo  temp)ore  inchoaren- 
tur} 

§  346.  One  of  the  consequences,  then,  of  a  dissolution 
of  a  partnership  by  death  (under  the  qualification  and 
limitations  above  suggested)  is,  that  the  personal  repre- 
sentatives of  the  deceased  become  tenants  in  common 
with  the  survivors  of  all  the  partnership  property  and 
effects  in  possession.^  We  say,  the  partnership  property 
and  effects  in  possession ;  for  there  is  at  the  common 
law  a  material  distinction  between  such  property  and 
effects  in  possession,  and  choses  in  action,  debts,  and 
other  rights  of  action,  belonging  to  the  partnership.  The 
latter,  at  law,  belong  to  the  survi^dng  partners ;  ^  and 
they  possess  the  sole  and  exclusive  right  and  remedy  to 
reduce  them  into  possession ;  although,  when  so  recov- 
ered, the  survivors  are  regarded  as  trustees  thereof,  for 

'  D.  3,  5,  21,  2 ;  Poth.  Pand.  3,  5,  n.  50. 

*  Gow  on  P.  c.  5,  §  4,  p.  351,  3d  ed. — What,  properly  speaking, 
constitutes  partnership  property,  has  been  already  in  part  considered,  and 
■will  occur  again  incidentally  in  another  connection  hereafter.  The  subject 
as  to  the  good-will  of  an  establishment,~^nd  of  the  right  to  use  the  firm 
name  by  the  surviying  partners,  after  the  death  of  one  partner,  has  been 
already  adverted  to.  Ante,  §  98-100,  and  note,  Ibid. ;  Lewis  v.  Langdon, 
7  Sim.  421. 

'  {And  he  may  recover  in  trover  against  the  administrator  of  the  deceased 
partner  for  notes  due  the  partnership  which  were  in  the  possession  of  the 
deceased  at  the  time  of  his  death.  Stearns  v.  Houghton,  38  Vt.  583.  In  a 
suit  by  a  surviving  partner,  to  recover  a  debt  due  to  the  firm,  the  defendant 
may  set  off  a  debt  due  to  him  from  the  surviving  partner  alone.  Holbrook  r. 
Lackey,  13  Met.  132.} 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  555 

the  benefit  of  the  partnership,  and  the  representatives  of 
the  deceased  partner  possess,  in  equity,  the  same  right 
of  sharing  and  participating  in  them,  which  the  deceased 
partner  would  have  possessed,  if  he  had  been  Uving.^ 

1  Gow  on  P.  c.  5,  §  4,  p.  348,  358,  3d  ed. ;  Martin  v.  Crompe,  1  Ld. 
Raym.  340;  Coll.  on  P.  B.  3,  c.  5,  §  2,  p.  471,  2d  ed.  ;  Id.  §  2,  p.  474,  2d 
ed.';  1  Story,  Eq.  Jur.  §  676,  677 ;  2  Bell,  Coram.  B.  7,  c.  2,  p.  637,  638, 
643,  644,  4th  ed.  ;  [Wilson  v.  Soper,  13  B.  Mon.  411]  ;  {Felton  v.  Reid,  7 
Jones,  Law,  269.]  — There  is  nothing  in  this  doctrine  peculiar  to  cases  of 
partnership ;  for  the  same  rule  applies  to  cases  of  several  obligees,  cove- 
nantees, and  other  joint  contractees,  having  a  joint  interest  in  the  contract ; 
for  in  every  such  case,  upon  the  death  of  one,  the  action  must  be  brought  in 
the  name  of  the  survivors.  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  471,  472,  2d  ed. 
And  reciprocally  at  law  (for  it  is  different  in  equity)  an  action  lies  solely 
against  the  survivors,  at  the  suit  of  third  persons,  for  any  debt  or  other  ob- 
ligation due  by  the  partnership.  Coll.  on  P.  B.  3,  c.  3,  §  4,  p.  404—413,  2d  ed. ; 
1  Story,  Eq.  Jur.  §  676,  677,  679,  680 ;  Scholefield  v.  Heafield,  7  Sim.  667  ; 
Gow  on  P.  c.  0,  §  4,  p.  351,  352,  3d  ed.  ;  Id.  p.  356-358.  Uv.  Gow  (p.  358, 
359,  3d  ed.)  has  assigned  the  technical  reasons  for  this  doctrine  (which 
seems  not  known  in  the  Roman  law,  or  in  the  modern  law  of  continen- 
tal Europe),  as  follows:  "The  right  of  action  must  necessarih^  survive ; 
otherwise,  according  to  the  technicalities  of  law,  there  would  be  a  failure  of 
justice ;  for  the  rights  of  the  executor  and  of  the  survivor  being  of  sev- 
eral natures,  if  they  joined  in  the  same  suit,  there  consequently  must  be 
several  judgments,  which  in  a  single  action  is  not  allowed.  Substan- 
tially, however,  the  right  of  the  representative  of  the  deceased  is  not 
varied  by  this  legal  anomaly ;  for,  there  being  no  survivorship  in  point  of 
interest,  the  instant  any  joint  chose  in  action  is  reduced  into  possession  by 
the  legal  process  of  the  survivor,  the  right  of  the  representatives  to  their 
distributive  portion  attaches.  So,  with  respect  to  joint  contracts  entered 
into  by  a  firm,  and  from  which  a  joint  legal  responsibility  results,  it  can  at 
law,  after  the  death  of  one  partner,  be  enforced  against  the  survivor  alone, 
and  finally  against  the  representatives  of  the  last  survivor ;  for  the  law  con- 
siders partnership  contracts  which  are  joint  in  form,  as  producing  only  a 
joint  obligation,  which,  on  the  death  of  one,  attaches  exclusively  upon  the 
survivor.  Indeed,  the  reason  which  has  been  advanced  as  operating  to 
prevent  personal  representatives  from  asserting,  jointly  with  the  survivor,  a 
right  resulting  to  the  partnership  firm,  applies  with  undiminished  force,  if 
a  right  accruing  to  a  stranger  from  the  firm  should  be  attempted  to  be  en- 
forced against  them  and  the  survivor.  Executors  or  administrators,  if  legally 
responsible,  could  only  contract  such  a  responsibility  by  the  assumption  of 
their  representative  characters ;  and  it  therefore  follows,  that  they  could 
only  be  charged  de  bo)iis  testatoris,  whereas  the  surviving  partner  would  be 
liable  de  bonis  propriis.  So  that  the  judgments  must  be  different,  as  they 
applied  either  to  the  survivor,  or  to  the  representatives  of  the  deceased 


556  PARTNERSHIP.  [CHAP.  XIV. 

However,  the  representatives  of  the  deceased  partner 
cannot,  strictly  speaking,  be  deemed  partners  with  the 
survivors.  But  still  a  community  of  interest  subsists 
between  them,  which  is  necessary  for  the  windmg  up  of 
the  affairs  of  the  partnership,  and  requires  that  what 
was  partnership  property  before,  shall  continue  so,  for 
the  purpose  of  being  applied  to  the  discharge  of  all  the 
proper  debts  and  obligations  thereof,  and  for  a  final  dis- 
tribution of  the  surplus,  according  to  the  rights  and 
shares  of  all  the  partners.^ 

§  347.  It  may  be  further  remarked,  that,  as  it  becomes 
the  duty  of  all  the  parties  in  interest,  upon  a  dissolution 
by  death,  with  all  practicable  diligence  to  wind  up  and 
settle  the  partnership  concerns,  to  pay  the  partnership 
debts  and  obligations,  and  to  distribute  the  surplus 
among  those  who  are  entitled  to  it,  according  to  their 
respective  shares  therein,  each  party  in  interest  has  a 
right,  in  case  of  any  improper  delay,  or  danger  of  loss, 
or  neglect  of  duty,  to  require  the  aid  of  a  Court  of 
Equity  to  enforce  the  duty,  and  to  compel  a  full  account 
and  settlement  of  the  whole  concern.^     Hence  the  per- 

partner.  And  little  inconvenience  arises  from  the  present  rule ;  for,  not- 
withstanding the  surviving  partner  is  liable  for  the  whole  debt  in  the  first 
instance,  he  can  call  upon  the  executor  of  his  copartner  for  a  contribution. 
Nor  is  there  any  hardship  upon  the  creditor,  since,  in  the  event  of  the  insol- 
vency of  the  surviving  partner,  we  shall  presently  see  that  he  has  a  remedy 
in  equity  against  the  estate  of  the  deceased." 

*  Gow  on  P.  c.  5,  §  4,  p.  351,  3d  ed. ;  Ex  parte  Williams,  11  Ves.  3,  5 ; 
Wilson  V.  Greenwood,  1  Swans.  471 ;  Crawshay  v.  Maule,  1  Swans.  495, 
506 ;  Beak  v.  Beak,  3  Swans.  627 ;  2  Bell,  Comm.  B.  7,  c.  2,  p.  637,  638, 
643,  644,  5th  ed. ;  3  Kent,  63 ;  ante,  §  325-328 ;  Evans  v.  Evans,  9  Paige, 
178.  {The  executors  of  a  deceased  partner  have  no  lien  on  the  stock  in  trade 
substituted  by  the  surviving  partner  who  has  continued  the  business  in  place 
of  the  partnership  stock  which  he  has  sold.  Payne  v.  Hornby,  25  Beav. 
280.} 

*  Evans  v.  Evans,  9  Paige,  178.  —  A  bill  of  this  sort  strongly  resembles 
the  action,  pro  socio,  of  the  Roman  law,  which  was  designed  to  effect  the 
same  and  other  purposes.  2  Bell,  Comm.  B.  7,  c.  2,  p.  646,  5th  ed. ;  Poth. 
Pand.  17,  2,  n.  30-53;  Poth.  de  Soc.  n,  161. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  557 

soiial  representatives  of  the  deceased  partner  have  a 
right  to  insist  upon  the  application  of  the  joint  prop- 
erty, in  the  hands  of  the  survivors,  to  the  payment  of 
the  joint  debts,  and  a  division  of  the  surpkis.^  And  as 
this  can  ordinarily  be  done  only  by  a  sale  and  conver- 
sion of  the  property  into  money,  they  are  entitled  to 
have  the  property  sold  for  this  purpose.^  And  if  within 
a  reasonable  time  the  survivors  do  not  account  with 
them,  and  come  to  a  settlement,  a  Court  of  Equity  will 
entertain  a  bill  for  this  purpose,  and  will,  in  aid  thereof, 
if  necessary,  restrain  the  partners  by  injunction  from 
disposing  of  the  joint  property,  and  from  collecting  the 
outstanding  debts.^  So,  the  surviving  partners  have 
each  against  the  others  a  like  right  to  insist  upon  a 
final  adjustment  and  settlement  of  the  partnership  ac- 
counts, and  a  distribution  of  the  surplus ;  but  in  such 
a  suit  the  personal  representatives  of  the  deceased  part- 
ners are  necessary  parties ;  for  they  have  an  equal  in- 
terest therein  with  the  survivors,  and  would  not  be 
concluded  by  any  decree  made  in  the  premises,  unless 
they  were  made  parties.'* 

1  ExiKirte  Ruffin,  6  Ves.  119, 126 ;  Gow  on  P.  c.  5,  §  4,  p.  352,  3d  ed. 
^  Evans  V.  Evans,  9  Paige,  178;   {post,  §  350,  351.} 

*  Gow  on  P.  c.  5,  §  4,  p.  352,  3d  ed. ;  Hartz  v.  Schrader,  8  Ves.  317 ; 
ante,  §  329-330,  344 ;  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  226,  227,  2d  ed. 

*  Gow  on  P.  c.  5,  §  4,  p.  352,  3d  ed. ;  Coll.  on  P.B.  2,  c.  3,  §  4,  p.  226, 
227,  2d  ed.— INIr.  Bell  (2  Bell,  Comm.  B.  7,  c.  2,  p.  645)  has  summed  the 
general  results  of  the  dissolution  of  the  partnership,  and  the  mode  of  settle- 
ment of  the  partnership  concerns,  as  follows:-  "Until  the  tinal  settlement 
of  the  partnership  ali'airs,  and  the  payment  of  the  joint  debts,  and  distiu- 
bution  of  the  joint  property,  it  cannot  correctly  be  said,  that  the  partnership 
is  determined.  1.  On  the  dissolution  of  partnership,  the  property  is  com- 
mon, to  be  divided  according  to  the  shares  of  the  partners  after  the  payment 
of  debts.  This  consists  of  the  following  particulars :  1st,  The  stock  in 
trade,  as  originally  contributed,  with  all  the  additions  made  to  it.  2d,  Real 
estates  acquired  by  the  company ;  leases  of  premises  for  the  use  of  the 
company ;  ships  purchased  or  freighted  on  time.  3d,  The  good-will  of  a 
mercantile  or  literary  establishment  seems  to  form  a  part  of  the  common 
stock.     2.  The  partners,  or  either  of  them,  may  insist  on  a  sale  as  the  best 


558  PARTNERSHIP.  [CHAP.  XIV. 

§  348.  In  taking  the  account  between  the  partners 
upon  any  dissokition,  each,  of  course,  becomes  charge- 
able with  all  the  debts  and  claims,  which  he  owes,  or  is 
accountable  for,  to  the  partnership  ;  with  all  interest 
accruing  upon  the  same  debts  and  claims ;  and  with  all 
profits,  which  he  has  made  out  of  the  partnership 
effects  during  the  partnership,  or  since  the  dissolution, 
either  rightfully  or  by  misapplication  thereof^  Similar 
provisions  existed  in  the  Roman  law,  which  are  labori- 
ously collected  by  Pothier,  in  his  edition  of  the  Pan- 
dects ;  ~  and  from  that  law  they  have  been  transferred 
into  the  modern  law  of  France.^ 

§  348  a.  If  any  partner  has  made  advances  to  the 
firm,  and  others  have  received  advances  from  it,  these 
do  not  constitute  debts,  strictly  speaking,  until  the  con- 
criterion  of  the  value  of  the  property ;  and  this  the  Court  may  order,  with- 
out waiting  the  final  adjustment  of  interests,  where  it  is  manifest  that  there 
must  be  a  dissolution.  3.  The  common  property  thus  converted,  with  the 
pecuniary  funds  when  collected,  forms  a  fund,  over  which  the  creditors  of 
the  concern  have  a  primary  and  preferable  claim ;  and  it  must  be  so  applied, 
in  the  first  place,  before  any  partner,  or  his  assignee  or  representatives, 
can  claim  a  share.  4.  In  taking  an  account  between  the  partners  them- 
selves, the  state  of  the  stock  is  to  be  taken  as  at  the  dissolution  (death  for 
instance) ,  and  the  proceeds  thereof  until  it  is  got  in ;  and  each  is  to  be 
allowed  whatever  he  has  advanced  to  the  partnership,  and  to  be  chai'ged 
with  what  he  has  failed  to  bring  in,  or  has  drawn  out  more  than  his  just 
proportion.  The  partners  are  to  be  allowed  equal  shares  of  the  profit  and 
stock,  if  there  be  no  other  arrangement  settled.  But  a  different  arrange- 
ment may  be  established  either  by  contract  or  by  the  books  and  usage  of 
the  company.  5.  The  surviving  partners  are  to  wind  up  the  affairs,  unless 
some  fault  or  abuse  is  chargeable  against  them,  or  some  danger  from  their 
intromissions,  which  may  require  the  appointment  of  a  neutral  person,  or 
the  requisition  of  caution.  6.  The  same  confidence,  which  was  placed  in 
the  partner,  is  not  necessarily  reposed  in  his  representatives  ;  and,  therefore, 
whei-e  both  or  all  the  partners  die,  the  Court  will  appoint  a  receiver." 

»  Gow  on  P.  c.  5,  §  12,  p.  255,  256,  3d  ed. ;  Id.  §  3,  p.  302,  303 ;  Id. 
§  4,  p.  355 ;  Coll.  on  P.  B.  2,  c.  2,  §  1,  p.  122,  123,  2d  ed. ;  Id.  B.  2,  c.  3, 
§  4,  p.  221,  222 ;  ante,  §  329,  341,  343 ;  Burton  v.  Wookey,  6  Madd.  367 ; 
Brown  v.  Litton,  1  P.  Wms.  140 ;  Crawshay  v.  Collins,  15  Ves.  218,  220. 

2  Poth.  Pand.  17,  2,  n.  35-45. 

3  Poth.  de  Soc.  n.  167 ;  Id.  n.  109-132. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  559 

cern  is  wound  up,  but  only  as  items  in  the  account  be- 
tween the  partners.^ 

§  349.  In  respect  to  the  mode  of  taking  the  accounts 
between  the  partners,  that  must  depend  upon  circum- 
stances.^    If  the  partners  have  by  the  articles  of  part- 

1  Richardson  v.  Bank  of  England,  4  Myl.  &  C.  165,  172.— On  this  oc- 
casion Lord  Cottenham  said,  speaking  of  debtor  and  creditor  partners : 
"  But  though  these  terms  '  creditor'  and  '  debtor'  are  so  used,  and  sufficiently 
explain  what  is  meant  by  the  use  of  them,  nothing  can  be  more  inconsistent 
with  the  known  law  of  partnership  than  to  consider  the  situation  of  either 
party  as  in  any  degree  resembling  the  situation  of  those  whose  appellation 
has  been  so  borrowed.  The  supposed  creditor  has  no  means  of  compelling 
pavment  of  his  debt ;  and  the  supposed  debtor  is  liable  to  no  proceedings 
either  at  law  or  in  equity,  assuming  always  that  no  separate  security  has 
been  taken  or  given.  The  supposed  creditor's  debt  is  due  from  the  firm  of 
which  he  is  a  partner ;  and  the  supposed  debtor  owes  the  money  to  himself 
in  common  with  his  partners  ;  and,  pending  the  partnership,  equity  will  not 
interfere  to  set  right  the  balance  between  the  partners.  Indeed  it  could 
not  do  so  with  effect,  inasmuch  as  immediately  after  a  decree  has  enforced 
payment  of  the  money  supposed  to  be  due,  the  party  paying  might,  in  exer- 
cise of  his  power  of  a  partner,  repossess  himself  of  the  same  sum.  But  if, 
pending  the  partnership,  neither  law  nor  equity  will  treat  such  advances  as 
debts,  will  it  be  so  after  the  partnership  has  determined,  before  any  settle- 
ment of  account,  and  before  the  payment  of  the  joint  debts  or  the  realization 
of  the  partnership  estate  ?  Nothing  is  more,  settled  than  that,  under  such 
circumstances,  what  may  have  been  advanced  by  one  partner,  or  received 
by  another,  can  only  constitute  items  in  the  account.  There  may  be  losses, 
the  j^artlcular  partner's  share  of  which  may  be  more  than  sufficient  to  ex- 
haust what  he  has  advanced,  or  profits  more  than  equal  to  what  the  other 
has  received ;  and  until  the  amount  of  such  profit  and  loss  be  ascertained 
by  tlie  winding  up  of  the  partnership  affairs,  neither  party  has  any  remedy 
against,  or  liability  to,  the  other,  for  payment  from  one  to  the  other,  of  what 
may  have  been  advanced  or  received.  In  Crawshay  v.  Collins.  Lord  Eldon 
says,  '  Where  a  sum  is  advanced  as  a  loan  to  an  individual  partner,  his  profits 
are  first  answerable  for  that  sum ;  and  if  his  profits  shall  not  be  sufficient 
to  answer  it,  the  deficiency  shall  be  made  good  out  of  his  capital ;  and  if 
both  his  profits  and  his  capital  are  not  sufficient  to  make  it  good,  he  is  con- 
sidered as  a  debtor  for  the  excess.'  The  money  drawn  out  by  any  partner 
ceases  to  be  part  of  the  joint  stock,  so  that,  upon  bankruptcy,  the  joint  creditor 
cannot  recall  it,  unless  there  had  been  a  fraudulent  abstraction  ;  Ex  parte 
Younge.  Again,  in  Foster  v.  Donald,  Lord  Eldon  says,  '  If  a  partner,  as 
partner,  receives  money  belonging  to  the  firm,  and,  admitting  that  he  has  re- 
ceived it,  insists  thai  there  is  a  balance  in  his  favor,  there  is  no  pretence  for 
making  him  pay  it  in.' "     Ante,  §  229. 

2  {See  Lind.  on  P.  659-664  ;  Levi  v.  Karrick,  13  Iowa,  344.} 


560  PARTNERSHIP.  [CHAP.  XIV. 

nership  provided  a  particular  mode,  that  will  be  held  to 
furnish  the  true  rule  for  the  adjustment  of  the  concern, 
and  the  winding  up  of  all  the  affairs  thereof;  unless 
the  partners,  by  their  own  acts  and  conduct,  have 
waived,  or  abandoned  it ;  for,  in  that  event,  the  stipu- 
lation in  the  articles,  as  to  the  mode,  will  be  held 
a  nullity.^  In  the  absence,  however,  of  any  positive 
stipulations,  or  the  abandonment  of  them  by  the  acts 
and  conduct  of  the  parties,  Courts  of  Equity,  as 
between  the  partners,  will  commence  with  the  last 
stated  account  between  them ;  and  deem  that  conclu- 
sive upon  all  antecedent  transactions,  unless,  indeed, 
some  gross  and  palpable  error  or  fraud  can  be  shown.^ 
If  there  has  not  been  any  stated  account  or  any 
positive  or  implied  settlement  at  any  period,  then,  of 
course,  the  accounts  must  be  taken  from  the  period  of 
the  commencement  of  the  partnership.^  If  profits  have 
accrued  since  the  death  of  the  partner,  by  the  employ- 
ment of  the  capital  or  otherwise,  that  will  be  treated  as 
an  accession  to  the  capital,  and  as  joint  property  sub- 
ject to  all  just  allowances  and  deductions.'* 

1  Ante,  §  192 ;  Gow  on  P.  c.  5,  §  4,  p.  353,  354,  3d  ed.;  Jackson  v.  Sedg- 
wick, 1  Swans.  460,  469  ;  Pettj-t  v.  Janeson,  6  Madd.  146  ;  2  Bell,  Comm.  B. 
7,  c.  2,  p.  645,  647,  648,  5tli  ed. 

=*  Ante,  §  206. 

3  Ante,  §  206,  207,  347  ;  Gow  on  P.  c.  5,  §  4,  p.  354,  355,  3d  ed. ;  Beak 
V.  Beak,  Eep.  Temp.  Finch,  190 ;  s.  c.  3  Swans.  627 ;  Coll.  on  P.  B.  2,  c.  2, 
§  2,  p.  144,  145,  2d  ed. ;  Id.  B.  2,  c.  3,  §  4,  p.  212-214.  {Gill  v.  Geyer,  15 
Ohio  St.  399.} 

*  Willett  V.  Blanford,  1  Hare,  253,  265;  ante,  §  329,  341,  343,  and  note; 
Gow  on  P.  c.  5,  §  4,  p.  354,  356,  3d  ed. ;  Brown  v.  Litton,  1  P.  Wms. 
140 ;  Hammond  v.  Douglas,  5  Ves.  539 ;  Crawshay  v.  Collins,  15  Ves.  218, 
and  Hill  v.  Burnham,  and  Coxwell  v.  Bromet,  cited  there,  p.  220,  223 ; 
Brown  v.  De  Tastet,  Jac.  284 ;  Burden  v.  Burden,  1  Ves.  &  B.  170 ;  Coll. 
on  P.  B.  2,  c.  3,  §  1,  p.  165,  2d  ed. ;  Id.  B.  2,  c.  3,  §  4,  p.  221,  222 ;  2  Bell, 
Comm.  B.  7,  c.  2,  p.  647,  648,  5th  ed. ;  {Bate  v.  Robins,  32  Beav.  73;  Wat- 
neyi\  Wells,  Law  Pep.  2  Ch.  250;  Tyng  v.  Thayer,  8  All.  391.}  Many 
other  matters,  connected  with  the  taking  of  the  accounts  between  the  partners, 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  561 

§  350.  Another    question     which     ordinarily    arises 
between   the    partners    in    cases    of    a    dissolution    by 

arise  incidentally  in  the  course  of  the  adjustment,  under  the  direction  of  Courts 
of  Equity ;  such,  for  example,  as  the  allowance  of  interest  for  or  against  part> 
ners  for  advances  made  to  or  by  them ;  [see  ante,  §  182  a] ;  so  for  separate 
debts  due  from  the  other  partners  to  one  partner.  These  and  many  similar 
questions  will  be  found  discussed  in  other  elementarj'  treatises ;  but  they  are 
not  within  the  scope  of  the  present  Commentaries,  which  do  not  purport  to 
deal  with  the  minute  details  fit  for  the  consideration  of  an  accountant.  See, 
on  this  subject,  Gow  on  P.  c.  2,  §  4,  p.  105,  106,  3d  ed. ;  Id.  c.  5,  §  3,  p. 
236;  Id.  c.  5,  §  4,  p.  356-358;  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  200, 
212-221,  229-231,  2d  ed. ;  [Beacham  v.  Eckford,  2  Sand.  Ch.  116.] 
Mr.  Collyer  has  well  remarked  (p.  214):  "In  taking  the  partner- 
ship accounts,  it  is  mainly  to  be  considered,  what  was  the  value  of  the 
joint  property,  and  what  the  amount  of  the  joint  debts  at  the  time  of 
the  dissolution ;  what  was  the  share  of  the  retired,  deceased,  or  bankrupt 
partner,  in  the  joint  property ;  whether,  and  to  what  extent,  the  joint 
capital  has  been  employed,  or  joint  debts  incurred,  since  the  dissolution; 
whether  any  of  the  joint  property  in  specie  has  been  sold  since  the  disso- 
lution ;  if  so,  what  the  gross  amount,  and  what  the  interest  of  the  profits  ; 
on  the  other  hand,  whether  any  of  the  joint  property  in  specie  having  been 
sold,  the  profits  have  been  applied  to  the  purchase  of  other  property  in 
specie ;  and  generally,  whether,  and  to  what  extent,  the  joint  property  has 
been  traded  with  since  the  dissolution.  These,  with  many  other  considera- 
tions bearing  on  each  particular  case,  must  be  duly  weighed  in  the  arrange- 
ment of  complicated  partnership  accounts.  And  it  may  here  be  remarked, 
that  the  account  is  founded  on  the  same  principles,  in  whatever  manner  the 
dissolution  may  have  taken  place ;  whether,  therefore,  the  aifairs  are  to  be 
adjusted  between  the  remaining  and  retiring  partner,  the  surviving  partner 
and  the  executors  of  the  deceased  partner,  or  the  solvent  partner  and  the 
assignees  of  the  bankrupt  partner."  The  following  remarks  of  Vice-Chan- 
cellor  Wigram,  in  Willett  v.  Blanford,  1  Hare,  253,  269-272,  deserve  to  be 
here  cited  as  to  the  mode  in  which  profits  are  to  be  shared  which  are  made 
after  the  death  of  one  partner,  as  showing  that  no  universal  rule  can  be 
laid  down.  "  The  circumstances  of  some  cases  would  almost  exclude  the 
possibility  of  making  a  decree  in  any  other  form  than  that  which  the  plaintiiFs 
claim  in  this  case.  Take,  for  example,  the  case  suggested  by  Lord  Eldon, 
in  Crawshay  i\  Collins,  of  the  mere  conversion  into  money,  at  a  large  profit, 
long  after  the  testator's  death,  of  the  very  property  which  belonged  to  the 
partnership  at  his  death,  and  no  other  circumstance  to  embarrass  the  ques- 
tion. Again,  the  dissolution  of  a  partnership  prima  facie  prevents  new 
contracts  being  made  on  the  joint  account  of  the  partners ;  but  it  necessarily 
leaves  the  old  contracts  of  the  partnership  to  be  wound  up.  In  the  absence 
of  circumstances  to  alter  the  case,  it  would  be  impossible  to  deny  the  right 
of  the  estate  of  a  deceased  partner  to  participate  in  the  profits  arising  from 

36 


562  PARTNERSHIP.  [CHAP.  XIV. 

death  (which  is  equally  applicable,  indeed,  to  other 
cases  of  dissolution),  is,  in  what  manner  the  partner- 
winding  up  of  the  old  concerns  ;  and  if,  in  such  a  case,  the  surviving  partners 
should  have  so  mixed  up  new  dealings  with  the  old,  that  the  two  could  not 
be  separated,  the  right  of  the  estate  of  the  deceased  partner  to  share  in  the 
profits  of  the  new  dealings  might  unavoidably  attach.  In  another  case,  a 
partnership  may  be  formed,  the  substratum  of  which  may  consist  of  specific 
things  of  peculiar  value  in  their  use,  as,  for  example,  patents,  the  inven- 
tion or  property  of  one  of  the  partners ;  and  the  profits  made  after  the 
death  of  the  patentee,  or  owner  of  the  patent,  may  be  derived  wholly  or 
principally  from  contracts  subsisting  at  his  death,  but  not  wound  up  until 
long  afterwards ;  or  contracts  entered  into  after  his  death,  of  which  con- 
tracts his  specific  property  (the  patents)  may  have  been  the  media.  In  such 
a  case,  in  the  absence  of  special  circumstances,  it  would  be  difficult  to  sug- 
gest a  principle  upon  which  the  estate  of  the  deceased  partner  should  be 
refused  the  same  proportion  of  the  profits  which  he  enjoyed  in  his  lifetime. 
This  appears  to  me  to  be  the  ground  of  the  ultimate  decision  in  Crawshay 
V.  Collins.  Again,  the  whole,  or  the  substantial  part,  of  a  trade,  may 
consist  in  good-will,  leading  to  renewals  of  contracts  with  old  connections. 
In  such  a  case,  it  is  the  identical  source  of  profit  which  operates  both  before 
and  after  dissolution ;  and  this  appears  to  me  to  be  the  groundwork  of  Lord 
Eldon's  reasoning,  in  Cook  y.  CoUingridge.  Circumstances  may  be  suggested 
of  a  very  diiferent  kind.  Take  the  case  of  a  business,  in  which  profit  is  made 
by  the  personal  activity  and  attention  with  which  the  use  of  the  money 
capital  is  directed,  and  the  case  may  require  a  different  determination. 
Brown  v.  De  Tastet ;  Featherstonhaugh  v.  Fenwick.  Or,  there  may  be  the 
case  of  two  persons  being  partners  together,  in  equal  shares ;  one  finding 
capital  alone,  and  the  other  finding  skill  alone ;  and  suppose  the  latter, 
before  his  skill  had  established  a  connection  or  good-will  for  the  concern, 
should  die,  and  the  survivor,  by  the  assistance  of  other  agents,  should 
carry  on  the  concern  upon  the  partnership  premises,  —  it  could  scarcely  be 
contended,  afler  a  lapse  of  years,  that  the  estate  of  the  deceased  partner  was 
entitled  as  of  course  to  a  moiety  of  the  profits  made  during  that  lapse  of  time 
after  his  death  ;  and  if  his  estate  would  not  be  so  entitled  where  the  deceased 
partner  had  left  no  capital,  itVould  be  difficult  to  establish  a  right  to  a  moiety, 
only  because  he  had  some  small  share  of  the  capital  and  stock  in  trade  en- 
gaged in  the  business  at  his  death,  without  reference  to  its  amount,  and  the 
other  circumstances  of  the  case.  If,  on  the  other  hand,  the  skill  of  an  indi- 
vidual, without  capital,  had  been  exercised  as  a  partner  in  a  concern,  until 
it  has  created  a  connection  and  good-will,  and,  upon  his  death,  his  surviving 
partner,  instead  of  giving  to  the  estate  of  the  deceased  the  benefit  of  that  good- 
will by«a  sale  of  the  concern,  should  think  proper  to  carry  on  the  concern 
for  his  own  benefit  until  the  connection  and  good-will  were  lost ;  it  would 
not  be  difficult  to  justify  a  decree  which,  in  such  a  case,  should  declare  the 
estate  of  the  deceased  entitled  to  share  any  profits  made  afler  his  death. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  563 

ship  effects  and  assets  are  to  be  divided,  after  all  the 
charges  and  the  debts  and  obligations  due  to  third 
persons  have  been  duly  paid  and  discharged.  In 
other  words,  how  are  the  effects  and  assets,  whether 
real,  personal,  or  mixed,  to  be  valued,  so  as  to  make 
an  equal  distribution  of  them  among  the  partners, 
according  to  their  respective  shares  thereof.  In  rela- 
tion to  the  real  estate  of  the  partnership,  it  seems  to 
have  been  generally  considered,  that  it  ought  to  be 
decreed  to  be  sold,  as  the  only  fair  and  just  way  (in 
the  absence  of  any  other  ageeement  between  the  par- 
ties) to  ascertain  its  true  value. ^     The  same  rule   would 


If  capital  were  to  be  taken  as  the  basis  upon  which,  in  every  case,  the  pro- 
portion of  profits  was  to  be  calculated,  much  injustice  would  often  ensue. 
In  partnership  cases,  the  agreed  capital  of  a  concern  is  considered  in 
general  as  remaining  the  same,  notwithstanding  one  partner  may  make  ad- 
vances to,  and  the  other  abstract  money  from  the  concern.  If,  at  the  death 
of  an  acting  partner,  he  had  abstracted  or  borrowed  money  from  the  part- 
nership exceeding  the  amount  of  his  property  in  the  concern,  it  would  be 
any  thing  but  justice  to  hold,  as  a  rule  of  course,  that  his  right  to  partici- 
pate in  the  profits  after  his  death  should  continue  to  the  same  extent  as  if 
his  accounts  with  the  partnership  Avere  adjusted,  and  he  had  given  his  time 
and  attention  to  the  business.  The  distinction  also  between  capital  and 
stock  in  trade,  which  forms  so  material  a  subject  of  consideration  in  Craw- 
shay  V.  Collins,  would  often  make  it  unjust  to  take  the  agreed  amount  of 
capital  in  partnership  as  a  basis  upon  which  to  found  a  general  rule  applica- 
ble to  the  estate  of  a  deceased  partner.  I  consider  myself,  therefore, 
bound  by  authority  and  reason,  to  hold,  that  the  nature  of  the  trade,  the 
manner  of  carrying  it  on,  the  capital  employed,  the  state  of  the  account 
between  the  partnership  and  the  deceased  partner  at  the  time  of  his  death, 
and  the  conduct  of  parties  after  his  death,  may  materially  affect  the  rights 
of  the  parties  ;  and  that  I  must  have  more  infoi'mation  than  I  now  possess 
before  I  can  safely  decide  this  case." 

1  Coll.  on  P.  B.  2,  c.  3,  §  4,  p.  204-214,  2d  ed. ;  Id.  p.  214-216 ;  Cook 
V.  Collingridge,  Jac.  607 ;  2  Bell,  Coram.  B.  7,  c.  2,  p.  632,  645,  5th  ed. ; 
3  Kent,  64 ;  Crawshay  v.  Collins,  15  Ves.  218,  227 ;  Crawshay  v.  Maule,  1 
Swans.  495,  506,  523 ;  Gow  on  P.  c.  5,  §  2,  p.  234,  235,  3d  ed. ;  {Lind.  on 
P.  857.  A.  and  six  others,  who  were  jointly  entitled  to  several  leases  of  a 
colliery,  worked  it  as  partners.  Held,  on  a  dissolution,  that  A.  could  not  in- 
sist on  a  partition,  though  there  might  be  no  debts ;  but  that  the  whole  must 
be  sold.    Wild  v.  Milne,  26  Beav.  504.} 


564  PARTNERSHIP.  [CHAP.  XIV. 

seem  equally  to  apply  to  all  cases  of  chattels  and 
other  personal  property  and  effects,  which  are  not  capa- 
ble in  themselves  of  being  exactly  divided,  without 
reference  to  their  positive  and  absolute  value. ^  As  to 
chattels  and  other  personal  property,  capable  of  such 
a  division,  the  same  rule,  as  to  a  sale,  may  not  neces- 
sarily and  under  all  circumstances  apply.  But  the 
true  doctrine  of  Courts  of  Equity  on  this  subject 
would  seem  to  be,  in  all  cases,  to  decree  a  sale  of  the 
partnership  property,  rather  than  a  division  thereof  in 
kind,  whenever  a  sale  would  be  most  beneficial  for 
the  interests  of  all  the  partners.^ 

§  351.  The  doctrine  has  sometimes  been  strenuously 
contended  for,  that  upon  the  dissolution  of  the  partner- 
ship by  the  retu-ement,  or  death,  or  bankruptcy  of  one 
partner,  the  others  had  a  right  to  take   the   whole  part- 

>  Ibid. 

2  Ibid. ;  Rigden  v.  Pierce,  6  Madd.  353;  Coll.  on  P.  B.  2,  c.  2,  §  2,  p. 
146,  147,  2d  ed. ;  Id.  B.  2,  c.  3,  §  4,  p.  206-211,  214-216.  —Mr.  Gow  (Gow 
on  P.  c.  5,  §  2,  p.  235,  237,  3d  ed. ;  Id.  p.  252,  253)  insists  upon  the  right 
of  any  partner  to  insist  on  a  sale  in  aU  cases.  He  says  (p.  234)  :  "When 
the  common  property  is  ascertained,  either  partner  may  insist  upon  a  sale 
of  the  whole  concern.  The  rights  of  the  partners  respectively  are  then  pre- 
cisely equal ;  each  may  require  the  -whole  concern  to  be  wound  up  by  a  sale, 
and  a  division  of  the  produce.  One  partner  has  no  claim  upon  his  individ- 
ual proportion  of  a  specific  article,  nor  can  he  insist  upon  an  exclusive  right 
in  it ;  but  he  is  entitled  only  to  a  general  arrangement  of  the  partnership 
concerns,  and  for  that  purpose  to  an  account  of  the  produce  of  the  aggre- 
gate joint  effects.  He  cannot  separate  his  share  from  the  bulk  of  the  joint 
property,  nor  compel  his  copartner  to  accept  what,  according  to  a  valuation, 
his  interest  may  be  worth.  That  is  not  the  mode  in  which  a  Court  of  Equity 
winds  up  the  concerns  of  a  partnership.  But  in  every  case,  in  which  that 
Court  interferes  in  closing  the  transactions  of  a  firm,  it  directs  the  value  of 
the  whole  of  the  joint  property,  whether  real  or  personal,  to  be  ascertained, 
in  the  way  in  which  it  can  be  best  ascertained,  viz.  by  a  sale  and  its  conversion 
into  money."  In  Fereday  v.  Wightwick,  Taml.  250,  261,  Sir  John  Leach, 
•Master  of  the  Rolls,  said:  "It  is  a  principle,  that  all  property,  whether 
real  or  personal,  is  subject  to  a  sale  on  a  dissolution  of  the  partnership." 
Mr.  Chancellor  Kent  lays  down  the  same  doctrine  in  his  Commentaries.  3 
Kent,  64. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  565 

nership  property  and  effects  at  a  valuation.  But  this 
doctrine  has  been  completely  repudiated  by  Courts  of 
Equity,  as  equally  unfounded  in  principle  and  public 
policy.'     In  short,  it  would  amount  to  a  right  of  pre- 

>  Gow  on  P.  c.  5,  §  2,  p.  234,  235,  3d  ed. ;  ante,  §  350;  Coll.  on  P.  B. 
2,  c.  3,  §  4,  p.  206-211,  2d  ed. ;  Crawshay  v.  Collins,  15  Ves.  218,  227 ; 
Crawshay  i'.  Maule,  1  Swans.  495  ;  Fox  v.  Hanbury,  Cowp.  445 ;  Feather- 
stonhaugh  v.  Fenwick,  17  Ves.  298 ;  Wilson  v.  Greenwood,  1  Swans.  471 ; 
Cook  V.  CoUingridge,  Jac.  607;  Sigourney  v.  Munn,  7  Conn.  11.  —  In 
Featherstonhaugh  v.  Fenwick,  17  Ves.  298,  309,  310,  Sir  William  Grant 
said  :  "  The  next  consideration  is,  whether  the  terms  upon  which  the  defend- 
ants proposed  to  adjust  the  partnership  concern,  were  those  to  which  the 
plaintiff  was  bound  to  accede.  The  proposition  was,  that  a  value  should  be 
set  on  the  partnership  stock ;  and  that  they  should  take  his  pi-oportion  of  it 
at  that  valuation  ;  or,  that  he  should  take  away  his  share  of  the  property 
from  the  premises.  My  opinion  is  clearly,  that  these  are  not  terms  to  which 
he  was  bound  to  accede.  They  had  no  more  right  to  turn  him  out,  than  he 
had  to  turn  them  out,  upon  those  terms.  Their  rights  were  precisely  equal ; 
to  have  the  whole  concern  wound  up  by  a  sale,  and  a  division  of  the  pro- 
duce. As,  therefore,  they  never  proposed  to  him  any  terms  which  he  was 
bound  to  accept,  the  consequence  is,  that,  continuing  to  trade  with  his  stock, 
and  at  his  risk,  they  come  under  a  liability  for  whatever  profits  might  be 
produced  by  that  stock."  In  Crawshay  v.  Collins,  15  Ves.  218,  227,  Lord 
Eldon  (after  making  the  remarks  already  stated,  ante,  §  322,  note),  added: 
"As  to  the  case  now  before  the  Court,  of  the  bankruptcy  of  one  partner, 
supposing  it  the  simple  case  of  profit  made  by  the  mere  sale  of  the  proper- 
ty, there  must  be  an  account.  It  is  said,  a  duty  was  imposed  upon  the  as- 
signees to  call  for  the  account.  That  is  true.  It  is  further  urged,  that  they 
could  not  be  traders  in  new  adventures.  That  also  is  in  a  sense  true.  But 
the  proposition  would  be  rash,  that  there  can  be  no  case  in  which  they  could 
trade  with  consent  of  the  creditors,  or  of  the  creditors  and  the  bankrupt  to- 
gether. If  they  had  the  consent  of  all  persons  interested,  I  do  not  know  that 
other  persons,  with  whom  they  might  deal,  could  make  the  objection.  The 
duty  is  not  as  between  them  and  the  other  persons,  who  are  not  properly  to  be 
termed  remaining  or  surviving  partners,  the  destruction  of  one  being,  un- 
less it  is  otherwise  provided,  a  dissolution  of  the  whole  partnership,  as  if  by 
effluxion  of  time,  or  by  death,  except  as  it  may  be  reasoned  upon  the  ef- 
fect in  bankruptcy  of  the  substitution  of  assignees.  It  is,  however,  no 
more  the  duty  of  the  assignees  to  settle  with  the  others,  than  it  is  their  duty 
to  settle  with  the  assignees.  Is  it  possible,  then,  to  say,  that  upon  any  rule 
of  law  the  other  partners  can  take,  as  sole  owners,  all  the  houses,  buildings,, 
and  stock  in  trade  ?  The  consequence  of  the  destruction  and  dissolution  of 
the  partnership  is,  that  they  became  tenants  in  common  in  each  and  every 
article  embarked  in  it,  under  an   obligation  to  deal  with  the  whole  of  the 


566  PARTNERSHIP.  [CHAP.  XIV. 

eminence  or  superiority  in  some  of  the  partners  over 
the  rest,  upon  any  dissokition,  to  compel  them  to  sub- 
mit to  a  particular  mode  of  sellmg  their  rights  in  the 
property,  upon  such  terms  as  the  others  should  choose 
to  prescribe  ;  a  right  utterly  inconsistent  with  the  ac- 
knowledged principles  of  the  equality  of  rights  and  of 
powers  and  authorities  of  all  the  partners.^ 

§  352.  The  Roman  law,  in  like  manner,  contained 
provisions  for  the  due  settlement  and  distribution  of 
the  partnership  effects,  as,  indeed,  every  system  of  juris- 
prudence must,  which  aims  at  any  moderate  administra- 
tion of  public  or  private  justice.  The  action.  Pro  socio, 
seems  properly  to  have  applied  to  the  due  taking  of  the 
accounts  of  the  partnership,  and  the  action,  Commimi 
dividundo,  to  the  distribution  of  the  effects.^  And  cer- 
tain rules  were  laid  down,  as  to  what  charges  and  allow- 
ances were  to  be  made  for  or  against  each  partner,  and 
the  reciprocal  rights,  which  each  has  against  the  others 

stock,  and  every  article,  as  the  equitable  title  of  the  bankrupt  and  themselves 
requires  ;  and,  according  to  the  case  of  Fox  v.  Hanbury,  the  right  is  not  to 
an  individual  proportion  of  a  specific  article,  but  to  an  account ;  the  proper- 
ty to  be  made  the  most  of  and  divided."  Mr.  Collyer  has  summed  up  the 
general  result  of  the  cases  in  the  following  terms  (p.  210)  :  "  It  appears, 
therefore,  that  in  all  cases  of  partnership  at  will,  whether  the  contract  was 
originally  of  that  nature,  or  has  become  so  by  effluxion  of  time  -or  other 
circumstances,  a  Court  of  Equity  will,  upon  a  dissolution,  decree  a  sale  of 
the  entirety  of  the  partnership  effects  at  the  desire  of  any  of  the  parties. 
And  even  in  the  case  of  a  partnership  with  articles,  supposing  it  to  be  dis- 
solved for  the  misconduct  of  one  partner,  a  case  might  be  stated,  where  a 
Court  of  Equity  would  decree  a  general  sale  and  account,  as  of  a  partner- 
ship at  will,  notwithstanding  express  provisions  in  the  articles,  as  to  the  pro- 
ceedings to  be  had  upon  a  dissolution." 

^  Ibid.  {But  though  a  partner  cannot  insist  on  it  as  a  matter  of  right,  a 
Court  of  Equity  may  order  his  share  to  be  taken  at  a  valuation  when  it  is 
most  for  the  benefit  of  all  concerned.  Lind.  on  P.  858 ;  Leaf  v.  Coles,  1 
De  G.  M.  &G.  171 ;  Prentice  v.  Prentice,  10  Hare,  app.  xxii. ;  Smith  v.  Mules, 
9  Hare,  556,  572. } 

*  D.  10,  3,  1-31 ;  Id.  17,  2,  I.  52,  57,  65;  Poth.  Pand.  10,  3,  n.  6;  Id. 
17,  2,  n.  38-54;  Poth.  de  Soc.  n.  161. 


CHAP.  XIV.]       DISSOLUTION RIGHTS    OF    PARTNERS.  567 

upon  the  final  adjustment.^  But  a  special  enumeration 
thereof  would  rather  be  a  matter  of  liberal  curiosity, 
than  of  practical  utility  or  illustration  of  our  jurispru- 
dence. 

§  353.  The  French  law  also  contains  a  minute  enu- 
meration of  the  mode  of  settling  the  accounts,  and  of 
making  a  distribution  of  the  effects  upon  the  dissolu- 
tion  of  partnerships.^     In    some    material   respects,  it 

'  Poth.  Panel.  17,  2,  n.  -35-49 ;  Domat,  1,  8,  5,  art.  16. 

2  Poth.  de  Soc.  n.  167-174. —Pothier  says  (167,  168):  "Avant  que 
de  proceder  au  partage,  on  doit  proceder  au  compte  de  ce  que  chacune  des 
parties  doit  a  la  communaute,  qui  est  a  partager,  et  de  ce  qui  lui  est  du  par 
la  dite  communaute.  On  doit  comprendre  dans  cet  etat,  non-seulement  ce 
qu'elle  devoit  a  la  societe  lors  de  sa  dissolution,  mais  ce  qu'elle  a  pu  devoir 
a  la  communaute  depuis  la  dissolution,  soit  pour  raison  de  ce  qu'elle  auroit 
retire  du  fends  commun,  soit  pour  raison  du  dommage  qu'elle  auroit  cause 
par  sa  faute  dans  les  efFets  de  la  communaute.  Pareillement  on  doit 
comprendre  dans  Tetat  de  ce  qui  est  du  par  la  communaute  a  chacune  des 
parties,  non-seulement  ce  qui  lui  etoit  du  par  la  societe  lors  de  sa  dissolu- 
tion, mais  ce  qui  a  pu  lui  etre  du  depuis  par  la  communaute  a  cause  des 
debourses  qu'elle  auroit  faits  utilement  pour  les  affaires  communes,  ou 
pour  les  biens  de  la  (jommunaute,  depuis  la  dissolution  de  la  societe.  On 
doit  compeuser  jusqu"a  due  concurrence  le  montant  des  sommes  dont  cha- 
cune des  parties  est  debitrice  de  la  communaute,  au  montant  de  celles,  dont 
elle  est  creanciere,  et  arreter  la  somme  dont  elle  se  trouve,  apres  cette  com- 
pensation faite,  debitrice  de  la  communaute,  ou  celle,  dont  elle  se  trouve, 
apres  cette  compensation  faite,  creanciere  de  la  communaute.  Observez 
que,  dans  le  comte  de  ce,  qui  a  ete  regu  ou  mis  pour  la  societe,  le  livre  de 
societe  tenu  par  Fun  des  associes  fait  foi  entre  eux ;  Laidcrhacli.  Apres  ce 
compte  fait,  on  dresse  la  masse,  c'est-a-dire,  un  etat  detaille  de  toutes  les 
diffi6i'entes  choses  dont  la  communaute  est  composee  ;  et  on  comprend  dans 
cette  masse,  au  nombre  des  dettes  actives  de  la  communaute,  les  sommes, 
dont  quelques-unes  des  parties  se  sent  trouvees,  apres  la  compensation  faite, 
debitrices  de  la  communaute ;  et  au  partage  de  la  communaute,  on  la  leur 
precorapte  sur  leur  part.  On  dresse  aussi  un  etat  des  dettes  passives  de  la 
conununaute,  et  on  y  comprend  les  sommes,  dont  quelques-unes  des  parties 
se  seroient  trouvees  au  compte  de  la  communaute,  apres  compensation  faite, 
creancieres  de  la  communaute.  Ces  sommes  doivent  etre  par  elles  prelevees 
au  partage  de  la  communaute.  Chacune  des  choses  dont  la  communaute  est 
composee,  soit  meubles,  soit  heritages,  est  portee  dans  cette  masse  pour  une 
certaine  estimation.  Les  parties  peu vent  faire  elles-memes  cette  estimation, 
lorsqu'elles  sont  en  ^tat  de  la  faire,  qu'elles  en  sont  d'accord,  et  qu"elles  sent 
toutes  majeures  ;  sinon  Testimation  se  fait  par  un  ou  par  plusieurs  estimateurs 


568  PARTNERSHIP.  [CHAP.  XIV. 

agrees  with  our  law  ;  in  others,  again,  it  widely  differs. 
It  gives  to  every  partner  a  right  of  action  to  enforce  a 
due  account  and  settlement ;  but  it  requires,  in  such  a 
case,  that  all  the  partners  should  be  parties  to  the  suit  ; 
and  if  they  are  not,  they  may  intervene,  and  make 
themselves  parties.^  If  the  partners  have  fixed  a  par- 
ticular time  after  the  dissolution  for  the  account,  that 
stipulation  is  to  be  followed.  If  there  be  no  such  stip- 
ulation, then  an  account  is  immediately  demandable.^ 
And  so,  indeed,  is  the  rule  of  the  Roman  law.  Si  con- 
veniat,  ne  omnino  divislo  Jiat,  hujusonodi  pactum,  nullas 
vires  habere  manifestissimujn  est ;  sin  autem,  intra  cer- 
tum  tempus,  qicod  etiam  ipsius  rei  qualitati  prodest, 
valet.^  In  these  and  in  many  other  respects  there  is  an 
agreement  with  our  law. 

§  354.  But  the  French  law  differs  from  our  law  in  a 
striking  manner,  as  to  the  mode  of  distribution  of  the 
partnership  effects,  whether  they  are  movable,  or  im- 
movable, or  credits.  It  allows  so  mufh  thereof  to  be 
sold,  as  may  be  necessary  to  discharge  the  debts  and 
other  obligations  of  the  partnership.'^  But  it  does  not 
authorize  a  sale  thereof  for  any  other  purposes,  unless 
it  be  by  the  express  consent  of  all  the  partners,  or  it  be 
the  only  mode  by  which  practically  a  division  of  a  part 
thereof  can  be  made.^  It  provides,  with  these  excep- 
tions, that  a  valuation  thereof  shall  be  taken,  either  by 
agreement  of  the  parties,  or,  if  they  disagree,  by  the 
proper  judicial  tribunal.^  It  further  provides,  that  the 
movable  or  personal  property  shall  be  valued,  and  di- 
vided among  them  all  in  kind  [en  nature)  ;  that  for  this 

dont  elles  conviennent ;  et  si  elles  n'en  peuvent  convenir,  le  juge  du  partage 
en  nomme  d'office." 

'  Poth.  de  Soc.  n.  162,  163.  "  Poth.  de  Soc.  n.  165. 

=>  Poth.  de  Soc.  n.  165 ;  D.  10,  3,  14,  2.         *  Poth.  de  Soc.  n.  169,  173. 

'  Poth.  de  Soc.  n.  169,  171.  «  Poth.  de  Soc.  n,  168. 


CHAP.  XIV.]       DISSOLUTION  RIGHTS    OF    PARTNERS.  569 

purpose  it  shall  be  put  into  lots  of  equal  value,  the  lots 
to  be  drawn  by  the  partners  ;  ^  that  the  real  estate  shall, 
in  like  manner,  be  valued  and  divided  ;  and,  as  it  rarely 
will  admit  of  being  put  into  lots  of  equal  value,  the  value 
of  each  lot  is  to  be  ascertained,  and  the  partner,  who 
draws  any  lot  beyond  or  short  of  his  share,  is  to  pay  or 
receive  the  surplus  to  or  from  the  other  partners,  who 
respectively  have  the  corresponding  lots.^  As  to  debts 
due  to  the  partnership,  they  are  to  be  valued  and  di- 
vided in  the  like  manner ;  that  is,  each  partner  is  to 
have  his  own  share  of  each  of  such  debts. ^  But,  inas- 
much as  great  embarrassment  must  arise  from  each  debt- 
or's being  thus  obliged  to  pay  each  partner  his  share  of 
the  debts,  a  custom  has  prevailed  of  putting  up  into  lots 
such  of  the  debts  as  are  good,  and  of  dividing  them  by 
lot,  in  the  same  way  as  other  effects."*  As  to  debts  due 
from  the  partnership  to  third  persons,  so  far  as  they  can- 
not be  discharged  by  the  application  of  the  partnership 
effects,  they  also  are  divisible  among  all  the  partners, 
who  thereby  become  liable  inter  sese  to  pay  the  same  to 
the  creditors  ;  but  the  rights  of  the  creditors  against  all 
in  solido  are  not  thereby  varied.^ 

§  355.  It  can  scarcely  escape  observation,  even  from 
this  brief  enumeration,  how  much  the  rule  of  our  Courts 
of  Equity  on  this  subject,  by  directing,  in  all  cases  of 
real  complexity  or  difficulty,  a  sale,  instead  of  a  distribu- 
tion or  division  of  the  effects,  excels  that  of  the  Roman 
and  French  law,  in  point  of  convenience,  simplicity,  and 
practical  policy.     The  Scotch  law  has  here  also  wisely 

'  Poth.  de  Soc.  n.  169.  «  Poth.  de  Soc.  n.  170. 

*  Poth.  de  Soc.  n.  172. 

*  Poth.  de  Soc.  n.  172. — In  this  respect  the  French  law  coincides  with 
that  of  the  Roman  law.  Ea,  quce  in  nominihus  sunt,  non  recipiiint  divisi- 
onem.  Cod.  3,  36,  6;  D.  10.  2,  4;  Poth.  Pand.  10,  2,  and  10,  3,  n.  26; 
Poth.  de  Soc.  n.  172. 

*  Poth.  de  Soc.  n.  173. 


570  PARTNERSHIP.  [cHAP.  XIV. 

abandoned  the  Roman  law,  and  adopted  the  same  rule 
of  a  sale  as  is  adopted  in  our  law.^ 

§  356.  We  come,  in  the  next  place,  to  the  fourth  and 
last  consideration  under  this  head,  viz.  the  effects  and 
consequences  of  a  dissolution  of  the  partnership  by  a 
decree  of  a  Court  of  Equity.  And  here,  as  between  the 
parties  themselves,  there  is  little  room  for  any  additional 
observations,  since  precisely  the  same  effects  and  conse- 
quences follow,  as  ordinarily  apply  to  a  voluntary  disso- 
lution by  the  partners,  or  to  a  dissolution  by  death. 
The  only  suggestion,  which  seems  important  in  a  prac- 
tical view  to  be  made,  is,  that  where  a  bill  is  filed  for 
this  purpose,  and  it  is  clear  to  the  Court,  that  a  dissolu- 
tion ought  finally  to  be  decreed,  the  Court  will  gener- 
ally at  once  put  an  end  to  the  partnership  trade  or  busi- 
ness, by  directing  a  sale  by  an  interlocutory  order  or 
motion,  where  that  measure  is  manifestly  required  by 
the  interest  of  the  parties,  and  otherwise  a  serious  or 
u-reparable  mischief  might  ensue.^ 

1  2  Bell,  Comm.  B.  7,  c.  2,  p.  632,  633,  645,  5tli  ed. 

2  Gow  on  P.  c.  5,  §  2,  p.  235,  236,  3d  ed. ;  Crawshay  v.  Maule,  1  Swans. 
495,  506,  523 ;  Nerot  v.  Burnand,  2  Russ.  56.  See,  also,  Goodman  v.  Whit- 
comb,  1  Jac.  &  W.  589,  592. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  571 


CHAPTER  XV. 

DISSOLUTION EFFECTS     AND     CONSEQUENCES    AS      TO     THE 

RIGHTS    OF    CREDITORS. 

J§  357.  Rights  of  creditors  after  dissolution. 

358.  ProjDerty  may  on  dissolution  be  bona  fide  transferred  to  one  partner 

free  from  partnership  equities. 

359.  Though  such  partner  assumes  the  payment  of  partnership  debts. 

360.  Quasi  lien  of  creditors  on  partnership  property. 

361.  This  quasi  lien  arises  only  on  dissolution  by  death  or  bankruptcy. 

362.  Joint  creditors  may  proceed  in  equity  against  the  estate  of  deceased 

partner. 

363.  364.  Rights  of  joint  and  separate  creditors  against  the  estate  of  a 

deceased  partner. 

365.  Roman  law. 

366.  French  law. 

367.  368.  What  are  joint  and  what  separate  debts. 

369,  370.  Conversion  and  extinguishment  of  joint  and  separate  debts. 
371,  372.  What  is  joint  and  what  separate  property. 

373.  Assignment  of  property  by  partner  to  the  firm  and  vice  versa. 

374.  Rights  of  creditors  on  dissolution  by  bankruptcy. 

375.  Rights  of  assignee  in  case  of  separate  bankruptcy. 

376.  Joint  debts  payable  out  of  joint,  and  separate  debts  out  of  separate 

property. 

377.  This  rule  finally  settled. 

378.  Those  cases  in  which  joint  creditors  may  s\ia.r&  pari  passu  with  sep- 

arate creditors. 

379.  (1.)  When  a  joint  creditor  is  petitioner  for  a  separate  commission. 

380.  (2.)  When  there  is  no  joint  estate  and  no  living  solvent  partner. 

381.  (3.)  When  there  are  no  separate  debts. 

382.  Doubtful  propriety  of  the  general  rule. 

383.  Joint  creditors  may  prove  their  debts  against  the  separate  estate. 

384.  Joint  and  several  creditors  cannot  prove  against  both  estates. 

385.  Supposed  analogy  to  joint  and  several  executions  at  common  law. 

386.  Analogy  not  real. 

387.  Proof  allowed  against  two  firms  composed   in   part  of  the   same 

members. 

388.  When  double  proof  is  allowed  in  case  of  negotiable  paper. 

389.  How  a  secured  creditor  must  prove. 

390.  The  separate  estate  cannot  prove  against  the  joint  estate. 


572  PARTNERSHIP.  [CHAP.  XV. 

391.  Nor  the  joint  estate  against  the  separate  estate, 

392.  Separate  creditors  may  prove  against  the  joint  estate  in  case  of 

fraud. 

393.  So  in  case  of  dormant  partner. 

394.  So  where  some  members  of  a  firm  carry  on  a  separate  trade. 

395.  No  set-ofF  of  joint  and  separate  debts. 

396.  Agreements  as  to  disposition  of  property  on  dissolution  avoided  by 

bankruptcy. 
397-404.  Statute  of  reputed  ownership. 

405.  Solvent  partners  cannot  come  into  competition  with  joint  creditors 

against  the  joint  estate. 

406.  Nor  against  the  separate  estates. 

407.  Rights  and  powers  of  solvent  partners. 

408.  Same  rights  in  the  case  of  a  partnership  for  a  single  adventure. 
490.  Close  of  subject  of  pai'tnership. 

410,  411.  Part-ownership.} 

§  357.  Hitherto  we  have  been  mainly  considering 
the  effects  and  consequences  of  a  dissolution  as  between 
the  partners  themselves  and  then'  representatives,  and 
when  and  under  what  circumstances  third  persons,  hav- 
ing no  notice  thereof,  might,  notwithstanding,  have  a 
remedy  against  all  the  partners  upon  subsequent  trans- 
actions with  some  of  the  firm.  We  now  come  to  the 
consideration  of  the  rights  of  the  creditors,  who  are  such 
at  or  before  the  dissolution  of  the  firm.  These  creditors 
may  be  either  joint  creditors  of  all  the  firm,  or  separate 
creditors  of  one  or  more  of  the  firm.  For  the  most  part, 
the  same  considerations  will  apply  to  each  class  of  cred- 
itors in  all  cases  of  distribution,  whether  by  voluntary 
consent,  or  by  mere  operation  of  law,  or  by  death,  or  by 
bankruptcy,  or  by  the  decree  of  a  Court.  There  are, 
however,  some  particulars  belonging  to  the  case  of  bank- 
ruptcy, which  will  be  reserved  for  a  distinct  and  sepa- 
rate examination.  But,  unless  some  qualification  is  an- 
nexed, the  doctrines  hereinafter  stated  will  generally 
apply  to  all  other  cases  of  dissolution. 

§  358.  It  has  been  already  suggested,  that  the  rights 
of  antecedent  creditors  of  the  partnership  are  in  no  wise 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  573 

varied  by  the  dissolution  of  the  partnership.^  It  may 
be  added,  that,  upon  the  dissolution,  it  is  competent  for 
the  partners,  in  cases  of  a  voluntary  dissolution,  to  agree 
that  the  joint  property  of  the  partnership  shall  belong 
to  one  of  them  ;  and  if  this  agreement  be  hona  jide^  and 
for  a  valuable  consideration,  it  will  transfer  the  whole 
property  to  such  partner,  wholly  free  from  the  claims 
of  the  joint  creditors.^  The  like  result  will  arise  from 
any  stipulation  to  the  same  effect,  in  the  original  articles 
of  copartnership,  in  cases  of  a  dissolution  by  death,  or 
by  any  other  personal  incapacity  ;  but  not  in  cases  of  a 
dissolution  by  forfeiture  for  felony,  or  by  bankruptcy. 
The  reason  of  this  is  obvious.  While  the  partnership 
is  solvent,  and  going  on,  the  creditors  have  no  equity, 
strictly  speaking,  against  the  effects  of  the  partnership.^ 
Neither  have  they  any  lien  on  the  partnership  effects 
for  their  debts.  All  that  they  can,  or  may  do,  is  to  pro- 
ceed by  an  action  at  law  for  their  debts  against  the 
partners  ;  and  having  obtained  judgment  therein,  they 
may  cause  the  execution,  issuing  upon  that  judgment 
to  be  levied  upon  the  partnership  effects,  or  upon  the 
separate  effects  of  each  partner,  or  upon  both.'^  There 
being,  then,  no  lien,  and  no  equity  in  favor  of  the  cred- 


'  Ante,  §  334,  335 ;  Ault  r.  Goodrich,  4  Russ.  430 ;  Gow  on  P.  c.  5,  §  2, 
p.  240,  241,  3d  ed. ;  Coll.  on  P.  B.  1,  c.  2,  §  3,  p.  75,  2d  ed. ;  2  Bell,  Comm. 
B.  7,  c.  2,  p.  638,  5tli  ed, 

'  Gow  on  P.  c.  5,  §  2,  p.  237-241,  3d  ed.  ;  Coll.  on  P.  B.  2,  c.  1,  §  2,  p. 
113, 114,  2d  ed. ;  Ex  paiie  Peake,  1  Madd.  346  ;  Ex  pmie  Ruffin,  6  Ves.  119, 
127;  Ex  parte  Fell,  10  Ves.  347  ;  Ex  jmrte  Williams,  11  Ves.  3  ;  Ex  parte 
Rowlandson,  1  Rose,  416  ;  Campbell  v.  MuUett,  2  Swans.  551,  575  ;  ante,  §  97, 
and  note  ;  ante,  §  326,  note ;  [Ketchum  v.  Durkee,  1  Barb.  Ch.  480  ;  Sage  v. 
Cliollar,  21  Barb.  596  ;  Bullitt  v.  Meth.  Epis.  Church,  26  Penn.  St.  108.] 

^  Ibid.,  and  ante,  §  97,  note,  and  ante,  §  326,  note,  and  especially  Ex  parte 
Williams,  11  Ves.  3,  5  ;  [Waterman  v.  Hunt,  2  R.  I.  298  ;  Cook  v.  Beech,  10 
Humph.  412.] 

*  Ex  parte  Ruffin,  6  Ves.  119,  126,  127  ;  Ex  parte  Williams,  11  Ves.  3 ; 
Ex  parte  Fell,  10  Ves.  347  ;  Campbell  i'.  Mullott,  2  Swans.  551,  575. 


574  PARTNERSHIP.  [CHAP.  XV. 

itors  against  the  partnership  effects,  until  such  execution 
is  issued  and  levied  thereon,  it  follows,  that  those  effects 
are  susceptible  of  being  legally  transferred,  honafide,  for 
a  valuable  consideration,  to  any  persons  whatsoever,  and 
as  well  to  the  other  partners  as  to  mere  strangers.^ 

§  359.  And  this  is  equally  true,  although  the  whole 
or  a  part  of  the  consideration  of  the  transfer  is,  that 
the  partners  taking  the  property  shall  pay  the  whole 
or  a  particular  part  of  the  debts  of  the  partnership  ;  for 
that  will  not  aid  the  creditors.  The  reason  is,  that,  in 
such  a  case,  the  retiring  partner  who  so  transfers  his 
share,  has  no  lien  on  the  property  for  the  discharge  of 
those  debts  ;  for  by  his  voluntary  transfer  thereof  he 
has  parted  with  it,  and  trusted  to  the  personal  security 
and  personal  contract  of  the  other  partners.^  Even  if 
he  had,  the  lien  would  not  pass  to  those  creditors  by 
operation  of  law,  so  as  to  become  available  in  theu* 
favor.^     There  may  be,  and  indeed  often  is,  a  special 

1  Ex  2Mrte  Ruffin,  6  Ves.  119,  126,  127;  Ex  parte  Williams,  11  Ves.  3, 

5  ;  ante,  §  97,  and  note  ;  ante,  §  326,  note  ;  Campbell  v.  Mullett,  2  Swans. 
551,  575 ;  Ex  parte  Fell,  10  Ves,  347 ;  [Ketchum  v.  Durkee,  1  Barb.  Ch. 
480;  Allen  v.  Center  Valley  Co.,  21  Conn.  130;  Ferson  v.  Monroe,  1 
Fost.  462;  Howe  v.  Lawrence,  9  Cush.  553];  {post,  §  371-373,  2  Lead. 
Cas.  inEq.  329,  3d  Am.  ed. ;  21  Law  Mag.  320;  Kimball  v.  Thompson, 
13  Met.  283 ;  Baker's  Appeal,  21  Penn.  St.  76  ;  Siegel  v.  Cliidsey,  28  Penn. 
St.  279 ;  Richardson  v.  Tobey,  3  All.  81 ;  Dimon  v.  Hazard,  32  N.  Y.  65 ; 
Potts  V.  Blackwell,  4  Jones,  Eq.  58 ;  Maries  v.  Hill,  15  Gratt.  400 ;  Jones 
V.  Lusk,  2  Metcalfe,  356 ;  Mandel  v.  Peay,  20  Ark.  325.  See  Mechanics' 
Bank  v.  Hildreth,  9  Cush.  356.  •  On  fraudulent  transfers,  see  2  Lead.  Cas. 
in  Eq.  330,  3d  Am.  ed. ;  Wilson  v.  Robertson,  21  N.  Y.  587;  Ransom  v. 
Van  Deventer,  41  Barb.  307.} 

2  Ex  parte  Ruffin,  6  Ves.  119,  126,  127;  Ex  2:»ar^e  Williams,  11  Ves.  3, 
5-8;  {Croone  v.  Bivens,  2  Head,  339.} 

3  Gow  on  P.  c.  5,  §  2,  p.  238-241,  3d  ed. ;  Id.  p.  245 ;  Id.  p.  253,  254 ; 
Coll.  on  P.  B.4,  c.  2,  §  1,  p.  603-605;  Ex  parte  Peele,  6  Ves.  602;  Ex 
parte  Williams,  Buck,  13  ;  Ex  parte  Freeman,  Buck,  471 ;  Ex  parte  Ruffin, 

6  Ves.  119,  126,  '127  ;  Ex  parte  Williams,  11  Ves.  3  ;  Campbell  v.  Mullett, 
2  Swans.  551,  575  ;  Ex  parte  Fell,  10  Ves.  347  ;  {2  Lead.  Cas.  in  Eq.  330, 
3d  Am.  ed. ;  Robb  v.  Mudge,  14  Gray,  534.  Partnership  property  con- 
veyed on  a  dissolution  to  one  of  the  partners,  who  agrees  to  hold  and  con- 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  575 

agreement,  subsequently  entered  into  between  the  cred- 
itors and  the  partner,  taking  the  transfer ;  but  then  the 
case  stands  dryly  upon  such  an  agreement,  and  has  no 
o^Dcration  beyond  it.^ 

§  360.  Subject,  however,  to  these  exceptions,  it  may 
be  generally  stated,  that,  where  the  partners  themselves 

vey  one-half  of  it  to  bis  copartner  after  paying  the  firm  debts,  is  to  be  ap- 
plied, in  case  of  the  insolvency  of  both  partners,  to  the  jiayment  of  the  firm 
debts.  Harmon  v.  Clark,  13  Gray,  114.  See  Wildes  v.  Chapman,  4  Edw. 
Ch.  669.  In  Tenney  v.  Johnson,  43  N.  H.  144,  upon  a  disagreement 
between  partners,  their  differences  were  submitted  to  arbitration,  and  the 
award  was  that  all  the  goods  and  assets  of  the  firm  should  pass  to  one  of  the 
partners  who  should  pay  all  the  firm  debts,  and  thereon  such  goods  and 
assets  were  all  attached  by  the  separate  creditors  of  such  partner,  and 
subsequently  by  the  creditors  of  the  firm,  and  it  was  held,  that  the  latter 
were  entitled  to  be  preferred,  even  had  the  award  been  executed  by  a  trans- 
fer in  accordance  with  it.  This  is  in  accoi'dance  with  prior  New  Hampshire 
cases.  Ferson  v.  Monroe,  1  Fost.  462 ;  Jarvis  v.  Brooks,  3  Fost.  136 ; 
Benson  v.  Ela,  35  N.  H.  402,  but  the  doctrine  seems  peculiar  to  that  State. 
2  Lead.  Cas.  in  Eq.  328,  3d  Am.  ed. ;  ante,  §  261,  note.  But  see  Conroy  v. 
Woods,  13  Cal.  626.}  In  Ex  2Jor^e  Williams,  11  Ves.  3,  6,  Lord  Eldon 
said:  "The  creditors  are  not  injured  by  the  agreement  of  partners  to  dis- 
solve the  pai'tnership ;  and  that,  from  that  time,  what  was  joint  property 
shall  become  the  separate  property  of  one,  notice  of  the  dissolution  being 
given  ;  as  either  a  consideration  is  paid,  or,  which  for  this  purpose  is  equal  to 
a  consideration,  a  covenant  is  entered  into  to  pay  the  debts  and  indemnifj- 
the  retiring  partner,  so  conceived  as  not  to  leave  any  lien  upon  the  prop- 
erty. Upon  any  other  principle  the  conclusion  must  be,  that  a  partner 
could  not  retire  from  Child's  house  ;  as  the  effects  may  be  distributed  twen- 
ty years  hence  among  the  creditors,  if  they  remain  so.  If  creditors  do 
not  like  the  arrangement,  they  must  go  to  each  of  the  partners,  and  de- 
sire payment.  Another  material  ground  is,  that,  where  the  possession  of  the 
property  is  delivered  ov«r  to  the  surviving  partner,  and  he  goes  into  the  world 
as  a  sole  trader ;  he  has  all  the  credit  belonging  to  him  as  such  sole  trader  ; 
having  the  possession,  and  dealing  with  mankind  as  such.  I  qualify  it  so ; 
for  I  do  not  agree,  that  mere  dissolution  will  work  all  this  effect;  as  that 
does  no  more  than  declare,  that  the  partnership  is  not  to  be  carried  on  any 
further,  except  for  winding  up  the  affairs,  and  he  who  has  actual  possession, 
has  it  clothed  with  a  trust  for  the  other,  to  apply  the  property  to  the  debts ; 
and  that  will  qualify  the  nature  of  his  possession,  so  that  it  cannot  be  said, 
he  has  the  sole  possession  of  the  specific  effects,  or  the  debts,  to  bring  it 
within  the  operation  of  the  Statute  of  King  James,  which  certainly  affects 
debts." 

'  See  Gow  on  P.  c.  5,  §  2,  p.  240,  245,  3d  ed. ;  Id.  p.  254,  where  the  prin- 
cipal cases  are  collected. 


576  PARTNERSHIP.  [CHAP.  XV. 

have  a  lien  upon  the  partnership  effects  for  the  dis- 
charge of  all  the  debts  and  obligations  thereof  (as  they 
have  in  all  cases,  where  they  have  not  parted  with  it)/ 
that  lien  may,  in  many  cases,  be  made  available  for  the 
benefit  of  the  creditors.  But  then  the  equities  of  the 
creditors  are  to  be  worked  out  through  the  medium  of 
that  of  the  partners.^  They  have,  indeed,  no  lien  ;  but 
(as  has  been  said)  they  have  something  approaching  to 
a  lien,  of  which,  with  the  assent  of  the  partners  entitled 
to  the  lien,  they  may  avail  themselves  in  a  Court  of 
Equity  against  the  partnership  effects.^     The  commu- 

1  Ante,  §  97,  and  note,  and  ante,  §  326;  1  Story,  Eq.  Jur.  §  675,  676  ; 
Holderness  v.  Shackels,  8  B.  &  C.  612. 

^  [And  if  the  contract  of  partnership  is  of  such  a  nature,  that  the  co- 
partners can  enforce  no  such  right  of  lien  as  between  themselves,  the  part- 
nership creditors  can  claim  no  such  preference.  Rice  v,  Barnard,  20  Vt.  479  ; 
Washburn  v.  Bank  of  Bellows  Falls,  19  Vt.  278,  and  the  able  judgment  of 
Redfield,  Chancellor.  In  the  late  case  of  Tillinghast  v.  Champlin,  4  R.  I. 
1 73,  it  was  held  that  the  doctrine  of  the  text  was  applicable  only  while  the 
copartners  are  administering  their  own  affairs,  and  did  not  apply,  if  one 
partner  died,  leaving  the  other  insolvent,  or  when  both  partners  become 
bankrupt,  and  their  property  is  in  the  hands  of  assignees.  But  that  in  such 
a  case  an  equitable  lien  would  attach  in  favor  of  copartnership  creditors 
upon  joint  property,  and  of  separate  creditors  upon  separate  property,  in  the 
hands  of  the  surviving  partner,  or  assignees,  as  trustee  for  each  class  of  cred- 
itors, which  will  be  administered  in  equity  against  such  trustees  upon  the 
direct  application  of  the  creditors.  See  the  able  opinion  of  Ames,  C.  J.] 
{2  Lead.  Cas.  in  Eq.  329,  3d  Am.  ed. ;  McNutt  v.  Strayhorn,  39  Penn.  St. 
269;  Backus  v.  Murphy,  39  Penn.  St.  397.} 

3  Campbell  v.  Mullett,  2  Swans.  551,  575,  576 ;  Ex  2miie  Ruffin,  6  Ves. 
119,  126,  127  ;  Ex  parte  Fell,  10  Ves.  347  ;  Ex  jictrte  Williams,  11  Ves.  3  ; 
ante,  §  97,  note,  and  ante,  §  326,  and  note  ;  3  Kent,  65  ;  Ex  parte  Kendall, 
17  Ves.  514,  526.  —  In  Ex  parte  Kendall,  17  Ves.  526,  Lord  Eldon  said: 
"  I  do  not  recollect  an  instance,  that  this  right  to  go  in  upon  the  separate 
fund,  not  given  by  the  legal  contract,  was  extended  beyond  those  who  were 
creditors  of  the  whole  firm.  Supposing  that  all  those  creditors  could  go  in, 
the  next  question  is,  whether  the  creditors  of  the  four  can  compel  them  to 
go  in.  With  regard  to  that,  though  much  artificial  doctrine  has  been  intro- 
duced in  this  Court,  yet  creditors,  as  such,  independent  of  the  effect  of  any 
special  contract,  have  no  lien  or  charge  upon  the  effects  of  their  debtor ; 
and  in  all  these  cases  of  distribution  of  joint  effects,  it  is  by  force  of  the 
equities  of  the  j^artners  among  themselves,  that  the  creditors  are  paid ;  not 
by  force  of  their  own  claim  upon  the  assets,  for  they  have  none." 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  577 

nity  of  interest  still  remains,  notwithstanding  a  dissolu- 
tion, so  far  as  is  necessary  to  wind  up  the  affairs  of  the 
partnership ;  and  this  requires,  that  what  was  partner- 
ship property  before,  shall  (unless  otherwise  agreed) 
continue  to  be  so  for  the  purpose  of  a  distribution,  not 
as  the  rights  of  the  creditors  may  suggest,  but  as  the 
rights  of  the  partners  themselves  require.  And  it  is 
thus,  through  the  operation  of  administering  the  equi- 
ties between  the  parties  themselves,  that  the  creditors 
have  the  opportunity  of  enforcing  this  quasi  lien.^  In 
short,  in  case  of  a  dissolution,  each  partner  holds  the 
joint  property,  clothed  with  a  trust  to  apply  it  to  the 
payment  of  the  joint  debts,  and,  subject  thereto,  to  be 
distributed  among  the  partners  according  to  their  re- 
spective shares  therein.^  -^ 
§  361.  From  the  foregoing  considerations,  then,  it  is 
plain,  that  the  joint  creditors  of  the  partnership,  while 
all  the  partners  are  living  and  solvent,  can  enforce  no 
claim  against  the  joint  effects  or  the  separate  effects 
of  the  partners,  except  by  a  common  action  at  law.^  It 
is  only  in  cases,  where  there  is  a  dissolution  by  the 
death  or  bankruptcy  of  one  partner,  that  the  right  of 
the  joint  creditors  can  attach,  as  a  cjiiasi  lien  upon  the 
partnership  effects,  as  a  derivative  subordinate  right, 
under  and  through  the  lien  and  equity  of  the  partners. 

1  Ex  parte  Williams,  11  Ves.  3,  6 ;  Ex  imrte  Ruffin,  6  Ves.  119,  126, 
127;  ante,  §  97,  note;  §  326,  note;  Ex  parte  Kendall,  17  Ves.  511,  626. 
[See  Stocken  v.  Dawson,  9  Beav.  239,  246.] 

*  Ibid.  See  Crallan  v.  Oulton,  3  Beav.  1,  7;  {Harmon  v.  Clark,  13 
Gray,  114.} 

3  [In  Allen  v.  The  Center  Valley  Co.,  21  Conn.  130,  it  was  held,  that 
although  partnership  creditors  were  entitled  to  priority  of  payment  as 
against  individual  creditors,  out  of  partnership  funds,  so  long  as  they  con- 
tinued partnership  funds,  yet  they  have  no  specific  lien  thereon ;  and  while 
tlic  partnership  remains,  and  its  business  is  going  on,  whether  insolvent  or 
not,  there  is  no  legal  objection  to  a  hona  fide  distribution  of  the  partnership 
funds  among  the  members  of  the  firm,  or  a  l>ona  fide  change  of  them  from 
joint  to  separate  estate.] 

37 


578  PAHTNERSHIP.  [CHAP. 


XV, 


In  the  former  case  (of  death),  the  personal  representa- 
tives of  the  deceased  partner  have  a  right  (whether 
his  estate  be  solvent  or  insolvent),  to  insist  upon  a  due 
application  of  the  joint  effects,  to  pay  the  joint  debts 
and  fulfil  the  other  purposes  of  the  trust.^  At  law,  in- 
deed, the  creditors  have  no  remedy,  except  against  the 
surviving  partners  for  their  debts ;  ^  but  in  equity,  as 
we  shall  presently  see,  it  is  far  otherwise.  In  the  lat- 
ter case  (of  bankruptcy)  the  like  equity  attaches  to  the 
solvent  partners,  and  the  assignees  can  stand  only  in 
the  place  of  the  bankrupt,  and  take  his  rights,  and 
consequently  they  are  entitled  to  nothing,  except  the 
surplus,  after  the  discharge  of  all  the  joint  debts,  and 
of  the  claims  of  the  other  partners.^  So  that,  in  each 
case,  it  is  plain,  that  the  joint  creditors  must  be  paid, 
in  order  to  the  due  administration  of  justice  between 
the  partners  themselves.  Thus,  we  see  at  once,  how 
the  quasi  lien  or  equity  of  creditors  arises,  and  that  it 
is  a  dependent  and  subordinate  right. 

§  362.  Another  important  consideration  in  cases  of 
a  dissolution  by  death  is,  as  to  the  rights  of  the  joint 
creditors  against  the  estate  of  the  deceased  partner. 
We  have  seen,  that  at  law,'*  the  sole  right  of  action  of 
the  joint  creditors  is  against  the  survivors.^     And  the 


>  Ex  jyarte  Ruffin,  6  Ves.  119,  126,  127;  Ex  parte  Williams,  11  Ves.  3, 
6 ;  ante,  §  97,  note;  ante,  §  326,  346,  347,  note;  Gow  on  P.  c.  5,  §  2,  p.  235, 
236,  3d  ed. ;  1  Story,  Eq.  Jur.  §  675,  676  ;  Coll.  on  P.  B.  3,  c.  3,  §  4,  p.  404, 
405,  2d  ed. ;  Id.  B,  3,  c.  5,  §  2,  p.  503  ;  3  Kent,  65 ;  Ex  parte  Kendall,  17 
Ves.  514,  526  ;  Wilcox  v.  Kellogg,  11  Ohio,  394. 

2  Ibid. ;  1  Chitty  on  PL  p.  39,  40,  3d  ed. ;  Bacon,  Ab.  Obligation,  D.  4  ; 
Com.  Dig.  Abatement,  F.  8  ;  Godson  v.  Good,  6  Taunt.  587  ;  Bovill  v.  Wood, 
2  M.  &  S.  23 ;  Richards  v.  Heather,  1  B.  &  Aid.  29 ;  Coll.  on  P.  B.  3,  c.  5, 
§  2,  p.  503,  2d  ed. 

*  See  authorities  cited  in  the  preceding  notes. 

*  [In  Massachusetts  a  statute  has  changed  this  principle.  Mass.  Rev.  Stat, 
c.  66,  §  27]  ;  {Gen.  Sts.  c.  97,  §  28.     See  In  re  Rice,  7  All.  112.} 

'  Ante,  §  361,  note. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  579 

inquiry  here  naturally  presented  is,  whether  they  have 
any  remedy  in  equity.  The  doctrine  formerly  held  upon- 
this  subject  seems  to  have  been,  that  the  joint  creditors 
had  no  claim  whatsoever  in  equity  against  the  estate  of 
the  deceased  partner,  except  when  the  surviving  part- 
ners were  at  the  time,  or  subsequently  became,  insolvent 
or  bankrupt.^  But  that  doctrine  has  been  since  over- 
turned ;  and  it  is  now  held,  that  in  equity  all  partner- 
ship debts  are  to  be  deemed  joint  and  several ;  ^  and 
consequently  the  joint  creditors  have  in  all  cases  a  right 
to  proceed  at  law  against  the  survivors,  and  an  election 
also  to  proceed  in  equity  against  the  estate  of  the  de- 
ceased partner,  whether  the  survivors  be  insolvent,  or 
bankrupt,  or  not.^     The  consequence  is,  that  the  joint 

^  See  Lane  v.  Williams,  2  Vern.  292  ;  Jacomb  v.  Harwood,  2  Ves.  Sr.  265  ; 
Hankey  v.  Garratt,  1  Ves.  Jr.  236  ;  Ex  parte  Ruffin,  6  Yes.  119,  126,  127  ; 
Ex  paHe  Williams,  11  Ves.  3  ;  Ex  parte  Kendall,  17  Ves.  514  ;  Campbell  v. 
Mullett,  2  Swans.  551;  Grayu.  Chiswell,  9  Ves.  118;  Coll.  on  P.  B.  3,  c.  3, 
§  4,  p.  404-408,  2d  ed. ;  Hamersley  r.  Lambert,  2  Johns.  Ch.  508  ;  Gowon  P.  c. 
5,  §  2,  p.  359,  360,  3d  ed.  [This  doctrine  is  still  maintained  in  New  York.  See 
Lawrence  v.  Trustees  of  Orphan  House,  2  Denio,  577.] 

-  By  the  civil  law  of  France,  the  rule  as  to  the  obligations  of  partners  on 
their  partnership)  conti'acts,  does  not  seem  to  agree  exactly  with  the  rule  of  the 
common  law.  They  are  always  understood  to  contract  jointly,  but  not  alwavs 
severally.  The  general  rule  is,  that  each  partner  is  considered  as  contracting 
only  to  the  extent  of  his  interest;  and  in  any  case,  unless  there  be  an  express 
agreement  by  all  the  partners  to  bind  themselves  severally,  the  creditor  can 
only  recover  from  each  his  own  proportion  of  the  debt.  One  exception  to 
this  rule  is  indeed  admitted  in  favor  of  commercial  partnerships  (societes  de 
commerce),  wherein  the  partners  are  liable  jointly  and  severally  (solidairement) 
for  the  debts  of  the  partnership ;  and  this  exception  is  created  for  the  pur- 
pose of  extending  the  credit  of  merchants.  But  in  universal  partnerships 
(societes  universelles),  and  in  all  special  partnerships  (societes  particulieres), 
which  ai'e  not  commercial  partnerships,  each  partner,  although  he  is  presumed 
to  contract  in  the  name  of  the  firm,  only  binds  each  one  of  his  copartners  for 
his  proportional  part  of  the  debt.  When,  indeed,  a  partner  has  conti-acted 
for  the  firm  in  his  own  sole  name,  he  is  solely  responsible  to  the  creditor,  but 
he  has  a  legal  claim  for  indemnification  and  contribution  therefor  on  each  part- 
ner for  liis  proportion,  unless  he  have  transgressed  the  limits  of  his  authority,  or 
been  guilty  of  fraud.    See  Poth.  de  Soc.  c.  vi.  §  1,  No.  96,  §  111,  No.  103-106. 

'  Coll.  on  P.  B.  3,  c.  3,  §4,  p.  407-413,  2d  ed. ;  Devaynesi).  Noble,  1  Mer. 
529  ;  s.c.  2  Russ.  &  M.  495  ;  Sumner  v.  Powell,  2  Mer.  30,  s.  c.  Turn.  &  R.423  ; 


580  PARTNERSHIP.  [CHAP.  XV. 

creditors  need  not  now  wait,  until  the  partnership  affairs 
are  wound  up,  and  a  final  adjustment  thereof  is  made. 
But  they  may  at  once  proceed,  as  upon  a  joint  and 
several  contract,  in  equity  against  the  estate  of  the  de- 
ceased partner ;  although  in  any  such  suit  the  surviving 
partners  must  be  made  parties,  as  persons  interested  in 
taking  the  account.^ 

Wilkinson  v.  Henderson,  1  Myl.  &  K.  582  ;  Thorpe  v.  Jackson,  2  You.  &  C.  Ex. 
553  ;  Gow  on  P.  c.  5,  §  2,  p.  358-360,  3d  ed. ;  Id.  §  3,  p.  290-292;  1  Storj-, 
Eq.  Jur.  §  676  ;  3  Kent,  64;  Hamersley  v.  Lambert,  2  Johns.  Ch.  508  ;  Bel- 
knap V.  Cram,  11  Ohio,  411;  {Lind.  on  P.  295,  872;  Rice  v.  Gordon,  11 
Beav.  265;  Brown  v.  Douglas,  11  Sim.  283;  Kimball  v.  Whitney,  15  Ind. 
280.  See  darker.  Bickers,  14  Sim.  639 ;  Wilmer  v.  Currey,  2  De  G.  &  Sm. 
347.}  In  Devaynes  v.  Noble,  1  Mer.  529,  563,  564,  Sir  William  Grant  (Mas- 
ter of  the  Rolls),  said  :  "  It  may  be  proper,  however,  to  observe,  that  the 
common  law,  though  it  professes  to  adopt  the  Lex  Mercatoria,  has  not  adopted 
it  throughout  in  what  relates  to  partnership  in  trade.  It  holds,  indeed,  that 
although  partners  are  in  the  nature  of  joint-tenants,  there  shall  be  no  surviv- 
orship between  them  in  point  of  interest.  Yet  with  regard  to  partnership 
contracts,  it  applies  its  own  peculiar  rule  ;  and,  because  they  are  in  form  joint, 
holds  them  to  produce  only  a  joint  obligation,  which  consequently  attaches  ex- 
clusively upon  the  survivors ;  whereas,  I  apprehend,  by  the  general  mercan- 
tile law,  a  partnership  contract  is  several,  as  well  as  joint.  That  may  probably 
be  the  reason,  why  Courts  of  Equity  have  considered  joint  contracts  of  this 
sort  (that  is,  joint  in  form),  as  standing  on  a  different  footing  from  others. 
The  cases  of  relief  on  joint  bonds  may  be  accounted  for  on  the  ground  of  mis- 
take in  the  manner  of  framing  the  Instrument ;  and  it  may  be  said  that  equity 
gives  to  them  no  other  effect  than  it  was  the  intention  of  the  parties  them- 
selves to  have  given  to  them.  But  how  is  it  possible  to  explain  the  cases  upon 
partnership  notes,  so  as  to  distinguish  them  from  ordinary  partnership  debts  ?  " 
'  Coll.  on  P.  B.  3,  c.  3,  §  4,  p.  404,  405,  2d  ed.;  |Lind.  on  P.  874}  ;  ante, 
§  347;  Wilkinson  r.  Henderson,  1  Myl.  &  K.  582,  588.  On  this  occasion  Sir 
John  Leach  (Master  of  the  Rolls)  said  :  "  All  the  authorities  establish,  that, 
in  the  consideration  of  a  Court  of  Equity,  a  partnership  debt  is  several,  as 
well  as  joint.  The  doubts  upon  the  present  question  seem  to  have  arisen 
from  the  general  principle,  that  the  joint  estate  is  the  first  fund  for  the  pay- 
ment of  the  joint  debts,  and  that  the  joint  estate  vesting  in  the  surviving  part- 
ner, the  joint  creditor,  upon  equitable  considerations,  ought  to  resort  to  the 
surviving  partner,  before  he  seeks  satisfaction  from  the  assets  of  the  deceased 
partner.  It  Is  admitted,  that  if  the  surviving  partner  prove  to  be  unable  to 
pay  the  whole  debt,  the  joint  creditor  may  then  obtain  full  satisfaction  from 
the  assets  of  the  deceased  partner.  The  real  question,  then,  is,  whether  the 
joint  creditor  shall  be  compelled  to  pursue  the  surviving  partner  In  the  first 


CHAP.   XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  581 

§  363.  Still  another  inquiry  may  remain,  in  cases 
where  the  estate  of  the  deceased  partner  is  not  suffi- 
cient to  pay  all  his  separate  debts,  and  all  the  joint 
debts ;  and  that  is,  whether  the  debts  are  to  be  paid 
pari  jyassic  out  of  the  assets  of  the  deceased,  or  either  is 
entitled  to  a  preference.  The  general  rule  would  seem 
to  be  (as  it  is  in  bankruptcy),  that  the  joint  creditors 
have  a  priority  of  right  to  payment  out  of  the  joint 
estate,  and  the  separate  creditors  a  like  right  of  pri- 
ority to  payment  out  of  the  separate  estate ;  and  the 
surplus,  if  any,  is  divisible  among  the  other  class  of 
creditors.^     In  cases  where  there  is  both  a  joint  estate 

instance,  and  shall  not  be  permitted  to  resort  to  the  assets  of  the  deceased 
partner,  until  it  is  established  that  full  satisfaction  cannot  be  obtained  fi-om 
the  surviving  jjartner  ;  or  whether  the  joint  creditor  may,  in  the  first  instance, 
resort  to  the  assets  of  the  deceased  partner,  leaving  it  to  the  personal  repre- 
sentatives of  the  deceased  partner  to  take  proper  measures  for  recovering 
what,  if  any  thing,  shall  appear  upon  the  partnership  accounts  to  be  due  from 
the  surviving  partner  to  the  estate  of  the  deceased  partner.  Considering  that 
the  estate  of  the  surviving  partner  is  at  all  events  liable  to  the  full  satisfaction 
of  the  creditors,  and  must  first  or  last  be  answerable  for  the  failure  of  the  sur- 
viving partner ;  that  no  additional  charge  is  thrown  ujion  the  assets  of  the  de- 
ceased partner  by  the  resort  to  them  in  the  first  instance,  and  that  great 
inconvenience  and  expense  might  otherwise  be  occasioned  to  the  joint 
creditors;  and,  further,  that  according  to  the  two  decisions  in  Sleech's  Case 
in  the  cause  of  Devaynes  v.  Noble,  the  creditor  was  permitted  to  charge  the 
separate  estate  of  the  deceased  jiartner,  which  in  equity  was  not  primarily 
liable,  as  between  the  partners,  without  first  having  resort  to  dividends,  which 
might  be  obtained  by  proof  under  the  commission  against  the  surviving  part- 
ner, I  am  of  opinion,  that  the  plaintiff  is  entitled  in  this  case  to  a  decree  for 
the  benefit  of  himself,  and  all  other  joint  creditors,  for  the  payment  of  his 
debt  out  of  the  assets  of  ShejAerd,  the  deceased  partner."  { So  Vance  v. 
Cowing,  13  Ind.  460.}  [But  see  Lawrence  v.  Trustees  of  Orphan  House,  2 
Denio,  577  ;  Patterson  v.  Brewster,  4  Edw.  Ch.  352,  where  the  case  of  Wilk-^ 
inson  v.  Henderson  is  examined  and  disapproved.] 

'  Gray  v.  Chiswell,  9  Ves.  118,  124,  125  ;  Twiss  v.  Massey,  1  Atk.  67; 
Ex  parte  Cook,  2  P.  Wms.  500 ;  Ex  parte  Clay,  6  Ves.  813 ;  Coll.  on  P.  B. 
4,  c.  2,  §  1,  p.  595,  2d  ed. ;  Id.  §  3,  p.  623,  624  ;  3  Kent,  64,  65  ;  Murray  v. 
Murray,  5  Johns.  Ch.  60, 74-77  ;  Tucker  v.  Oxley,  5  Cranch,  34,  44,  45  ;  Gow 
on  P.  c.  5,  §  3,  p.  286,  287,  3d  ed. ;  Id.  p.  310-323 ;  Payne  v.  INIatthews,  6 
Paige,  19;  Comm.  Bank  of  Lake  Erie  v.  AVestern  Reserve  Bank,  11  Ohio, 
444,  451 ;    [Bridge  v.   McCuUough,  27  Ala.  661 ;    Rodgers  v.  Meranda,  7 


582  PARTNERSHIP.  [CHAP.  XV. 

and  a  separate  estate,  the  rule  may  not  be  unreason- 
able, as,  at  most,  it  only  puts  the  joint  creditors  of  the 

Ohio  St.  179, 187,  where  the  subject  is  very  ably  examined.    Walker  w.  Eyth, 
25  Penn.  St.  216]  ;  {Lind.on  P.  876;  1  Am.  Lead.  Cas.  480,  4th  Am.  ed.  ; 
Ridgway  v.  Clare,  19  Beav.  Ill;  Lodge  v.   Prichard,  4  GifF.   294;  s.  c.  on 
appeal,   1  De  G.  J.  &  S.  610;  Weyert?.  Thornburgh,  15  Ind.  124;  Moline 
Water  Power  Co.  v.  Webster,  26  111.  233 ;  Pahlman  v.  Graves,  Id.  405  ; 
Toombs  r.  Hill,  28  Ga.  371 ;  post,  §  376.} — This  doctrine  has  not  been  univer- 
sally adopted  in  America.     Mr.  Chancellor  Kent  has  collected  the  principal 
cases  in  his  Note  (b)  to  3  Kent,  65.     The  subject  was  also  very  fully  discussed 
by  the  same  learned  Judge,  and  all  the  then  existing  authorities  were  cited 
by  him  in  Murray  v.   Murray,  6  Johns.  Ch.  60,  and  by  Mr.  Chief  Justice 
Tilghman,  and  Mr.  Justice  Gibson,  and  Mr.  Justice  Duncan  in  Bell  v.  New- 
man, 5  S.  &  R.  78,  85-107.     Still  more  recently  this  doctrine  has  been  re- 
viewed at  large  by  Mr.  Chief  Justice  Shaw,  in  an  elaborate  opinion,  in 
Allen  V.  Wells,  22  Pick.  450 ;  and  the  conclusion  to  which  he  has  arrived 
seems  entirely  well  founded,  that  the  doctrine  is  one  that  can  be  properly  en- 
forced in  equity  only,  and  not  at  law.     The  comments  of  all  these   learned 
Judges   upon  the   general  doctrine   are  very  instructive,  and   in  a  great 
measure  exhaust  the  subject.     {In  the  American  note  to  the  case  of  Silk 
V.  Prime,    2    Lead.   Cas.  in  Eq.   3d  Am.    ed.    313,  this   subject  is  treated 
with  great  learning  and   clearness.     What   seems   to   be   the  true  reason 
for  the  prior  rights  of  the  separate  creditors  in  the   estate    of  a   deceased 
partner   is   there   given   thus :    "  Whenever   one  partner   dies    in  the  life- 
time   of  another,   the   law   casts   all  the   obligations    of   the    firm  on   the 
surviving  partner,  and  the  only  recourse  of  the  partnership  creditors  against 
the  separate  estate  of  the  deceased  partner  being  in  equity,  this  estate  will 
stand,  so  far  as  they  are  in  question,  on  the  footing  of  equitable  assets,  and  be 
subject  to  the  two  principles  which  govern  the  distribution  of  such  assets,  first 
that  legal  priorities  must  be  resjjected,  and  next,  that  the  division  among  equi- 
table claimants  must  be  equal.     When,  therefore,  the  estate  of  a  deceased 
partner  comes  into  equity  for  distribution,  the  separate  creditors,  whose  right 
to  the  assets  is  legal,  must  be  satisfied  in  the  first  instance,  and  then  the  resi- 
due distributed  as  equitable  assets  among  the  joint  creditors."     It  is  not  to  be 
denied,  however,  that  the  reason  generally  given  in  both  the  English   and 
American  cases  for  this  distribution  of  the  assets  of  a  deceased  partner  is  the 
, analogy  of  the  proceedings  in  bankruptcy.     See  the  cases  cited  in  the  note  to 
Silk  V.  Prime,  ubi  sup.  ;  Lodge  v.  Prichard,  4  Gifi".  294  ;  s.  c.  on  appeal,   1 
De  G.  J.  &  S.  610.     There  is  a  theoretical  advantage  in  supporting  the  distri- 
bution of  a  deceased  partner's  estate  on  acknowledged  principles  of  equity 
jurisprudence  rather  than  on  a  practice  in  bankruptcy,  the  soundness  of  which 
has  been  seriously  questioned,  see  §  377  ;  but,  on  the  other  hand,  the  latter 
method  produces  a  uniformity  in  distributing  the  estates  of  both  insolvent 
and  deceased  partners,  which  recommends  it  in  practice.     This   is  best  seen 
in  the  administration  of  the  assets  of  the  last  surviving  partner.     Both  the 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.         583 

partnership  to  an  election,  whether  they  will  proceed 
against  the  joint  estate,  or  against  the  separate  estate, 
where  both  estates  are  insolvent.  But,  where  there  is 
no  joint  estate,  the  case  may  seem  to  be  involved  in 
more  nicety  and  difficulty ;  since  under  such  circum- 
stances the  creditors  would  seem,  as  their  contract  is 
several,  as  well  as  joint,  to  be  entitled,  upon  general 
principles,  to  claim  pari  passu  with  the  separate 
creditors.^  However,  it  cannot  be  positively  affirmed, 
that  such  is  the  settled  doctrine  in  equity,  in  cases  of 
deceased  partners.  On  the  contrary,  there  seems  to 
be  some  conffict  of  opinion  upon  the  point.^  In  bank- 
joint  and  separate  creditors  have  a  legal  claim  on  these  assets,  and  therefore, 
according  to  the  principles  of  the  pax-agraph  quoted  above,  ought  to  take  pari 
passu,  while  in  the  estate  of  the  partner  who  died  first  his  separate  credi- 
tors, according  to  the  same  principle,  would  have  the  priority,  a  difference 
which  is  at  least  inconvenient.  Besides  now  in  many  of  the  States,  the  death  of 
a  joint  debtor  does  not  discharge  his  estate  from  his  liability  at  law  for  the 
joint  debts.} 

'  Coll.  on  P.  B.  3,  c.  3,  §  4,  p.  413,  2d  ed. ;  [Emanuel  v.  Bird,  19  Ala. 
596.] 

"  Cowell  V.  Sikes,  2  Russ.  191,  194,  196. —  In  this  case  Lord  Gifford 
(Master  of  the  Rolls)  seemed  to  be  of  opinion,  that  the  joint  creditors  under 
such  circumstances  could  not  come  in,  jyari  jjassu,  with  the  separate  creditors. 
But  Lord  Eldon,  under  the  circumstances  of  that  particular  case,  thought 
otherwise.  Mr.  Collyer  on  this  subject  says :  "  We  ought  not  to  conclude 
this  subject  without  adverting  to  the  question,  whether,  when  a  partnership 
creditor  has  obtained  a  decree  in  equity  for  payment  of  his  debt  out  of  the 
estate  of  the  deceased  partner,  he  is  entitled  to  receive  payment  j^ri  passu 
with  the  separate  creditors  of  that  partner.  If  this  point  were  decided  on 
principle  alone,  and  without  reference  to  any  supposed  analogy  between  the 
practice  in  the  Courts  of  Equity  and  the  practice  in  bankruptcy,  it  seems 
clear,  that  the  partnership  creditor,  as  resting  on  his  separate  contract,  would 
have  a  right  to  come  in  competition  with  the  separate  creditors.  On  the 
other  hand,  the  cases  of  Gray  v.  Chiswell,  and  Cowell  v.  Sikes,  tend  to  show, 
that,  by  analogy  to  the  rule  in  bankruptcy,  the  partnership  creditor  will  in 
such  case  be  postponed  to  the  separate  creditors,  unless  there  be  no  joint 
estate."  Mr.  Chancellor  Kent,  in  his  Commentaries,  seems  to  have  laid  down 
the  doctrine  in  general  terms,  as  equally  applicable  to  all  cases.  His  lan- 
guage is :  "  The  joint  creditors  have  the  primary  claim  upon  the  joint  fund, 
in  the  distribution  of  the  assets  of  bankrupt  or  insolvent  partners,  and  the 


584  PARTNERSHIP.  [cHAP.  XV. 

ruptcy,  where  there  is  no  joint  estate,  and  there  is  no 
solvent  partner,  joint  creditors  are  permitted  to  prove 
against  the  bankrnpt's  estate  ^^ari  passu  with  the  sepa- 
rate creditors.^ 

§  364.  Be  this  doctrine  as  it  may,  it  seems  certain, 
that  the  joint  creditors  cannot  be  compelled,  in  case 
of  the  death  of  one  partner,  and  the  bankruptcy  of 
the  survivors,  to  resort  to  the  estate  of  the  deceased 
partner  for  payment  for  the  benefit  of  the  fund  in 
bankruptcy,  in   aid   of  creditors,  who   are   creditors  of 

partnershiji  debts  are  to  be  settled  before  any  division  of  the  funds  takes 
place.  So  far  as  the  partnership  property  has  been  acquired  by  means  of 
partnership  debts,  those  debts  have  in  equity  a  priority  of  claim  to  be  dis- 
charged; and  the  separate  creditors  are  only  entitled  in  equity  to  seek 
payment  from  the  surplus  of  the  joint  fund,  after  satisfaction  of  the  joint 
debts.  The  equity  of  the  rule,  on  the  other  hand,  equally  requires  that  the 
joint  creditors  should  only  look  to  the  surplus  of  the  separate  estates  of 
the  jDartners,  after  payment  of  the  separate  debts.  It  was  a  principle  of  the 
Roman  law,  and  it  has  been  acknowledged  in  the  equity  jurisprudence  of 
Spain,  England,  and  the  United  States,  that  partnership  debts  must  be  paid 
out  of  the  partnership  estate,  and  private  and  separate  debts  out  of  the  pri- 
vate and  separate  estate  of  the  individual  partner.  If  the  partnership 
creditors  cannot  obtain  payment  out  of  the  partnership  estate,  they  cannot 
in  equity  resort  to  the  private  and  separate  estate,  until  private  and  separate 
creditors  are  satisfied  ;  nor  have  the  creditors  of  the  individual  partners  any 
claim  upon  the  partnership  property,  until  all  the  partnership  creditors  are 
satisfied.  The  basis  of  the  general  rule  is,  that  the  funds  are  to  be  liable, 
on  which  the  credit  was  given.  In  contracts  with  a  partnership  the  credit  is 
supposed  to  be  given  to  the  firm ;  but  those  who  deal  with  an  individual 
member  rely  on  his  sufficiency."  3  Kent,  64,  €5.  The  modern  Code  of 
Commerce  of  France  provides  (art.  534),  that  the  creditor,  holding  a  joint 
and  several  obligation  of  the  insolvent  and  other  persons,  who  are  also 
insolvent,  shall  participate  in  the  dividends  of  all  their  respective  estates, 
until  he  shall  be  fully  paid.  See,  also,  1 7  Duranton,  Cours  de  Droit  Franc. 
§  457,  and  5  Duvergier,  Droit  Civil  Franc.  §  406,  cited  post,  §  365  ;  4  Par- 
dessus,  Droit  Comm.  §  1089.  {See  2  Lead.  Cas.  in  Eq.  323,  3d  Am.  ed. ; 
post,  §  380.  In  Weyer  v.  Thornburgh,  15  Ind.  124,  though  there  were  no 
joint  assets,  yet  the  joint  creditors  were  not  allowed  to  share  J9a?■^  passii  in  the 
estate  of  a  deceased  partner.} 

•  Ex  parte  Kensington,  14  Ves.  447;  Ex  parte  Janson,  3  Madd.  229; 
Buck,  227 ;  Ex  parte  Sadler,  15  Ves.  52 ;  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  624, 
626,  627,  2d  ed.     {See  post,  §  380.} 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  585 

the  survivors,  and  not  of  the  old  partnership.^  For 
the  rule  in  equity,  that,  where  one  person  can  resort 
to  two  funds  for  payment,  and  another  can  resort  to 
one  only,  the  latter  may  compel  the  former  to  resort 
to  the  fund  to  which  he  may  exclusively  resort,  in  aid 
of  the  latter,  applies  only  where  both  debts  are  due  by 
precisely  the  same  debtors.^ 

§  365.  This  principle  of  Equity  Jurisprudence,  that  the 
joint  creditors  shall  be  entitled  to  a  priority  of  payment 
out  of  the  joint  effects,  and  the  separate  creditors  to  a  like 
priority  out  of  the  separate  effects,  before  the  other  class 
of  creditors  shall  be  entitled  to  any  portion  of  the  surplus, 
is  not,  perhaps,  under  all  its  aspects,  so  purely  artificial 
as  it  has  sometimes  been  suggested  to  be  ;  at  least,  it  has 
been  often  relied  upon,  as  the  dictate  of  natural  justice.^ 
In  the  Roman  law,  if  one  man  carried  on  two  separate 
trades,  it  seems,  that  the  creditors,  who  separately  sup- 
plied goods  or  credit  for  the  use  of  either  of  those  trades, 
had  a  privilege  or  right  of  payment  out  of  the  prop- 
erty employed  therein,  in  preference  to  the  creditors 
in  the  other  business.  Ut-puta  (says  Ulpian),  duas 
negotiatlones  exercehat  (^mta  sagariam  et  linteariam)  et 
separatos  hahuit  creditores?  Puto,  separathn  eos  in 
tributumvocari  ;  unusquisque  enwi  eorwrn  merci  magls, 
quam  ipsi,  crediditJ^  Straccha  lays  down  the  like  doc- 
trine in  the  case  of  the  failure  or  insolvency  of  a  mer- 
chant, engaged  in  two  kinds  of  business.  Si  mercator 
duas  negotiatlones  exerculsset,  puta  sagariam  et  lintea- 

*  Ex  parte  Kendall,  17  Yes.  514,  526,  527  ;  Coll.  on  P.  B.  4,  c.  2,  §  3,  p. 
629,  630,  2d  ed. 

*  Ibid.;  1  Story,  Eq.  Jur.  §  558-560;  Id.  §  642-645  ;  {House  v.  Thomp- 
son, 3  Head,  512.} 

^  Ex  parte  Elton,  3  Ves.  238,  242  ;  [Rodgers  v.  Meranda,  7  Ohio  St.  179.] 

*  D.  14,  4,  5,  15  ;  Poth.  Pand.  14,  4,  n.  8  ;  2  Emerigon,  Contrat  a  la  Grosse, 
c.  12,  §  6,  p.  582,  ed.  1 783  ;  Inst.  4,  7,  3  ;  17  Duranton,  Cours  de  Droit  Franc. 
§457,  p.  512-514. 


586  PARTNERSHIP.  [CHAP.  XV. 

riam,  ef  separatos  hcibiierit  creditores  in  dictls  mercibus^ 
separatos  eos  in  trihutum  vocari;  et  ilia  7^atio  in  prce- 
dictis  redditur  ;  quia  unusquisque  creditor  magls  merci, 
quam  mereatori,  credidit ;  et  ne  ex  alferius  re  merceve 
alii  indemnes  jiant,  alii  damnum  sentiant} 

§  366.  Emerigon  holds  the  same  doctrine ;  and  says, 
that  where  a  person  carries  on  two  trades  in  different 
houses,  the  creditors  who  have  given  credit  to  one  of 
these  trades  or  houses,  have  a  privilege  upon  the  effects 
there  found,  to  the  exclusion  of  the  creditors  who  have 
given  credit  to  the  other  trade  or  house  ;  and  these  last 
creditors  have  also  a  like  exclusive  privilege  upon  the 
effects  of  the  trade  or  house  to  which  they  have  given 
credit.^  And  he  puts  the  very  case  of  the  joint  credi- 
tors of  a  partnership,  as  clearly  settled  in  the  French 
law,  saying,  that  the  joint  creditors  of  a  partnership 
have  a  privilege  or  preference  of  payment  out  of  the 
partnership  effects,  before  the  separate  creditors  of  any 
one  partner ;  and  that  the  respective  creditors  of  two 
different  partnerships  have  the  like  exclusive  pri^dlege 
and  preference  upon  the  partnership  effects  of  each 
partnership,  although  both  firms  are  composed  of  the 
very  same  persons.^  And  he  gives  the  very  reason  as- 
signed therefor  in  the  Roman  law :  Unusquisque  enim 
eorum  merei  magis,  quam  ijjsi,  credidit^  This  also 
seems  to  be  the  recognized  doctrine  in  the  modern 
jurisprudence  of  France ;  and  it  has  been  so  promul- 
gated by  some  of  its  most  approved  jurists.^ 

'  Straccha  de  Decoctorlbus,  Pars  Ultima,  n.  21,  p,  469,  ed.  1669. 
^  Emerigon,  Contrat  a  la  Grosse,  c.  12,  §  6,  p.  582,  ed.  1783. 
3  Ibid. 

*  Ibid.     See,  also,  2  Story,  Eq.  Jur.  §  1221-1223,  1239,  1240. 

*  17  Duranton,  Cours  de  Droit  Franc.  §  457,  p.  512-515 ;  5  Duvergier, 
Droit  Civil  Franc.  §  405,  406  ;  4  Pardessus,  Droit  Comm.  §  1089,  1207.— 
In  relation  to  the  correlative  principle,  that  the  separate  creditors  ought 
first  to  be  paid  out  of  the  separate  effects  of  the  debtor  partner,  there 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  587 

§  367.  In  relation  to  what  properly  constitute  joint 
debts  of  the  partnership,  and  what  constitute  separate 
debts  of  the  particular  partners,  the  considerations  al- 
ready suggested  in  another  place  will,  in  a  great  meas- 

does  not  seem  to  be  the  same  uniformity  of  opinion  at  present  prevailing 
in  France,  although  Duranton  strongly  inclines  to  hold  it.     His  language 
is:    "Mais  il  n"y  a  pas  lieu  de  dire,  en  sens  inverse,  que  les  creanciers 
particuliers  d'un  associe  doivent  etre  payes  sur  les  biens  personnels  de  est 
associe,  par  preference  aux  creanciers  cju"il  a  a  raison  de  la  societe,  meme 
en  ce  qui  concerne  la  part  de  ses  coassocies  dans  ces  memes  dettes,  dans 
le  cas  ou  ils  en  seraient  tenus  solidairement,  soit  parce  que  la  societe  serait 
en  nom  coUectif,  soit  parce  que  les  associes  se  seraient  obliges  avec  clause 
de  solidarite ;  car  cet  associe  est  oblige,  a  I'egard  des  uns  comme  a  Tegard 
des  autres,   sur  tous  ses  biens  presens  et  a  venir,  par  consequent  sur  ses 
biens  particuliers  comme  sur  ceux  qu"il  avait  pour  sa  part  dans  la  societe. 
Et  de  meme  que  les  creanciers  particuliers  d"un  heritier  ne  peuvent  demander 
la  separation  de  son  patrimoine  d'avec  celui  du  defunt  (art.  881) ,  pour  etre 
payes  sur  ses  biens  par  preference  aux  creanciers  de  la  succession,  de  meme 
les  creanciers  particuliers  d'un  associe  ne  doivent  pas  pouvoir  demander  la 
separation  de  ses  biens  personnels  de  ceux  qu'il  a  dans  la  societe,  pour  etre 
paves  sur  ces  memes  biens  par  preference  aux  creanciers,  qu'il  a  relative- 
ment  aux  affaires  de  cette  societe.     II  y  a  parite  parfaite ;  cet  associe,  en 
contractant  la  societe,  et  des  dettes  relativement  a  cette  meme  societe,  a 
fait  ce  qu'il  avait  le  droit  de  faire,  comme  un  heritier,  qui,  en  acceptant 
purement  et  simplement  une  succession  oberee,  a  pris  sur  lui  les  dettes  du 
defunt.     Tout  ce  qu'on  pourrait  dire  de  plus  juste,  et  telle  est  Topinion  de 
plusieurs  personnes,  c'est  que  si  les  creanciers  de  la  societe  demandent  a 
etre  payes  par  preference  sur  ses  biens  ils  doivent  souiFrir  que  les  creanciers 
particuliers  de  I'associe  soient  payes  par  preference  a  eux  sur  les  biens  per- 
sonnels de  cet  associe.     La  loi  citee  au  n°  precedent  fournirait  un  argument 
pour  le  decider  ainsi.  .  On  en  trouverait  un  semblable  dans  la  loi  3,  §  2,  S. 
de  separationibus,  oil  Papinien,   centre  le  sentiment  de  Paul  et  d'Ulpien 
(dans  la  5%  au  meme  titre),  qui  ne  voulaient  pas  que  les  effets  de  la  sepa- 
ration pussent  etre  scindes,  admettait  bien  les  creanciers  du  defunt,  qui 
avaient  demande  la  separation  des  patrimoines,  a  se  faire  payer  aussi  sur  les 
biens  particuliers  de  I'heritier,  mais  toutefois  apres  discussion  pr^alablement 
faite  de  ceux  du  defunt,  et,  en  outre,  apr^s  le  paiement  integral  des  creanciers 
particuliers  de  Th^ritier ;  decision  qu'avait  adoptee  Domat,  Lebrun,  et  Po- 
thier.    -Comme  le  point  en  question  n'est  pas  positivement  prevu  et  regie 
par  le  Code  Ci\-il,  les  juges,  en  virtu  de  Farticle  4,  pourraient  le  decider  de 
la  sorte,  en  suivant  les  regies  de  Tequitd,  qui  paraissent  en  effet  vouloir  une 
semblable  decision."     17  Duranton,  Cours  de   Droit  Frangais,  §  458,  p. 
515-517.     M.  Duvergier  holds   a  different  opinion.     5  Duvergier,  Droit 
Civil  Franc.  §  406. 


588  PARTNERSHIP.  [CHAP.  XV. 

ure,  supersede  any  discussions  here.^  It  may,  however, 
be  generally  stated,  that  wherever  the  original  credit  is 
given  to  the  partnership,  that  will  constitute  a  debt 
against  the  partnership,  notwithstanding  the  partner 
contracting  the  debt  may  also  have  given  his  own 
separate  security  therefor,  or  have  also  made  himself 
personally  liable  therefor.^  And,  on  the  other  hand, 
wherever  the  original  credit  has  been  exclusively  given 
to  the  partner  contracting  the  debt,  the  partnership  will 
not  be  liable  therefor,  but  the  individual  partner  only, 
although  it  has  been  applied  to  the  use  and  benefit  of 
the  partnership.^ 

§  368.  So,  also,  if  the  original  debt  is  exclusively 
contracted  by  one  partner  on  his  own  account,  but  it 
has  been  immediately  assumed  by  the  partnership,  with 
the  consent  and  approbation  of  the  creditor,  as  a  part- 
nership debt,  it  will  henceforth  be  treated  in  his  favor 
as  a  joint  debt.'*  So,  if  one  partner  is  separately  in- 
trusted with  trust-money,  and  he,  wdth  the  knowledge  and 
consent  of  his  partners,  applies  it  to  partnership  purpo- 
ses, it  will  constitute  a  joint  debt  against  the  partnership 
at  the  election  of  the  ceshci  que  trust,  or  beneficiary.^ 

'  Ante,  §  126-155  ;  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  613-622,  2d  ed.  {See, 
also,  Tremlett  v.  Hooper,  10  Gray,  254  ;  Fisher  v.  Minot,  Id.  260.} 

*  Ante,  §  140  ;  Gow  on  P.  c.  5,  §  3,  p.  282-285  ;  Wats,  on  P.  c.  5,  p.  274- 
278,  2d  ed. ;  Ex  parte  Brown,  cited  1  Atk.  225  ;  Ex  parte  Emly,  1  Rose,  61  ; 
Ex  jmrte  Hunter,  1  Atk.  223. 

=>  Ibid. 

*  Ante,  §  142,  154;  Gow  on  P.  c.  5,  §  3,  p.  284-286,  3d  ed. ;  Ex  parte 
Jackson,  1  Ves.  Jr.  131 ;  Ex  jmrte  Peele,  6  Ves.  602 ;  Ex  parte  Williams, 
Buck^  13 ;  Ex  parte  Apsey,  3  Bro.  Ch.  265 ;  Coll.  on  P.  B.  4,  c.  2,  §  1,  p. 
613-622,  2d  ed. ;  Ex  parte  Freeman,  Buck,  471 ;  Wats,  on  P.  c.  6,  p.  274, 
275,  2d  ed. 

^  Gow  on  P.  c.  5,  §  3,  p.  285,  3d  ed. ;  Ex  paiie  Watson,  2  Ves.  &  B. 
414  ;  Smith  v.  Jameson,  5  T.  R.  601 ;  Keble  v.  Thompson,  3  Bro.  Ch.  112 ; 
Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  616-622,  2d  ed. ;  Id.  c.  2,  §  5,  638,  639 ;  Ex 
parte  Clowes,  2  Bro.  Ch.  595 ;  Wats,  on  P.  c.  5,  p.  274-278,  2d  ed.;  {Lind. 
on  P.  248 ;  Trull  v.  Trull,  13  All.  407.     See  ante,  §  166.} 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  589 

§  369.  Cases  also  may  arise  in  a  more  general  form, 
involving  the  like  considerations,  whether  debts,  origi- 
nally separate,  have  been  converted  into  joint  debts  ; 
or  debts,  originally  joint  debts,  have  been  converted 
into  separate  debts,  at  any  other  period  subsequent  to 
their  first  creation ;  and  also,  whether,  if  there  has  been 
such  a  conversion,  the  original  debts  have  been  thereby 
intentionally  extinguished,  or  not.^  It  is  obvious,  that 
the  remedy  of  the  creditors  against  the  estates  of  the 
partners,  either  joint  or  several,  may  be  materially  af- 
fected by  each  of  these  facts,  and  especially  by  the  lat- 
ter. By  the  conversion  of  debts,  in  the  technical  sense 
of  the  phrase,  is  meant  the  changing  of  their  original 
character  and  obligation  with  the  consent  of  the  credi- 
tors ;  so  that,  if  they  are  originally  joint  debts  of  all 
the  partners,  they  become,  by  consent,  the  separate 
debts  of  one  partner ;  or,  if  they  are  the  separate  debts 
of  one  partner,  they  become,  by  the  like  consent,  the 
joint  debts  of  all  the  partners.  It  is  obvious,  that  this 
conversion  may  be  with  an  intention,  either  to  extin- 
guish the  original  debt,  or  merely  to  give  the  creditor 
an  additional  security  therefor;  and  the  law  will  give 
effect  to  it  according  to  that  intention.  Where  the 
original  debts  have  been  converted  with  an  intention 
to  extinguish  them  (which  can  only  be  where  a  suffi- 
cient consideration  exists  or  passes  between  the  parties), 
there,  the  creditors  must  rely  solely  on  their  debts  in 
their  new  quality  or  form,  and  are  entitled  to  receive 
compensation  out  of  the  joint  estate  or  several  estate, 
according  to  the  nature  of  the  conversion,  and  in  con- 
formity to   the  principle   already  stated.^     But,  where 

1  Coll.  on  P.  B.  4,  c.  2,  §  2,  p.  Glo,  6U,  2d  ed. ;  ante,  §  155-157  ;  Wats, 
on  P.  c.  5,  p.  274,  275,  2d  ed. 

2  Coll.  on  P.  B.  2,  c.  1,  §  2,  p.  113,  2d  ed. ;  Id.  B.  4,  c.  2,  §  2,  p.  614; 
1  Mont,  on  P.  B.  2,  c.  7,  §  2,  p.  226-232,  Am.  ed. ;  Wats,  on  P.  c.  5,  p. 
256,  257,  2d  ed. ;  Bolton  v.  Puller,  1  B.  &  P.  539. 


590  PARTNERSHIP.  [cHAP.  XV. 

the  original  debts  have  been  converted  without  any 
such  extinguishment  (which,  also,  can  only  be  upon  a 
sufficient  consideration),  the  creditors  can  take  advan- 
tage of  the  debts,  according  either  to  their  new  or  their 
old  form  and  quality.^  In  other  words,  they  may  treat 
them  as  joint,  as  well  as  separate  debts,  and  have  their 
remedy  against  the  joint  or  separate  estate  accordingly 
in  their  election.  The  creditors  are,  therefore,  ordi- 
narily, in  this  latter  case,  in  a  far  more  beneficial  con- 
dition than  in  the  former ;  ^  and  this  may  be,  especially 
in  cases  of  bankruptcy,  a  right  of  no  inconsiderable 
value.^ 

§  370.  The  question,  therefore,  may  become  highly 
important  to  ascertain,  what,  upon  any  such  conver- 
sion, will  amount  to  a  conversion  of  the  original  debt 
with  any  extinguishment ;  and  what  will  amount  to 
a  conversion  thereof  without  such  extinguishment. 
And  here,  again,  what  has  been  already  stated  may 
serve,  in  a  great  measure,  to  explain  and  solve  most 
questions  of  this  sort.'*  In  order  to  produce  any  con- 
version at  all,  either  with  or  without  an  extinguish- 
ment, there  must  be  a  sufficient  consideration,  and  also 

1  Coll.  on  P.  B.  4,  c.  2,  §  2,  p.  614,  2d  ed. ;  Id.  B.  2,  c.  1,  §  2,  p.  113. 

^  Ibid. 

3  Coll.  on  P.  B.  4,  c.  2,  §  5,  p.  634-641,  2d  ed. ;  Gow  on  P.  c.  5,  §  3,  p. 
286-288,  3d  ed.  {The  guaranty  by  a  partnership  of  a  debt  of  one  of  the 
partners,  if  made  in  contemplation  of  insolvency,  cannot  be  proved  against 
the  joint  estate  by  a  creditor  who  knew  the  insolvency  of  the  firm.  Phillips 
V.  Ames,  5  All.  183.} 

*  Ante,  §  157-159 ;  Coll.  on  P.  B,  3,  c.  3,  §  3,  p.  384-389,  2d  ed.  — 
See  especially  the  cases  already  cited,  ante,  §  156-159,  where,  upon  the  re- 
tirement of  one  partner,  there  have  been  subsequent  dealings  by  the  joint 
creditors  with  the  remaining  partners,  constituting  a  new  firm,  and  new 
securities  have  been  taken,  and  new  credits  obtained,  and  new  accounts 
opened,  and  new  stipulations  entered  into  between  them,  with  reference  to 
the  old  debts,  when  and  under  what  circumstances  they  will  amount  to  a 
conversion  of  the  old  debts,  and  an  extinguishment.  Mr.  Collyer  and  Mr. 
Gow  have  cited  the  cases  at  large  in  the  passages  above  referred  to. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  591 

a  deliberate  and  mutual  assent  of  the  creditors  and 
debtors  to  such  conversion.  Both  must  concur ;  and 
the  offer  and  the  acceptance  must  be  upon  the  same 
conditions,  stipulations,  and  limitations.^  In  short,  all 
the  terms  must  be  accepted  and  complied  with.^  And 
it  may  be  laid  down,  as  a  general  rule,  that  where  a 
separate  creditor  has  taken  a  partnership  bill,  or  note, 
or  other  security,  in  full  discharge  of  his  original  claim, 
there,  the  separate  debt  is  converted  into  a  joint  debt, 
and  the  original  remedy  is  extinguished.^  The  same 
rule  will  apply  in  the  converse  case,  where  a  joint 
creditor  has  taken  the  separate  bill,  or  note,  or  other 
security,  in  discharge  of  the  joint  debt.  But,  if  the 
evidence  goes  only  to  show,  that  the  bill,  or  note,  or 
other  security  was  given,  not  in  discharge  of,  but  as  a 
collateral  security  for  the  original  debt,  in  such  a  case 
the  original  debt  and  remedy  will  still  remain.^ 

§  371.    Another   question  may  arise,  and  that  is,  as 

1  Coll.  on  P.  B.  4,  c.  2,  §  2,  p.  617-620,  2d  ed. ;  Id.  c.  2,  §  1,  p.  608, 
609  ;  {Dwight  v.  Mudge,  12  Gray,  23  ;  Wild  v.  Dean,  3  All.  579  ;  Backus 
V.  Fobes,  20  N.  Y.  204. } 

^  Ibid. ;  Ex  parte  Fairlie,  1  Montagu,  17 ;  Ex  parte  Peele,  6  Ves. 
602;  Ex  parte  Williams,  Buck,  13;  Ex  parte  Freeman,  Buck,  471;  Ex 
parte  Fry,  1  Glyn.  &  J.  96 ;  Gow  on  P.  c.  5,  §  3,  p.  284,  285,  3d  ed. 

3  Coll.  on  P.  B.  4,  c.  2,  §  2,  p.  614-618,  2d  ed. ;  Ex  parte  Seddon,  2 
Cox,  49 ;  Gow  on  P.  c.  5,  §  3,  p.  282-286,  3d  ed. ;  Ex  parte  Lobb,  7  Ves. 
592 ;  Ex  p)arte  Roxby,  1  Mont,  on  P.  124 ;  Ex  parte  Fairlie,  1  Montagu, 
17;  Ex  parte  Clowes,  2  Bro.  Ch.  595;  David  v.  Ellice,  5  B.  &  C.  196; 
Gow  on  P.  c.  5,  §  4,  p.  359-367,  3d  ed. ;  Id.  c.  5,  §  4,  p.  360-366. 

*  Coll.  on  P.  B.  4,  c.  2,  §  2,  p.  615,  616,  2d  ed. ;  Id.  B.  3,  c.  3,  §  3,  p. 
384-388 ;  Ex  parte  Seddon,  2  Cox,  49 ;  Ex  parte  Lobb,  7  Ves.,592 ;  Ex 
parte  Koxby,  1  Mont,  on  P.  124 ;  Ex  parte  Hodgkinson,  Cooper,  99 ;  Ex 
parte  Hay,  15  Ves.  4;  Ex  parte  Slater,  6  Ves.  146 ;  Evans  v.  Drummond, 
4  Esp.  89;  Reed  v.  White,  5  Esp.  122;  Thompson  v.  Percival,  5  B.  & 
Ad.  925 ;  Ex  parte  Whitmore,  3  Mont.  &  A.  627  ;  Oakley  v.  Pashcller,  10 
Bligh,  N.S.548;  s.  c.  4  CI.  &  Fin.  207  ;  Wats,  on  P.  c.  5,  p.  274-277,  2d  ed. 
{Ci'ooker  v.  Crocker,  52  Me.  267.  So,  if  judgment  has  been  recovered 
against  one  partner  for  a  debt  due  from  the  firm,  the  creditor  cannot  prove 
against  the  joint  estate ;  Ex  parte  Higgins,  3  De  G.  &  J.  33. } 


592  PARTNERSHIP.  [cHAP.  XV. 

to  what  is  to  be  deemed  joint  property  of  the  partner- 
ship, and  what  separate  property  of  the  respective 
partners.  This,  not  iinfrequently,  becomes  a  perplex- 
ing and  comphcated  inquiry  in  cases  of  bankruptcy ; 
and  it  is  sometimes  not  wholly  free  from  doubt  in 
other  cases.  But,  as  with  few  exceptions,  and  these 
chiefly  arising  upon  reputed  ownership  under  the 
statutes  of  bankruptcy,^  the  same  general  principles 
apply  to  all  classes  of  cases,  we  shall  consider  them 
(reserving  the  exceptions  for  a  future  discussion)  in 
this  place. 

372.  The  joint  estate  of  the  partnership  is  that 
which  belongs  to  the  firm,  and  in  which  the  partner- 
ship have  a  joint  interest,  either  at  law  or  in  equity,  at 
the  time  of  the  dissolution.^  The  separate  estate  is 
that  in  which  any  of  the  partners  has  a  separate  inter- 
est, either  at  law  or  in  equity,  at  the  same  period  ;  and 
it  is  not  the  less  his  separate  estate,  although  it  may  be 
actually  possessed  and  used  by  the  partnership  at  the 
time,  for  partnership  purposes,  if  in  truth  it  is  merely 
for  the  accommodation  thereof,  and  the  partnership  have 
no  interest  whatsoever  therein.^  The  partners  may,  by 
their  articles  of  partnership,  agree  as  to  what  shall  be 
deemed  partnership  property,  and  what  shall  be  deemed 

'  See  Ex  parte  Enderby,  2  B.  &  C.  389 ;  Ex  parte  Wood,  De  Gex, 
134;  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  597-600,  2d  ed. ;  Gow  on  P.  c.  5,  §  3, 
p.  267,  268,  271-274,  3d  ed. ;  Id.  §  2,  p.  232-234;  Wats,  on  P.  c.  5,  p. 
256-260,  2d  ed. ;  Id.  p.  264-272. 

2  Ante,  §  88-100  ;  {In  re  Rowland,  Law  Rep.  1  Ch.  421.} 
■■'  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  595,  596,  2d  ed. ;  Ex  jmrte  Hamper,  17 
Ves.  403,  412,  413  ;  Gow  on  P.  c.  5,  §  3,  p.  271-274 ;  {Lind.  on  P.  551 ;  Ex 
parte  Owen,  4  De  G.  &  Sm.  351.  As  to  real  estate,  see  §  93,  note.  In  El- 
liot V.  Stevens,  38  N.  H.  311,  it  was  held,  that  if  partners  by  arrangement 
among  themselves,  owned  each  a  separate  part  of  the  stock  in  trade  on 
which  the  firm  business  was  transacted,  yet  the  stock  would  be  regarded  as 
partnership  property  for  the  payment  of  partnership  debts,  at  least  as  to 
creditors  who  had  no  notice  how  the  stock  was  owned. } 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  593 

separate  property,  at  the  time  of  the  dissolution.  So 
they  may,  during  the  partnership,  convert  joint  prop- 
erty into  separate  property,  or  separate  property  into 
joint  property  ;  and  the  property  will,  at  the  dissolution, 
be  held  to  possess  tliat  character,  and  that  only,  which 
is  imposed  upon  it  at  the  time.^  Hence,  if  upon  a  dis- 
solution, any  partnership  property  be  left  in  the  posses- 
sion of  one  partner,  but  not  for  the  purpose  of  carrying 
on  the  trade  therewith,  on  his  own  account,  it  will  be 
deemed  partnership  property,  and  retain  its  true  char- 
acter, notwithstanding  such  partner  shall  subsequently, 
while  it  is  in  his  possession,  become  a  bankrupt.^  The 
reason  is,  that  the  property  is  in  his  hands,  merely  as 
a  trustee  of  the  partnership  ;  and  trust  property  is  not 
deemed  to  be  the  reputed  property  of  the  bankrupt.^ 

§  373.  In  relation  to  the  assignment  of  separate  debts 
by  a  partner  to  the  firm,  or  the  assignment  of  joint 
debts  by  the  firm  to  a  separate  partner  (subject  to  the 
exceptions  arising  under  the  bankrupt  laws),"*  the  debts 
will  be  treated  as  joint  or  several  in  equity,  according 
to  the  intention  of  the  parties,  whether  they  are  actu- 
ally reduced  into  possession,  or  whether  actual  notice 
has  been  given  to  the  debtors  or  not.  For  such  an  as- 
signment will  operate  in  equity  as  a  complete  transfer 
of  the  debts,  if  made  honafide^  and  for  a  valid  consider- 
ation. In  respect  to  the  assignment  of  other  property, 
the  transfer  need  be  made  only  in  the  same  way  and 

»  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  596,  597,  2d  ed. ;  Id.  p.  600,  601,  603- 
606;  Ex  imrte  Ruffin,  6  Ves.  119;  {Fishery.  Minot,  10  Gray,  260;  Mc- 
Cormick  v.  Gray,  13  How.  26.} 

«  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  596,  597,  2ded. ;  Wats,  on  P.  c.  5,  p. 
314-320,  2d  ed. ;  [See  also  Stooken  v.  Dawson,  9  Beav.  239.] 

•■«  Winch  V.  Keely,  1  T.  R.  619;  Copeman  v.  Gallant,  IP.  Wms.  314; 
Ex parteYlyn,  1  Atk.  185;  Ex parte^NAlmns,  11  Ves.  3,  5,  6 ;  Coll.  on  P. 
B.4,  c.  2,  §  1,  p.  597-599,  2d  ed.    {And  see  Harmon  v.  Clark,  13  Gray,  114.} 

^  Gow  on  P.  c.  5,  §  3,  p.  275,  276,  3d  ed. 

38 


594  PARTNERSHIP.  [cHAP.  XV. 

manner,  as  it  ought  to  be,  to  be  valid  if  made  in  favor 
of  a  third  person.  But,  in  all  these  cases,  the  transfer 
by  assignment  roust  be  complete,  and  all  the  conditions 
thereof  fulfilled,  otherwise  it  will  not  amount  to  a  con- 
version of  the  property.^ 

§  37-1.  We  come,  in  the  next  place,  to  the  considera- 
tion of  the  effects  and  consequences  of  a  dissolution  by 
bankruptcy  upon  the  rights  of  creditors.  It  might  at 
first  view  be  supposed,  that  the  doctrines  upon  this  sub- 
ject, being  the  growth  of  the  bankrupt  system  of  Eng- 
land, were  not  of  much  importance  to  be  examined  or 
studied  elsewhere.  But,  when  it  is  considered,  that  the 
jurisdiction  exercised  by  the  Courts  in  cases  of  bank- 
ruptcy, is  founded  upon  the  general  notion  of  adminis- 
tering the  principles  of  equity  and  general  justice  be- 
tween the  parties  (although  these  principles  may,  per- 
haps, in  some  instances  be  administered  upon  artificial 
reasoning),  it  will  be  found,  that  they  furnish  many 
lights  by  which  the  corresponding  systems  of  other  na- 
tions in  the  analogous  cases  of  insolvency,  and  the  Ces- 
sio  honorum,  may  frequently  be  illustrated  and  expound- 
ed. It  is  mainly  upon  considerations  of  this  sort,  that 
they  are  here  brought  under  review.^ 

'  2  Story,  Eq.  Jur.  §  1039-1048  ;  Coll.  on  P.  B.  4,  c.  2,  §  1,  p.  612,  613,  2d 
ed. ;  Ex  imrte  Ruffin,  6  Ves.  119  ;  Gow  on  P.  c.  5,  §  3,  p.  268-270,  3d  ed. 
See  and  consult  the  cases  cited  by  Mr.  Collyer  on  P.  B.  4,  c.  2,  §  1,  p.  605- 
610,  2d  ed. ;  Gow  on  P.  c.  5,  §  3,  p.  268-281, 3d  ed. ;  which,  though  arising  in 
bankruptcy,  show  what  the  general  princi2)le  is,  where  there  is  no  bankruptcy. 
[Ex  parte  Sprague,  4  De  G.  M.  &  G.  866  ;  Hawkins  v.  Hawkins,  4  Jur.  n.  s. 
1044  ;  Armstrong  v.  Fahnestock,  19  Md.  58  ;  Jones  v.  Neale,  2  P.  &  H.  339.} 

^  {The  provisions  in  the  United  States  Bankrupt  Act  of  1867  concerning 
partnerships  are  contained  in  the  thirty-sixth  section,  which  is  as  follows : 
"  Where  two  or  more  persons  who  are  partners  in  trade  shall  be  adjudged 
bankrupt,  either  on  the  petition  of  such  partners  or  any  one  of  them,  or  on 
the  j)ctition  of  any  creditor  of  the  partnei-s,  a  warrant  shall  issue  in  the  man- 
ner provided  by  this  act,  upon  which  all  the  joint  stock  and  property  of  the 
copartnership,  and  also  all  the  separate  estate  of  each  of  the  partners,  shall 
be  taken,  excepting  such  parts  thereof  as   are  hereinbefore  excepted ;  and 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  595 

§  375.  It  is  obvious,  that  many  of  the  considerations 
already  suggested,  as  applicable  to  other  cases  of  disso- 
lution, are  also  applicable  to  cases  of  bankruptcy.^ 
Thus,  for  example,  the  assignees,  in  the  case  of  the 
separate  bankruptcy  of  one  partner,  can  affect  the  joint 
property  no  further  than  the  bankrupt  himself.  They 
have  no  right  to  change  the  possession  or  to  make  any 
specific  division  of  the  joint  effects.  They  take  only 
such  an  undivided  share  or  interest  therein,  as  the  bank- 
rupt himself  had,  and  in  the  same  manner  as  he  held 
it ;  that  is  to  say,  subject  to  all  the  rights  and  liens  of 
the  other  partners  ;  and  they  are  entitled  only  to  the 
balance,  which  is  ascertained  to  be  due  to  the  bankrupt, 
after  all  the  partnership  debts  and  the  claims  of  the 
solvent  partners  are  paid,  and  a  division  is  made  of  the 

all  the  creditors  of  the  company,  and  the  separate  creditors  of  each  part- 
ner, shall  be  allowed  to  prove  their  respective  debts  :  and  the  assignee  shall 
be  chosen  by  the  creditors  of  the  company,  and  shall  also  keep  separate  ac- 
counts of  the  joint  stock  or  property  of  the  copartnership  and  of  the  sepa- 
rate estate  of  each  member  thereof:  and  after  deducting  out  of  the  whole 
amount  received  by  such  assignee  the  whole  of  the  expenses  and  disbui-se- 
ments,  the  net  proceeds  of  the  joint  stock  shall  be  appropi'iated  to  pay  the 
creditors  of  the  copartnership,  and  the  net  proceds  of  the  separate  estate  of 
each  partner  shall  be  appropriated  to  pay  his  separate  creditors  :  and  if 
there  shall  be  any  balance  of  the  separate  estate  of  any  partner,  after  the 
payment  of  his  separate  debts,  such  balance  shall  be  added  to  the  joint 
stock  for  the  payment  of  the  joint  creditors:  and  if  there  shall  be 
any  balance  of  the  joint  stock  after  payment  of  the  joint  debts,  such 
balance  shall  be  divided  and  appropriated  to  and  among  the  sepa- 
rate estates  of  the  several  partners,  according  to  their  respective  right 
and  interest  therein,  and  as  it  would  have  been  if  the  partnership  had 
been  dissolved  without  any  bankruptcy ;  and  the  sum  so  appropriated  to 
the  separate  estate  of  each  partner  shall  be  applied  to  the  payment  of  his 
separate  debts  ;  and  the  certificate  of  discharge  shall  be  granted  or  refused 
to  each  partner  as  the  same  would  or  ought  to  be  if  the  proceedings  had  been 
against  him  alone  under  this  act ;  and  in  all  other  respects  the  proceedings 
against  partners  shall  be  conducted  in  the  like  manner  as  if  they  had  been 
commenced  and  prosecuted  against  one  person  alone.  If  such  copartners 
reside  in  different  districts,  that  court  in  which  the  petition  is  first  filed  shall 
retain  exclusive  jurisdiction  over  the  case."  } 
'  See  Gow  on  P.  c.  5,  §  3,  p.  299,  300,  3d  ed. 


596  PARTNERSHIP.  [cHAP.  XV. 

surplus.^  But  there  are  some  doctrines,  which  are  pe- 
culiar to  the  latter  cases,  and  therefore  require  a  distinct 
and  separate  examination.  It  is  not  the  design  of  these 
Commentaries  to  enter  into  a  general  discussion  of  all 
the  various  topics  belonging  to  the  administration  in 
bankruptcy  of  the  joint  and  separate  effects  ;  or  to  the 
administration  in  bankruptcy  in  cases  under  a  joint 
commission  against  all,  or  a  separate  commission  against 
one  or  more  of  the  partners  ;  or  of  the  practice  and 
proceedings  in  matters  of  bankruptcy.  A  full  and  ex- 
act exposition  of  these  subjects  properly  belongs  to  a 
regular  Treatise  on  the  principles,  the  proceedings,  and 
the  practice  in  bankruptcy,  rather  than  to  an  element- 
ary work  on  the  subject  of  partnership,  which  can  dis- 
cuss but  a  single  branch  thereof.^  Our  remarks  will, 
therefore,  be  limited  to  a  few  prominent  considerations 
of  a  general  nature,  which  may  principally  serve  to 
illustrate  the  doctrines  in  bankruptcy,  as  contradistin- 
guished from  those  which  are  commonly  applicable  to 
other  cases  of  dissolution,  or  which  may  qualify  or  vary 
the  latter. 

§  376.  In  the  first  place,  then,  it  is  a  general  rule  in 
bankruptcy,  that  the  joint  debts  are  primanly  payable 
out  of  the  joint  effects,  and  are  entitled  to  a  preference 

'  Gow  on  P.  c.  5,  §3,  p.  300,  3d  ed. ;  Wats,  on  P.  c.  5,  p.  312,  313,  2d 
ed. 

^  The  learned  reader  will  find  very  ample  information  upon  the  prac- 
tice and  proceedings  and  administration  of  assets  in  bankruptcy,  in  Gow 
on  P.  c.  5,  §3,  p.  256-348,  3d  ed. ;  in  Coll.  on  P.  B.  4,  c.  2,  §  1-21,  p.  595- 
678,  3d  ed. ;  Id.  c.  3,  p.  686-716 ;  in  Wats,  on  P.  c.  5,  p.  243-356,  2d  ed.  ; 
in  1  Mont,  on  P.  B.  2,  c.  7,  p.  226-233,  Am.  ed. ;  and  still  more  amply  in 
Cook  on  Bankruptcy,  Christian  on  Bankruptcy,  Deacon  on  Bankruptcy,  and 
Montagu  &  Ayrton  on  Bankruptcy.  The  doctrines  stated  in  the  text  have 
in  some  few  cases  been  qualified  or  modified  by  the  recent  Bankrupt  Act  in 
England.  But  it  seemed  unnecessary  in  the  present  work  minutely  to  ex- 
amine them,  as  they  involve  no  general  principles  of  Equity  Jurisprudence 
as  administered  in  bankruptcy. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  597 

over  the  separate  debts  of  the  bankrupt ;  and  so,  in  the 
converse  case,  the  separate  debts  are  primarily  payable 
out  of  the  separate  effects  of  the  bankrupt,  and  possess 
a  like  preference ;  and  the  surplus  only,  after  satisfying 
such  priorities,  can  be  reached  by  the  other  class  of 
debts.^  For  this  purpose,  the  joint  estate  and  the  sepa- 
rate estate  of  the  bankrupt  constitute  separate  funds, 
to  be  administered  separately  by  the   assignees  under 

1  Gow  on  P.  c.  5,  §  3,  p.  235,  236,  3d  ed.  ;  Id.  p.  281,  282,  299,  300 ; 
Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  623,  2d  ed. ;  Id.  B.  2,  c.  1,»§  2,  p.  119 ;  Twiss 
V.  Massey,  1  Atk.  67  ;  Ex  parte  Cook,  2  P.  Wms.  500 ;  Ex  parte  Elton, 
3  Ves.  238,  240;  Ex  parte  Abell,  4  Ves.  837  ;  Ex  parte  Clay,  6  Ves.  813; 
In  re  Plummer,  1  Phil.  56,  60 ;  Bolton  v.  Puller,  1  B.  &  P.  539,  545  ;  [Mur- 
rill  V.  Neill,  8  How,  414 ;  Jackson  v.  Cornell,  1  Sand.  Ch.  348  ;  Woddrop  v. 
Ward,  3  Des.  Eq.  203 ;  Jarvis  v.  Brooks,  3  Post.  136  ;  Bridge  v.  McCullough, 
27  Ala.  661 ;  Rodgers  v.  Meranda,  7  Ohio  St,  179  ;  Washburn  v.  Bank  of 
Bellows  Falls,  19  Vt.  278]  ;  Wats,  on  P.  c.  5,  p.  262,  263,  2d  ed. ;  Id.  p. 
324-334.  — In  Ex  parte  Field,  in  Bankruptcy,  3  Mont.  D.  &  De  G.  95,  the 
Chief  Judge  (in  Bankruptcy)  said:  "It  appears  to  me  that  long  known 
decisions  have  settled  the  point,  that  a  joint  debt  cannot  be  proved  against 
the  separate  estate  of  a  bankrupt,  so  long  as  there  are  joint  assets  or  a  sol- 
vent partner."  The  rule  equally  applies  to  cases  of  co-contractors  as  of 
partners.  Ibid.;  Ex  parte^iovi-'is,  Montagu,  218.  {See  1  Am.  Lead.  Cas. 
480,  4th  ed. ;  2  Lead.  Cas.  in  Eq.  813,  3d  Am.  ed. ;  especially  the  latter,  to 
which  the  learned  reader  is  referi-ed  for  an  excellent  discussion  on  the  foun- 
dations, propriety,  and  limitations  of  this  rule.  Besides  the  cases  there  cited, 
see  Holton  v.  Holton,  40  N.  H.  77  ;  Treadwell  v.  Brown,  41  N.  H.  12  ;  Weyer 
V.  Thornburgh,  15  Ind.  124;  Toombs  v.  Hill,  28  Ga.  371 ;  N.  Bank  of  Ken- 
tucky V.  Keizer,  2  Duv.  169  ;  Whitehead  v.  Chadwell's  Adm'r,  Id.  432,  and 
more  particularly  Black's  Appeal,  44  Penn.  St.  503  and  Kuhne  v.  Law,  14 
Rich.  18  ;  also  the  recent  English  case  Lodge  v.  Prichard,  4  Giff.  294 ;  s.  c.  on 
appeal,  1  De  G.  J.  &  S.  610.  See  also  U.  S.  Bankrupt  Act,  §  36  and  ante, 
§  260-264,  363. 

The  joint  creditors  are  entitled  to  interest  on  their  debts  before  the  sur- 
plus is  carried  to  the  separate  estates.  Ex  parte  Ogle,  Mont.  350 ;  Ex 
parte  Reeve,  9  Ves.  588.  But  when  the  separate  creditors  have  been  paid 
in  full,  the  surplus  is  carried  to  the  joint  estate  and  the  separate  creditors 
are  not  entitled  to  interest.  Ex  parte  Clarke,  4  Ves.  677 ;  Ex  parte  Min- 
chin,  2  Gl.  &  J.  287  ;  Ex  parte  Boardman,  1  Cox,  275;  Ex  parte  Wood,  5 
Jur.  1115  ;  Ex  parte  Wood,  2  Mont.  D.  &  De  G.  283.  Thomas  r.  Minot,  10 
Gray,  263.  But  it  would  seem  under  the  U.  S.  Bankrupt  Act,  1867,  §  36, 
that  the  joint  and  separate  creditors  must  stand  in  the  same  position  as 
to  the  allowance  of  interest.     See  Thomas  v.  Minot,  uhi  sttp.] 


598  PARTNERSHIP.  [CHAP.  XV. 

the  commission,  whether  it  be  a  separate  commission 
against  one  partner,  or  a  joint  commission  against  all 
the  partners.^ 

§  377,  This  rnle,  although  now  firmly  established, 
has  occasioned  much  diversity  of  opinion  among  learned 
Judges  at  different  times."  It  was  established  at  an 
early  period ;  but  was  afterwards  departed  from,  and 
was  again  re-established ;  and  it  now  stands,  as  much, 

»  Gow  on  P.  c.  5,  §  8,  p.  280-282,  3d  ed. ;  Id.  p.  299,  300,  311,  312  ; 
Wats,  on  P.  c.  5,  p.  243-245,  2d  ed. ;  Id.  p.  252-260 ;  Id.  p.  262,  263 ; 
[Purple  V.  Cooke,  4  Gray,  120]  ;  Bolton  v.  Puller,  1  B.  &  P.  539  ;  Coll.  on 
P.  B.  3,  c.  2,  §  3,  p.  624,  2d  ed.  —Lord  Chief  Justice  Eyre,  in  delivering  the 
opinion  of  the  Court,  in  Bolton  v.  Puller,  1  B.  &  P.  539,  547,  548,  said : 
"Bankruptcy,  when  it  intervenes,  may  very  much  change  the  situation 
of  these  parties.  Mr.  Justice  Heath  suggested  this  consideration  at  the 
close  of  the  first  argument.  It  is  a  very  important  consideration.  If  all 
become  bankrupts,  all  the  joint  and  all  the  separate  property  will  vest 
in  the  assignees,  whether  the  commissions  are  joint  or  several.  If  a  sep- 
arate commission  issue  against  one  partner,  his  assignees  will  take  all  his 
separate  property,  and  all  his  interest  in  the  joint  property.  If  a  joint 
commission  issues  against  all,  the  assignees  will  take  all  the  joint  prop- 
erty, and  all  the  separate  property  of  each  individual  partner.  In  the 
distribution  to  creditors,  a  rule  of  convenience  has  been  adopted.  To  un- 
derstand it,  we  should  see  what  the  rights  of  creditors  were  as  to  execu- 
tion for  their  debts  before  bankruptcy.  A  separate  creditor  might  take 
at  his  election  the  separate  estate  of  his  debtor,  or  his  debtor's  share  of 
the  joint  estate,  or  both,  if  necessary.  A  joint  creditor  might  take  the 
whole  joint  estate,  or  the  whole  separate  estate,  of  any  one  partner.  But 
the  rule  of  convenience,  which  has  been  adopted,  restrains  the  separate 
creditor  from  resorting,  in  the  first  instance,  to  his  debtor's  share  of  the  joint 
property  ;  and  also  restrains  the  joint  creditor  from  resorting,  in  the  first  in- 
stance, to  the  separate  property  of  his  debtor.  Bankruptcy  has  been  called  a 
statute  execution  ;  but  if  it  has  any  analogy  to  an  execution,  it  is  certainly  very 
much  modified,  and,  as  I  take  it,  by  the  authority  of  the  Chancellor,  who  is 
to  take  order  for  the  distribution  of  the  effects  of  a  bankrupt.  Under 
the  rule  the  separate  creditors  have  a  right  to  be  satisfied  for  their  debts 
out  of  the  separate  property  in  preference  to  the  joint  creditors. .  But  what 
shall  be  deemed  separate  property,  or  what  effect  the  claims  of  third  per- 
sons upon  that,  which  (as  between  one  partner  and  the  partnership)  would 
be  separate  property,  are  questions  which  neither  bankruptcy  nor  the  rule 
of  distribution  seem  to  touch.  The  assignees  stand  but  in  the  place 
of  the  bankrupt,  and  take  the  effects  suljject  to  every  legal  and  equitable 
claim  upon  those  eff'ects." 

^  [See  Cleghorn  v.  Insurance  Bank,  9  Ga.  319.] 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  599 

if  not  more,  upon  the  general  ground  of  authority  and 
tlie  maxim,  stcu^e  decisis,  than  upon  the  ground  of  an 
equitable  reasoning.  In  truth,  it  is  precisely  such  a 
case,  as  may  well  justify  a  great  deal  of  argument  on 
each  side  ;  and  although  it  has  been  said,  that  the  equity 
of  this  mode  of  distribution  is  very  plain,  because  each 
estate  ought  to  bear  its  own  debts  ;  yet  it  is  by  no  means 
clear,  that  this  is  not  an  artificial  suggestion,  cutting 
down  the  difficulty,  and  assuming  the  correctness  of  the 
rule,  rather  than  showing,  that  it  has  its  origin  and 
foundation  in  the  principles  of  natural  justice,  ex  cequo 
et  bono} 

*  Ante,  §  363,  364.  — Mr.  Gow  (p.  312-314)  has  summed  up  the  doctrine 
of  the  authorities  on  this  subject  as  follows  :  "In  the  time  of  Lord  Hardwicke, 
the  rule  adopted  was  to  permit  joint  creditors  to  prove  under  a  separate 
commission  against  one  partner,  or  under  separate  commissions  against  all 
the  partners,  for  the  purpose  of  assenting  to,  or  dissenting  from,  the  certifi- 
cate ;  and  the  joint  creditors  were  considered  to  have  an  equitable  right  to 
any  surplus  of  the  separate  estates,  after  payment  of  the  separate  creditors  ; 
but  the  joint  property  was  distributed  under  a  joint  commission  taken  out 
for  that  purpose,  or  a  bill  must  have  been  filed  for  an  account  of  the  joint 
estate.  Ex  parte  Baudier,  1  Atk.  98 ;  Ex  j^arte  Yoguel,  1  Atk.  132 ;  Ex 
parte  Oldknow,  Cook's  B.  L.  233;  Ex  parte  Cobham,  Id.  234.  See  also 
Button  V.  Morrison,  17  Ves.  193,  207  ;  Ex  parte  Farlow,  1  Rose,  421.  This 
rule  was  broken  in  upon  by  Lord  Thurlow,  who  expressed  his  decided 
opinion,  that  the  contrary  course  was  the  best,  as  being  the  most  legal ;  and 
he,  in  several  instances  (^Ez  jJarte  Haydon,  Cook's  B.  L.  234 ;  s.  c.  1  Bro. 
Ch.  4o4;  Ex  parte  Copland,  Cook's  B.  L.  236;  s.  c.  1  Cox,  420;  Ex 
parte  Hodgson,  2  Bro.  Ch.  5  ;  Ex  parte  Page,  Id.  119  ;  Ex  parte  Flintum, 
Id.  120),  allowed  the  joint  creditors  to  prove  and  take  dividends  under  a 
separate  commission ;  his  Lordship  holding,  that  a  commission  of  bank- 
ruptcy was  an  execution  for  all  the  creditors,  and  as  the  assignees  under  a 
separate  commission  might  possess  themselves,  not  only  of  the  se^jarate 
estate,  but  of  the  bankrupt's  proportion  of  the  joint  estate,  and  as  a  joint 
creditor,  having  brought  an  action  and  recovered  judgment  against  all  his 
debtors,  might  have  several  executions  against  each,  thei'efore  the  bank- 
ruptcy, preventing  his  action  with  effect,  should  be  considered  a  judgment 
for  him  as  well  as  the  others,  and  consequently  that  no  distinction  ought  to 
be  made  between  joint  or  separate  debts,  but  that  they  ought  all  to  be  paid 
ratably  out  of  the  bankrupt's  property,  which  was  composed  of  his  separate 
estate,  and  his  moiety  or  other  proportion  of  the  joint  estate.  See  Button 
V.  Morrison,  17  Ves,  193,  207.     Lord  Rosslyn  acted  for  some  time  upon  the 


600  PARTNERSHIP.  [cHAP.  XV. 

§  378.  What  renders  the  foundation  of  the  rule  it- 
self as  one  of  natural  justice  and  equity,  and  not  of 

practice  established  by  Lord  Thurlow,  but  afterwards  with  some  alteration  ; 
and  upon  great  consideration  he  restored  the  principle  of  the  rule,  which 
had  been  adopted  by  Lord  Hardwicke.  In  the  case  of  Ex  parte  Elton, 
3  Ves.  238,  242,  Lord  Rosslyn  says  :  '  The  plain  rule  of  distribution  is,  that 
each  estate  should  bear  its  own  debts.  The  equity  is  so  plain,  that  it  is  of 
course  upon  a  bill  filed.  The  object  of  a  commission  is  to  distribute  the 
effects  with  the  least  expense.  Every  order  I  make,  to  prove  a  joint  debt 
upon  the  separate  estate,  must  produce  a  bill  in  equity.  It  is  not  funda- 
mentally a  just  distribution,  nor  a  convenient  distribution  ;  because  it  tends 
to  more  litigation  and  more  expense.  Every  creditor  of  the  partnership 
would  come  upon  the  separate  estate.  The  consequence  would  be,  the 
assignees  of  the  separate  estate  must  file  a  bill  to  restrain  the  dividend 
upon  all  these  proofs,  and  make  the  partners  parties.  But  there  is  another 
circumstance ;  it  is  a  contrivance  to  throw  this  upon  the  separate  estate ; 
for  what  hinders  them  from  recovering  at  law  this  debt  against  the  partner- 
ship, for  it  is  money  paid  to  one  of  the  partners  ?  They  have  nothing  to  do 
but  to  bring  an  action  against  the  partner.  The  affairs  of  the  partnerships 
may  be  very  much  involved ;  but  if  they  are  arrested,  they  would  pay  it. 
It  is  not  stated  as  a  case  where  there  are  no  joint  effects.  Here  it  is  only 
that  there  are  two  funds.  Their  proper  fund  is  the  joint  estate,  and  they 
must  get  as  much  as  they  can  from  that  first.  I  have  no  difficulty  in  order- 
ing them  to  be  admitted  to  prove,  but  not  to  receive  a  dividend.'  This  rule 
was  afterwards  acted  upon  by  Lord  Rosslyn  (^Ex  parte  Abell,  4  Ves.  837) , 
and  was  adopted  and  followed  by  Lord  Eldon  in  many  subsequent  cases, 
not  because  he  was  convinced  of  its  propriety,  or  of  its  being  better  calcu- 
lated to  the  due  administration  of  justice  than  the  doctrine  introduced  by 
Lord  Thurlow ;  but  he  adhered  to  it,  because  it  was  the  practice,  and  to 
avoid  the  mischief  arising  from  shaking  settled  rules.  Ex  parte  Clay,  6  Ves. 
813,  and  the  cases  cited  Ibid,  in  note;  Ex  pa?'^e Kensington,  14  Ves.  447; 
Ex  parte  Taitt,  16  Ves.  193.  According  to  the  rule,  therefore,  which  these 
decisions  have  established,  if  there  is  a  joint  fund,  or  a  solvent  partner,  a 
joint  creditor  is'not  entitled  to  prove  his  debt  under  a  separate  commission 
for  the  purpose  of  receiving  a  dividend,  without  the  Lord  Chancellor's 
order.  Mont.  B.  L.  230.  And  notwithstanding  the  joint  property  is  of 
the  most  trivial  amount,  yet  if  there  is  such  a  fund  of  any,  even  the 
smallest,  description,  and  it  is  capable  of  being  realized,  the  rule  is  inflexible, 
and  tliere  will  be  no  departure  from  it.  Ex  parte  Peake,  2  Rose,  54.  See 
also  J?ireLee,  Ibid,  in  note.  Lord  Eldon,  indeed,  admitted  this  qualification 
of  the  rule,  that  '  If  the  property  alleged  to  exist  be  of  such  a  nature,  and 
in  such  a  situation,  that  any  attempt  to  bring  it  within  the  reach  of  the 
joint  creditors  must  be  deemed  a  desperate,  or,  in  point  of  expense,  an 
unwarrantable  attempt,  that  would  authorize  a  departure  from  the  rule ;  as 
in  truth  there  would  then  be  no  joint  property.'    Ibid.     And  joint  estate  has 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  601 

more  -assumed  convenience,  somewhat  more  open  to 
criticism  and  question,  is  the  character  of  the  excep- 
tions, to  which  it  has  given  rise,  some  of  which  may 
be  truly  said  to  present  the  reasoning  against  it  in  a 
stronof  hjjht,  and  to  make  it  more  difficult  to  be  sus- 
tained.  These  exceptions  allow  a  joint  creditor  to 
share,  pari  passu,  with  the  separate  creditors  in  every 
case,  to  which  they  are  applicable.  They  are  of  three 
sorts;  (1.)  ^Yhere  the  joint  creditor  is  the  petitioner  for 
a  separate  commission  against  the  bankrupt  partner ; 
(2.)  Where  there  is  no  joint  estate,  and  no  living  sol- 
vent partner ;  (3.)  Where  there  are  no  separate  debts. 
In  the  tirst  case,  the  petitioning  creditor  may  prove 
his  debt,  and  share,  j9a?'i  passu,  with  the  separate  cred- 
itors in  the  separate  estate ;  in  the  second  case,  all  the 
joint  creditors  enjoy  the  same  privilege ;  and  in  the 
third  case,  all  the  joint  creditors  share,  p«?^i  passu,  with 
each  other. ^ 

§  379.  The  fii-st  exception  stands  confessedly  upon 
a  ground  of  reasoning,  which,  if  not  purely  artificial, 
applies  at  least  with  equal  force  in  favor  of  the  joint 
creditors  in  all  other  cases.  The  ground  is,  that  a 
commission  of  bankruptcy  is  an  action  and  an  execu- 
tion in  the  first  instance.^     To  which  it  has  been  replied 

been  said  to  mean  such  estate  only  as  comes  under  the  administration  of  the 
assignees  to  distribute,  and  not  to  extend  to  joint  estate  pledged  for  more 
than  its  value.  Ex  parte  Hill,  5  B.  &  P.  191,  n.''  See  also  Coll.  on  P.  B. 
4,  c.  2,  §  3,  p.  623,  624,  2d  ed. ;  Ex  parte  Cobham,  1  Bro.  Ch.  576,  Mr. 
Belt's  note  (1). 

'  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  623-628,  634,  635,  2d  ed. ;  ^.r  parte 
Tate,  Cook's  B.  L.  244. 

2  Twiss  V.  Massey,  1  Atk.  67 ;  Ex  parte  Crisp,  1  Atk.  133 ;  Coll.  on  P. 
B.  4,  c.  5,  §  3,  p.  625,  626,  2d  ed. ;  {Lind.  on  P.  1002}  ;  Ex parteEhon,Syes. 
238.  —  In  this  latter  case  Lord  Loughborough  (afterwards  Earl  of  Rosslyn) 
said:  "Antecedent  to  these  authorities,  I  should  have  tliought  it  perfectly 
clear  it  could  not  be  done ;  and,  that  the  utmost  length  they  could  go  was, 
that  a  joint  creditor,  where  there  is  a  separate  commission,  is  to  be  admitted 


602  PARTNERSHIP.  [cHAP.  XV. 

with  as  great  force,  that  it  is  true  that  a  commission  is 
an  execution,  but   an   execution  for   all  the  creditors  ; 

to  prove,  only  for  the  purpose  of  assenting  to  or  dissenting  from  the  cer- 
tificate, and  receiving  such  surplus  beyond  the  amount  of  the  separate  debts, 
as  joint  creditors  would  be  entitled  to  claim,  where  there  are  two  commis- 
sions. I  doubt,  Avhether  it  is  possible  to  innovate  upon  that,  which  was 
the  law  formerly ;  for  though  a  commission  is  an  execution,  and  the  joint 
creditor  has  such  an  interest  as  enables  him  to  take  out  a  separate  commission, 
yet  the  consequence  does  not  follow.  There  are  cases  antecedent  to  those 
cited.  In  Lord  King's  time  it  was  determined,  that  a  joint  creditor  might 
be  a  good  petitioning  creditor,  though  the  commission  is  only  against  one 
partner;  that  the  joint  creditor  does  no  more  in  taking  his  execution,  pass- 
ing over  his  action,  than  bringing  the  separate  effects  to  be  administered  in 
bankruptcy.  But  it  is  not  treated  any  longer  as  an  execution  at  law ;  for 
the  effects  taken  under  it  are  not  disposed  of  as  at  law,  but  fliU  immediately 
by  the  direction  of  the  statute  under  the  administration  of  this  Court ; 
which  is  to  make  an  equitable  distribution  among  the  creditors,  to  admit  all 
equitable  claims  upon  the  effects,  and  to  divide  them  ratably.  It  has  been 
long  settled,  and  it  is  not  possible  to  alter  that,  that  each  estate  is  to  pay  its 
own  creditors.  With  regard  to  the  creditor  suing  out  the  commission,  the 
separate  creditors  cannot  object  to  his  having  the  effect  of  the  execution 
he  has  taken  out.  He  is  precluded  from  suing  at  law ;  and  it  would  be 
against  all  equity,  having  done  it  for  their  benefit,  to  refuse  him  the  fruit  of 
that  for  his  own  debt.  But  any  other  joint  creditor  is  in  exactly  the  case 
of  a  person  having  two  funds  ;  and  this  Court  will  not  allow  him  to  attach 
himself  upon  one  fund  to  the  prejudice  of  those  who  have  no  other,  and  to 
neglect  the  other  fund.  He  has  the  law  open  to  him ;  but  if  he  comes 
to  claim  a  distribution,  the  first  consideration  is,  What  is  that  fund  from 
which  he  seeks  it  ?  It  is  the  separate  estate,  which  is  particularly'  attached 
to  the  separate  creditors.  Upon  the  supposition,  that  there  is  a  joint  estate, 
the  answer  is,  '  Apply  yourself  to  that ;  you  have  a  right  to  come  upon 
it ;  the  separate  creditors  have  not ;  therefore  do  not  affect  the  fund  attached 
to  them,  till  you  have  obtained  what  you  can  get  from  the  joint  fund.' 
There  would  be  no  great  inconvenience,  if  he  could  put  them  in  his  situation 
as  to  the  joint  fund  ;  but  I  doubt  very  much  whether  that  is  possible.  For 
suppose  in  the  case  of  A.  and  B.,  partners,  the  former  remains  solvent, 
the  latter  becomes  a  bankrupt,  and  there  is  a  joint  debt  of  £1,000.  The 
creditor  making  his  claim  first  against  the  separate  estate,  paying  a  dividend 
of  10s.  in  the  pound,  receives  £500.  Can  the  assignees  claim  against  the 
solvent  partner,  what  they  have  paid  ?  His  answer  would  be,  they  could 
only  claim  the  same  right  the  bankrupt  could  ;  and  as  against  the  bankrupt 
he  is  entitled  to  retain ;  he  has  paid  his  moiety  of  the  partnership  debt. 
If  the  case  is  turned  the  other  way,  and  the  creditor  first  sues  the  solvent 
partner,  he  recovers  all  the  debt  against  him ;  and  he  has  a  right  to  come  in 
as  a  separate  creditor  of  the  bankrupt  to  the  amount  only  of  a  moiety  of 


CHAP,  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  603 

that  if  a  joint  creditor  had  brought  an  action  against  all 
the  partners,  he  might  have  several  executions  against 
each,  or  at  least  a  joint  execution,  which  could  be  levied 
upon  the  joint  property,  and  also  upon  the  separate 
property  of  each  of  the  partners.^     What  makes  it  still 

that  debt ;  for  a  moiety  only  of  the  debt  of  the  partnership  he  could  have 
recovered  against  him  if  he  had  been  solvent.  That  makes  a  very  great 
difierence  to  the  separate  creditors.  I  was  led  to  consider  another  thing, — 
Is  it  possible  to  admit  a  separate  ci'editor  to  take  a  dividend  upon  tlie  joint 
estate  ratable  with  the  joint  creditors  ?  No  case  has  gone  to  that,  and  it 
is  impossible ;  for  the  separate  creditor  at  law  has  no  right  to  sue  the  other 
partner.  He  has  no  right  to  attach  the  partnership  property.  He  could  only 
attach  the  interest  his  debtor  had  in  that  property.  If  it  stands  as  a  rule  of 
law,  we  must  consider,  Avhat  I  have  always  understood  to  be  settled  by  a  vast 
variety  of  cases,  not  only  in  bankruptcy,  but  upon  general  equity,  that  the  joint 
estate  is  applicable  to  partnership  debts,  the  separate  estate  to  the  separate 
debts.  Another  difficulty  is,  whether  really  it  is  just  to  put  it  to  the  assignees 
in  behalf  of  the  separate  creditors,  to  assert  the  right  of  the  creditor,  making 
the  claim,  to  go  against  the  joint  estate.  The  creditor  coming  in  upon  the 
separate  estate  is  first  to  answer  the  question,  why  he  does  not  go  against 
the  joint  estate.  It  may  be  said,  '  The  law  is  open  to  you ;  it  is  not  open 
to  us.  You  put  us  to  file  a  bill  against  the  other  partners  to  discover  and 
apply  the  partnership  fund.  You  have  a  much  quicker  remedy;  sue  the 
partnership.  You  need  not  wait  the  account.  They  will  settle  it  rather 
than  put  you  to  that ;  at  all  events,  j'ou  have  a  legal  execution  against  them.' 
Another  consideration  is,  that  the  great  object  of  the  law  in  establishing 
this  sort  of  authority,  in  which  I  now  sit,  is  to  make  a  speedy  distribution, 
and  to  avoid  suits.  The  necessary  consequence  of  admitting  a  joint  cred- 
itor to  prove  against  the  separate  estate,  is  in  every  such  case  to  make  a 
chancery  suit ;  and  the  right  of  the  separate  creditors  to  the  administration 
of  their  fund  is  frustrated."  See,  also.  Ex  parte  Abell,  4  Ves.  837.  {Where 
the  attachment  of  the  property  of  one  partner  by  a  partnership  creditor  was 
dissolved  by  the  assignment  in  bankruptcy  of  that  partner's  estate,  the 
creditor,  on  proving  his  debt  and  the  costs  of  his  suit  against  such  estate, 
was  held  entitled  to  be  paid  such  costs  before  the  payment  of  the  partner's 
separate  debts.  Buck  v.  Burlingame,  13  Gray,  307.  This  was  a  decision 
under  the  Massachusetts  Insolvent  Law,  the  provisions  of  which  were  similar 
to  those  of  the  United  States  Bankrupt  Act  of  1867.} 

'  Ex  parte  Hodgson,  2  Bro.  Ch.  5  ;  Button  i'.  Morrison,  17  Ves.  193,  207. 
—  In  this  latter  case,  Lord  Eldon  went  into  the  reasoning  of  the  various 
opinions,  and  said:  "The  case  now  before  me  must  be  regarded  in  this 
point  of  view.  The  question  being  as  to  the  effect  of  the  quasi  execution, 
under  a  commission  of  bankruptcy  against  one  partner,  with  reference  to 
the  interest  of  himself  and  two  others,  in  a  fund  in  the  hands  of  the  plaintiff. 


604  PARTNERSHIP.  [CHAP.  XV. 

more  artificial  is,  that  if  a  joint  creditor  sues  out  a  joint 
commission  against  all  the  partners,  he  can  resort  only 
to  the  joint  funds  of  the  partnership.^ 

The  jurisdiction  in  bankruptcy  being  both  legal  and  equitable,  let  us  see, 
whether  we  must  not,  of  necessity,  go  a  great  way  in  this  case ;  or  admit, 
that  we  have  already  gone  much  too  far  in  bankruptcy.  The  opinion  of 
Lord  Hardwicke  was,  that  joint  creditors  could  prove  under  a  separate 
commission  only  for  the  purpose  of  assenting  to,  or  dissenting  from,  the 
certificate,  but  not  to  receive  dividends  ;  and  that  they  must  file  a  bill  for  an 
account  of  the  joint  estate.  The  operation  of  that  bill  was  to  draw  into  the 
joint  estate  the  share  of  that  bankrupt  partner,  taken  in  execution,  as  far  as 
bankruptcy  can  be  so  represented ;  and  by  the  effect  of  the  commission,  the 
bill,  and  the  decree,  nothing  could  be  divided  among  the  separate  creditors 
under  the  commission,  but  that  which  formed  the  separate  share  of  the  bank- 
rupt after  the  account,  and  an  application  of  the  joint  estate  to  all  demands 
against  it.  Lord  Hardwicke,  therefore,  must  either  have  thought,  that  upon 
such  a  case  it  was  clearly  fit  to  say,  that  execution  against  one  partner 
should  not  affect  the  application  of  the  joint  fund  to  the  joint  demands  ;  or, 
as  I  rather  believe,  he  found  himself  in  a  situation  requiring  him  to  cut  the 
knot,  and  to  make  some  rule  that  would,  upon  the  whole,  be  most  convenient. 
This  suliject  took  a  different  course  at  different  periods,  until  the  time  of 
Lord  Thurlow,  who  considered  it  with  great  anxiety,  and,  having  consulted 
most  of  the  Judges,  expressed  his  decided  opinion,  that  the  contrary  course 
was  the  best,  as  being  the  most  legal ;  and  therefore  held,  that  the  joint 
creditors  should  be  admitted  to  prove,  and  take  dividends,  under  a  separate 
commission  ;  that  a  commission  of  bankruptcy  was  an  execution  for  all 
the  creditors ;  that,  if  a  joint  creditor  had  bi-ought  an  action  against  all  the 
debtors,  he  might  have  several  executions  against  each ;  and  therefore 
the  bankruptcy,  preventing  his  action  with  effect,  should  be  considered  as 
a  judgment  for  him  as  well  as  the  other ;  that  he  had  a  right  to  receive 
the  dividends  ;  and  it  was  upon  the  assignees  of  the  separate  estate  to  bring 
their  bill  to  have  the  account  settled.  The  question  afterwards  came  to 
be  considered  by  Lord  Loughborough,  who  got  back  to  the  old  rule,  and 
abided  by  it  firmly ;  but  great  difficulties  occurred  of  this  sort.  Lord 
Loughborough,  adopting  the  principle  of  Lord  Hardwicke's  rule,  did  not 
adopt  his  practice ;  not  putting  the  joint  creditors  to  file  a  bill,  bringing 
before  the  Court  the  assignees  and  the  solvent  partners,  and  taking  the 
account  in  their  presence ;  but  taking  this  course,  directing  the  assignees 
to  take  an  account  of  the  joint  estate,  and  applying  that  to  the  discharge 
of  the  joint  creditors,  to  ascertain  the  share  of  the  residue,  belonging 
respectively  to  the  bankrupt  and  the  solvent  partners.  From  the  nature 
of  this  proceeding,  unless  the  solvent  partners  thought  proper  to  come  in 
and  have  the  account  taken  before  the  commissioners,  the  Lord  Chancellor, 


Ex  parte  Bolton,  2  Rose,  389,  390,  cited  in  the  preceding  note. 


CHAP.  XY.]       DISSOLUTION RIGHTS    OF    CREDITORS.  605 

§  380.    The    second    exception    excludes    the    joint 
creditor,  in  all  cases  but   one ;    and  in  that  case   two 

in  bankruptcy,  had  no  power  to  compel  them ;  neither  could  the  joint 
creditors,  unless  they  thought  proper  to  come  in  before  the  commissioners, 
be  compelled,  in  that  proceeding,  to  come  in ;  and  if  the  other  partners 
did  not,  or  could  not,  as  in  the  instance  of  residence  abroad,  make  them- 
selves parties,  the  account  upon  ordinary  principles  could  not  bind  them. 
I  pressed  the  difficulty  that  would  arise,  if  a  joint  creditor  should  bring 
an  action  and  proceed  to  judgment.  Would  this  Court  interfere  upon  the 
ground,  that  there  was  an  order  in  bankruptcy,  to  which  he  and  the  other 
joint  creditors  were  not  parties-;  and,  to  enforce  that  order,  grant  an 
injunction  against  execution  in  that  action  ?  That  would  be  a  question 
of  gi-eat  imi^ortance,  if  the  law  was  as  simple  as  it  was  supposed  to  be  in 
the  early  cases  upon  this  subject ;  that  the  assignees  were  tenants  in  com- 
mon of  a  chattel  with  the  solvent  partner ;  and  the  creditor  might  satisfy 
himself  out  of  the  appai-ent  interest.  But,  taking  the  law  to  be,  that  no 
more  should  be  applied  than  the  result  of  a  general  account,  the  only  effect 
of  the  execution  would  be,  that  the  creditor  would  have  subjected  himself 
to  the  general  account,  that  was  going  on  in  another  proceeding.  The 
question  then  came  before  me ;  and  ujion  consideration  of  all  the  authori- 
ties, I  thought  the  best  course  for  me  to  adopt  (whether  the  best  in  prin- 
ciple I  have  often  doubted)  was,  that  the  rule  should  continue  to  be  applied, 
as  it  had  been  for  some  years  in  a  course  of  application ;  and,  therefore, 
I  have  not  disturbed  the  practice,  as  it  has  of  late  prevailed.  The  result 
is,  that  now  it  has  been  understood  for  fifteen  years,  that,  under  a  separate 
commission  of  bankruptcy,  the  other  partners  remaining  solvent,  an  account 
shall  be  directed  of  the  joint  estate  in  the  absence  even  of  the  other  part- 
ners ;  and  upon  the  application  of  any  one  joint  creditor,  whether  the 
others  choose  it  or  not,  the  whole  account  being  taken  in  the  bankruptcy, 
the  joint  creditors  shall  be  paid,  pari  passu,  out  of  the  joint  estate ;  and 
the  residue  shall  then  be  distributed  only  according  to  the  respective 
interest  of  the  partners ;  and,  if  the  rule  of  law,  where  a  creditor  takes 
execution,  is  the  same,  perhaps  we  ai-e  not  far  wrong.  In  the  course  of 
this  period  there  has  been  no  instance  of  a  creditor  coming  here,  saying 
that  he  had  a  judgment,  not  executed,  against  a  partner,  and  desiring  to 
go  on ;  nor  has  the  case  occurred  in  bankruptcy  of  a  joint  creditor  claiming 
to  set  aside  the  execution  under  the  commission  by  a  prior  act  of  bankruptcy  ; 
and  desiring  to  have  execution  against  all  without  any  account.  Such  a 
case,  if  it  occurred,  must  be  dealt  with  upon  much  the  same  principle  as 
this."  I  cannot  find  that  Lord  Thurlow's  reasoning  on  the  subject  is  any- 
where given  at  large.  All  that  remains  consists  of  these  notes  and  com- 
ments. It  is  manifest  that  Lord  Eldon  equally  doubted  with  him,  as  to  the 
solid  foundation  of  the  rule.  Ex  imrte  Clay,  6  Ves.  813 ;  £x  parte  Chandler, 
9  Ves.  35  ;  Ex  parte  Cobham,  1  Bro.  Ch.  576,  Mr.  Belt's  note  (1)  ;  Ex  parte 
Taitt,  16  Ves.  193,  195, 196  ;  Gowon  P.  c.  5,  §  3,  p.  312-315,  3d  ed.    Again, 


606  PARTNERSHIP.  [cHAP.  XT. 

circumstances  must  concur  and  co-exist  ;  (1.)  That 
there  is  no  joint  estate  ;  and  (2.)  That  there  is  no  living 
solvent  partner.^  If  there  is  any  joint  estate,  however 
small  it  may  be,  if  it  is  an  available  joint  fund,  and  not 
purely  a   desperate   and   nominal  joint   fund,  then   the 

in  Ex  parte  Bolton,  2  Rose,  389,  390,  Lord  Eldon  said  :  "  Since  the  case  of 
Ex  parte  Crisp,  a  decision  now  at  least  sanctioned  by  time,  it  has  been 
clearly  settled,  that  a  joint  creditor  may  take  out  a  separate  commission  ; 
and,  taking  out  that  commission,  he  has  a  privilege  of  election,  either  to  make 
his  proof  against  the  separate  or  the  joint  estate.  By  a  joint  commission, 
on  the  other  hand,  he  binds  himself  to  resort  to  the  joint  property.  The 
rule  at  law,  as  to  executions,  affords  some  analogy.  If  a  creditor  take  out 
a  joint  execution,  he  cannot  afterwards  take  out  a  separate  execution  ;  and  a 
commission  is  in  the  nature  of  an  execution  ;  a  joint  commission  being  as 
an  execution  against  all,  a  separate  commission  as  an  execution  against  the 
individual.  If  a  creditor  deliberately  resorts  to  the  process  of  a  joint  commis- 
sion, he  is,  as  a  joint  creditor,  proceeding  on  a  joint  judgment  and  execution  ; 
and  having  once  elected  so  to  do,  he  cannot  alter  it.  No  determination 
approaches  a  case  like  the  present.  Here  are  two  separate  commissions 
at  the  instance  of  the  same  creditor.  If  it  were  the  case  of  one  separate 
commission,  thus  awarded,  the  creditor  might  say,  I  will  take  my  debt  out  of 
either  the  joint  or  the  separate  estate ;  but  to  get  at  the  joint  estate,  there 
must  be  a  special  order  of  the  Chancellor.  The  joint  property  is,  therefore, 
reached  by  circuity ;  and,  being  thus  looked  at,  if  the  creditor  says,  I  will 
rank  under  this  commission  as  against  the  joint  estate,  and,  so  ranking,  receives 
a  dividend,  say  to  the  extent  of  fifteen  shillings  in  the  pound,  he  still  re- 
mains the  creditor  of  the  solvent  partner  as  to  the  five,  and  for  that  he 
may  bring  his  action,  or  he  may  take  out  a  commission ;  and  taking  out  a 
commission,  until  he  completely  knows,  and  which  until  then  he  only  indi- 
rectly knows,  the  state  of  the  joint  accounts  under  that  commission,  he 
cannot  be  said  deliberately  to  have  elected.  I  think,  therefore,  he  is  entitled 
to  reconsider  his  mode  of  proof;  and  refunding  the  joint  dividend  with  the 
interest,  let  the  proof  stand  against  the  separate  estate."  See  also  Coll.  on 
P.  B.  4,  c.  2,  §  5,  15.  634,  635,  3d  ed. 

1  {The  U.  S.  Bankrupt  Act,  1867,  §  36,  provides  that  "the  net  proceeds 
of  the  joint  stock  shall  be  appropriated  to  pay  the  creditors  of  the  copart- 
nership, and  the  net  proceeds  of  the  separate  estate  of  each  partner  shall  be 
appropriated  to  pay  his  separate  creditors."  An  identical  provision  in  the 
Insolvent  Act  of  ^Massachusetts  has  been  held  peremptory,  distinctly  forbid- 
ding the  application  of  this  exception,  and  requiring  the  appropriation  of 
the  separate  estate  to  the  separate  creditors,  whether  there  be  any  joint 
estate  or  not.  Howe  v.  Lawrence,  9  Cush.  553 ;  Somerset  Potters  Works 
r.*Minot,  10  Cush.  592.  See  Weyer  i\  Thornburgli,  15  Ind.  124 ;  Weaver 
V.  Weaver,  46  N.  II.  188  ;  ante,  §  363.  | 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CRKDITORS.  607 

joint  creditor  is  excluded.  As  for  example,  if  the  joint 
fund  is  absolutely  worthless  from  the  expenses  of  any 
attempt  to  get  it  in,  or  if  it  is  pledged  beyond  its  real 
value,  it  will  be  deemed  a  mere  nullity ;  but  not  other- 
wise.^ On  the  other  hand,  if  there  is  no  available  joint 
fund,  still,  if  there  is  a  solvent  partner,  as  the  creditor 
has  his  right  of  action  against  him  for  a  full  satisfaction, 
it  is  said,  that,  therefore,  he  ought  not  to  be  allowed  to 
come  in  competition  with  the  separate  creditors  of  the 
bankrupt.-  Why  he  may  not,  it  is  not  easy  to  say  upon 
general  reasoning,  especially  as  all  partnership  debts 
are  now  treated  in  equity  as  several,  as  well  as  joint. 
But  here,  again,  there  is  a  "peculiar  qualification  upon 
this  part  of  the  rule.  The  solvent  partner  must  be 
living ;  for  if  he  is  dead,  although  his  estate  is  solvent, 
yet,  the  joint  creditors  may  come  in  upon  the  separate 
estate  of  the  bankrupt  ^;ari  |9«.s,sz^,  with  the  separate 
creditors.^  The  like  rule  will  apply  to  the  case  of  joint 
debtors,  who  are  not  partners,  under  the  like  circum- 
stances.'* 

§  381.  The  third  exception  stands,  if  possible,  in  its 
actual  application,  upon  more  subtle  and  refined 
grounds.  It  is  not  necessary  here  to  make  out  a  case, 
where  there    are    absolutely   and  literally  no   separate 

1  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  626,  627,  2d  ed. ;  Ex  parte  Leaf,  1 
Deac.  176 ;  In  re  Lee  &  Armstrong,  2  Rose,  54 ;  Ex  parte  Peake,  2  Rose, 
54;  Ex  pane  Hill,  5  B.  «&  P.  191,  a ;  Ex  parte  Janson,  3  Madd.  229  ;  Ex 
2)arte  Kensington,  14  Ves.  447;  [/«  re  Marwick,  Daveis,  229];  {Lind.  on 
P.  1002.  Where  there  was  a  joint  fund  of  £13,  though  it  did  not  appear 
but  that  it  would  all  be  absorbed  by  costs,  the  joint  creditors  were  excluded 
from  the  separate  estate.  Ex  parte  Kennedy,  2  De  G.  M.  &  G.  228.  So 
where  there  was  a  joint  fund  of  £9.  3s.  6cZ.,  all  of  whidi  would  be  required  for 
expenses  and  costs.  Ex  jyarte  Clay,  2  Christian's  Bank.  Law,  320 ;  S.  c.  2 
DeG.  M.  &G.  230,  note.} 

-  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  626,  627,  2d  ed. ;  Ex  parte  Sadler,  15 
Ves.  52,  56;  Ex  parte  Kensington,  14  Ves.  447. 

'  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  627,  2d  ed.  ♦  Ibid. 


608  PARTNERSHIP.  [CHAP.  XV. 

debts  at  all.  It  is  sufficient,  that  they  are  few  and 
inconsiderable  in  amount,  and  that  the  joint  creditors 
undertake  to  pay  them  all,  and  do  discharge  them ;  so 
that  they  no  longer  stand  in  their  way  as  subsisting 
claims,  impeding  their  rights.^ 

§  382.  Such  is  the  acknowledged  state  of  the  author- 
ities as  to  the  general  rule,  and  the  exceptions  to  it  as 
to  the  respective  rights  of  joint  creditors  and  separate 
estates  of  the  bankrupt.  After  the  repeated  doubts 
which  have  been  expressed  upon  the  subject,  by  the 
most  eminent  judges,  it  is  not,  perhaps,  too  much  to 
say,  that  it  rests  on  a  foundation  as  questionable  and 
as  unsatisfactory  as  any  rule  in  the  whole  system  of 
our  jurisprudence.  Such  as  it  is,  however,  it  is  for  the 
public  repose,  that  it  should  be  left  undisturbed,  as  it 
may  not  be  easy  to  substitute  any  other  rule  which 
would  uniformly  work  with  perfect  equality  and  equity 
in  the  mass  of  intricate  transactions  connected  with 
commercial  operations. 

§  383.  But  although  the  joint  creditors  and  the  sep- 
arate creditors  are  not  entitled  to  come  in,  ^9«ri!  passu, 
upon  the  joint  and  separate  estates  of  a  bankrupt,  for 
a  dividend  thereof;  yet  they  are  in  all  cases  entitled 
to  come  in  and  prove  their  debts  against  his  estate,  for 
the  purpose  of  assenting  to  or  dissenting  from  his  cer- 
tificate ;    but  not  to   vote  in  the   choice   of  assignees.^ 

>  Coll.  on  P.  B.  4,  c.  2,  §  3,  p.  627,  2d  ed. ;  Ex  parte  Chandler,  9  Ves. 
35 ;  Ex  parte  Taitt,  16  Ves.  193  ;  Ex  parte  Hubbard,  13  Ves.  424.  [See 
also  Rice  v.  Barnard,  20  Vt.  479.]  {This  seems,  in  truth,  no  exception  at 
all ;  it  has  never  been  doubted,  that,  if  there  be  any  surplus  left  of  the 
separate  estate  after  paying  the  separate  creditors,  that  surplus  goes  to  the 
joint  creditors  ;  and,  if  there  are  no  separate  creditors,  the  whole  of  the  sep- 
arate estate  is  such  surplus. } 

"  Gow  on  P.  B.  5,  §  3,  p.  280,  2d  ed. ;  Id.  p.  329 ;  Ex  parte  Taitt,  16 
Ves.  193;  Wats,  on  P.  c.  5,  p.  334,  335,  2d  ed.  {By  the  U.  S.  Bankrupt 
Act  of  1807,  §  30,  the  assignee  of  both  estates  is  chosen  by  the  creditors  of 
the  partnership. } 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  609 

And  this  is  upon  a  principle  of  natural  justice,  since  the 
certificate,  when  given,  will  operate  as  a  discharge  of 
the  bankrupt  equally  against  his  joint  and  his  separate 
creditors.^ 

§  38-i.  The  question  often  occurs  in  bankrujitcy,  as 
to  the  rights  of  creditors,  who  are  at  law  both  joint 
and  several  creditors  of  the  partners,  or,  in  other  words, 
to  whom  the  partners  are  in  law  jointly  and  severally 
indebted  upon  joint  and  several  securities  and  con- 
tracts, whether  they  are  entitled  to  prove  both  against 
the  joint  estates  and  against  the  separate  estates  of  the 
bankrupt  or  bankrupts.  And  here  the  general  rule  is 
now  firmly  established,  that  they  shall  not  in  equity  be 
allowed  to  prove  their  debts  and  take  dividends  upon 
the  joint  estate,  and  also  upon  the  separate  estate ;  but 
they  shall  be  restrained,  and  put  to  their  election  to 
prove  and  take  dividends  from  the  one  or  the  other.^ 
When  they  have  once  made  this  election,  they  are  ex- 
cluded from  any  dividend  of  the  other  fund,  unless 
there  remains  a  surplus  after  the  discharge  of  all  the 
debts  having  a  preference  thereon.^  However,  before 
any  such  creditor  can  be  put  to  his  election,  he  is  enti- 
tled to  a  reasonable  time  to  inquire  into  and  ascertain 
the  true  state  of  each  fund ;  and  even  after  he  has 
made  an  election,  he  will  sometimes  be  allowed  to 
recall  it  upon  equitable  circumstances,  when  it  will  not 
interfere  Avith  the  positive  rights  actually  acquired  and 
fixed  in  others.^ 

1  Ibid. 

-  Gow  on  P.  c.  5,  §  3,  p.  286,  287,  3d  ed. ;  Cook's  B.  L.  259,  4th  ed. ; 
Ex  parte  Banks,  1  Atk.  106  ;  Ex  parte  Rowlandson,  3  P.Wms.  40o  ;  Ex  parte 
Bond,  1  Atk.  98 ;  Coll.  on  P.  B.  4,  c.  2,  §  8,  p.  561,  2d  ed. ;  Id.  B.  4,  c.  2, 
§  4,  p.  630-632 ;  Id.  p.  634-637 ;  Wats,  on  P.  c.  5,  p.  289,  295,  2d  ed. 
{Lind.  on  P.  1013;  Ex  parte  Barnewall,  6  De  G.  M.  &  G.  795.  But  see 
Borden  v.  Cuyler,  10  Gush.  476.} 

=>  Ibid. 

♦  Gow  on  P.  c.  5,  §  3,  p.  286,  288,  289,  3d  ed. ;  Ex  parte  Bond,  1  Atk. 

39 


610  PARTNERSHIP.  [CHAP.  XV. 

§  385.  The  doctrine  thus  established  does  not,  any 
more  than  the  preceding,  seem  to  stand  upon  any  sohd 
ground  of  equity  or  general  reasoning.  It  has  been 
supported  upon  some  supposed  analogy  to  the  rule  of 
law  in  cases  of  this  sort,  where  the  creditor  may  sue  all 
the  partners  at  law,  and  have  a  joint  execution  against 
all,  or  he  may  sue  each  partner  separately  at  law,  and 
have  a  separate  execution  against  each.  But  he  cannot 
do  both ;  that  is,  he  cannot  at  law  at  the  same  time  sue 
them  all  in  a  joint  action,  and  each  one  separately  in  a 
separate  action ;  but  he  will  be  put  to  an  election  of  his 
remedy  by  the  very  forms  of  pleading.^     And  it  is  added, 

98. — We  are  here  to  understand,  that  the  election  of  the  remedy  by  the 
creditor  against  the  joint  or  the  several  estate  is  strictly  confined  to  cases  of 
one  and  the  self-same  debt ;  and  does  not  apply,  where  the  creditor  has  two 
distinct  debts,  arising  under  separate  and  independent  contracts.  Coll.  on 
P.  B.  4,  c.  2,  §  4,  p.  632,  2d  ed. ;  Id.  §  5,  p.  634-638,  2d  ed. ;  Ex  paHe  Ed- 
wards, Mont.  &  McA.  116. 

'  Gow  on  P.  C.5,  §  3,  p.  286,  287,  3d  ed. ;  Coll  on  P.  B.  4,  c.  2,  §  4,  p. 
630,  631,  2d  ed. ;  Id.  p.  634,  635  ;  Ex  parte  Rowlandson,  3  P.  Wms.  405,  406. 
—  On  this  occasion  Lord  Talbot  stated  his  opinion  to  be  :  "  That  as  at  law, 
when  A.  and  B.  are  bound  jointly  and  severally  to  J.  S.,  if  J.  S.  sues  A. 
and  B.  severally,  he  cannot  sue  them  jointly,  and,  on  the  contrary,  if  he  sues 
them  jointly,  he  cannot  sue  them  severally,  but  the  one  action  may  be 
pleaded  in  abatement  of  the  other;  so,  by  the  same  reason,  the  petitioner 
in  the  present  case  ought  to  be  put  to  his  election  under  which  of  the  two 
commissions  he  would  come ;  and  that  he  should  not  be  permitted  to  come 
under  both  ;  for  then  he  would  have  received  more  than  his  share.  But  his 
Lordship  said  he  would  hear  counsel,  if  they  had  anything  to  object  against 
this  order."  And  again  he  added  :  "In  the  principal  case,  the  bond  upon 
which  the  petitioner  would  seek  relief  under  the  separate  commission,  was 
not  only  for  the  same  debt,  but  given  by  both  the  parties  ;  and  the  plea  in 
abatement  would  have  been  proper,  had  the  bond  been  sued  at  the  same 
time  both  as  a  joint  and  several  bond,  which  cannot  be  where  there  is  only 
a  separate  bond.  Then  taking  this  to  be  the  rule  at  law,  that  a  joint  and 
several  bond  cannot  be  sued  at  one  and  the  same  time  both  jointly  and  sev- 
erally, but  that  the  obligee  must  make  his  election  ;  so  it  ought  to  be  (he 
said)  in  the  principal  case.  And  this  would  best  answer  the  general  end  of 
the  statutes  concerning  bankrujjts,  which  provide  that  all  debts  shall  be  paid 
equally,  as  in  conscience  they  are  all  equal ;  that  it  is  upon  this  foundation 
that  debts  of  a  partnership  have  been  ordered  to  be  first  paid  out  of  the  part- 
nership effects ;  and  that  afterwards  the  joint  creditors,  when  the  separate 


CHAP,  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  611 

that  the  general  end  of  the  bankrupt  laws  is  to  provide 
for  the  payment  of  all  debts  equally,  as  in  conscience 
all  are  equal ;  and  equality  is  equity.^ 

§  386.  Now  (to  say  the  least  of  it),  this  is  assuming 
the  very  ground  of  controversy,  and  not  establishing  it 
by  any  satisfactory  reasoning.  With  what  justice  can 
it  be  said,  that  a  contract,  which,  is  merely  joint  or 
merely  several,  shall  stand  upon  an  equal  footing,  as  to 
right  and  remedy,  with  one  that  is  both  joint  and  sev- 

creditors  are  satisfied,  may  come  in  upon  the  separate  effects,  but  not  before  ; 
and  so  vice  versa,  the    separate  creditors   are  to  come  first  on  the  separate 
effects  of  the  partners,  and  if  these  are  not  sufficient  then  on  the  joint  effects, 
after  the  partnership  creditors  are  paid."     And  therefore,  the  Reporter  adds, 
"  That  there  might  be  an  equality  in  the  principal  case,  his  Lordship  ordered 
that  the  petitioner  should  make  his   election,  whether  he  would   come  in  for 
a  satisfaction  out  of  the  partnership,  or  the  separate  effects,  but  not  out  of 
both  at  the  same  time  ;  however,  his  having  received  his  dividend   out  of  the 
joint  effects,  on  the  joint  commission,  whilst  this  matter  was  in  suspense,  was 
not  to  bind  him  ;  and  provided  he  brought  that  back  again,  he  might  come 
in  for  a  satisfaction  out  of  the  separate  effects,  and  he  to  have  a  month's  time 
to  make  his  election."     Lord  Hardwicke,  in  Ex  paHe  Bond,  1  Atk.   98, 
said  :   "It  was  objected  upon  the  last  day  of  petitions,  that  this  would  be  con- 
trary to  proceedings  at  law  upon  a  joint  and  several  bond,  where  the  credi- 
tor may  proceed  against  both  obligors  at  the  same  time,  till  his  debt  is  fully 
satisfied.     And  to  be  sure  it  is  so  at  law  ;  but  in  bankrupt  cases,  this   Court 
directs  an  equality  of  satisfaction.    Consider  it  on  the  footing  of  a  joint  estate 
first;  joint  creditors  are  entitled  to  a  satisfaction  out  of  the  joint  estate,  be- 
fore separate  creditors  ;  but  then  they  have  no  right  to  come  upon  the  sep- 
arate estate  for  the  remainder  of  their  debts,  till  after  separate  creditors  are 
satisfied.     What  would  be  the  consequence,  if  the  petitioners  should  be  ad- 
mitted to  come  on  both  estates  at  the  same  time?     Why,  then,  these  credi- 
tors would  draw  so  much  out  of  the  separate  estate,  as  would  be  a  prejudice 
to  other  joint  creditors,  who  have  an  equal  right  to  come  upon  the   separate 
estate  with  themselves ;  and  by  that  means  I  should  give  the  petitioners  a 
preference  to  other  creditors,  when  the  act  of  parliament  and  the  equity  of 
this  court  incline,  that  all  persons  should  have  an  equal  satisfaction,  and  not 
one  more  than  another."     See  also  Ex  />ar/e  Wildman,  1  Atk.  109. 

'  Ibid.  — The  doctrine,  compelling  the  creditor  to  elect,  equally  applies 
to  the  case  of  a  joint  creditor,  who  takes  the  separate  personal  contract  or 
security  of  one  of  the  debtors,  as  collateral  security  for  the  joint  debt.  Ex  parte 
Roxby,  1  Mont,  on  P.  124 ;  Gow  on  P.  c.  5,  §  3,  p.  287,  3d  ed. ;  Coll.  on  P. 
B.  4,  c.  2,  §  5,  p.  635,  636,  2d  ed. ;  But  see  In  re  Plummer,  1  Phil.  56,  59  ; 
post,  §  389. 


612  PARTNERSHIP.  [CHAP.  XV. 

eral  1  The  very  object  of  the  latter  is  to  provide  a  su- 
perior remedy  to  enforce  it ;  and  why  should  any  Court 
deprive  the  creditor  of  the  very  benefit  which '  the  debt- 
ors had  stipulated  to  give  him,  or  restrain  him  from 
using  all  his  rights "?  Courts  of  Equity  generally  act 
upon  an  opposite  principle,  and  give  a  broader  effect  to 
joint  partnership  contracts  in  favor  of  the  creditor,  even 
when  his  remedy  is,  by  the  death  of  one  of  the  partners, 
gone  at  law.^  However,  the  doctrine  is  now  too  firmly 
established  in  practice  to  be  shaken.^ 

§  387.    But,   although,    generally,    where    a    creditor 
holds  the  joint  contract  or  personal  security  of  the  firm, 

^  Ante,  §  384,  385,  and  note.  —  Lord  Eldon  held  a  pointed  opinion 
against  tlie  whole  doctrine ;  but  at  the  same  time  he  considered  it  so  well 
established  in  practice  by  authority,  that  he  ought  not  to  depart  from  it. 
In  iix  jja/'^eBevan,  9Ves.  223,  224,  he  said:  "It  is  not  necessary  to  de- 
cide the  other  question,  as  to  the  joint  and  several  proof.  If  it  was,  I 
am  not  perfectly  satisfied  with  the  authority  that  has  been  stated.  The 
reasoning  goes  upon  this,  that  a  joint  and  separate  action  could  not  be 
brought  at  law.  But  surely  the  distinction  is  thin,  that  where  a  joint  and 
separate  bond  is  given,  and  another  secui'ity,  several  from  each,  there, 
as  two  actions  might  be  brought,  the  rule  in  bankruptcy  should  be  dif- 
ferent. I  think  I  have  heard,  that  in  the  case  cited  in  Peere  Williams, 
the  only  separate  creditor  was  he  who  took  out  the  commission ;  and  it 
appears  by  the  book,  that  the  joint  creditors  prayed  that  he  might  deliver 
over  to  them  the  effects,  which  was  refused  ;  and  it  was  said,  that  he  should  have 
the  effects  applied  to  his  separate  bond  ;  and  if  that  is  the  case,  the  rule  is  quite 
right ;  for  he  would  have  a  right  to  take  the  separate  effects,  if  not  to  the  det-' 
riment  of  other  separate  creditors."  And  again,  in  £"0;  parte  Bevan,  10  Ves. 
107, 109,  he  said :  "  The  principle  seems  obvious ;  yet  in  bankruptcy,  for  some 
reason  not  very  intelligible,  it  has  been  said  the  creditor  shall  not  have  the 
benefit  of  the  caution  he  has  used.  I  never  could  see  why  a  creditor,  having 
both  a  joint  and  a  several  security,  should  not  go  against  both  estates.  But 
it  is  settled  that  he  must  elect.  By  his  election  to  go  against  the  joint  estate, 
the  effect  to  the  joint  creditors  is  very  different  from  what  it  would  have  been 
if  he  had  elected  to  go  against  the  separate  estate  ;  and  the  question  is,  wheth- 
er, if  he  elects  to  go  against  the  joint  estate,  and  thereby  participates  with 
the  joint  creditors,  that  j^articipation,  arising  from  his  election,  has  not  in 
practice  been  treated  as  a  consideration  for  the  rest  of  the  joint  creditors  ; 
entitling  them  to  go  along  with  him  upon  the  separate  estate,  when  he  after- 
wards goes  against  that  estate." 

2  {But  see  Borden  v.  Cuyler,  10  Cush.  476.} 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  613 

and  likewise  the  separate  contract  or  personal  security 
of  individuals  composing  the  firm,  he  is  compelled,  upon 
the  bankruptcy  of  some  of  them,  to  elect,  whether  he 
will  consider  them  as  his  joint  or  as  his  separate  debtors, 
and  proceed  accordingly ;  yet  this  rule  is  not  without 
exceptions.^  For,  where  a  creditor  holds  the  joint  con- 
tract or  personal  security  of  a  firm,  and  also  the  several 
contract  or  personal  security  of  some  of  its  members, 
and  the  latter  likewise  form  a  distinct  partnership  inter 
sese,  there  are  cases  where  the  creditor  may  have  a 
double  remedy.  Thus,  if  A.,  13.,  C,  and  D.  trade  under 
the  firm  of  A.,  B.,  &  Co.,  and  C.  and  D.  are  in  a  distinct 
partnership,  and  the  firm  of  A.,  B.,  &  Co.  draw  bills  upon 
C.  and  1).,  who  accept  them,  the  holder  of  such  bills  may 
prove  them  under  the  bankruptcy  of  C.  and  D.,  and 
afterwards  may  bring  his  action  on  the  bills  against  A., 
B.,  &  Co.^  So,  if  a  creditor  of  A.  and  B.  should  take  out 
a  separate  commission  against  A.,  and  receive  a  dividend 
under  that  commission  out  of  the  joint  estate,  he  may 
bring  an  action  against  the  other  partner  for  the  resi- 
due.^ 

§  388.  Cases  sometimes  occur  upon  written  nego- 
tiable instruments,  such  as  bills  of  exchange  and  prom- 
issory notes,  where,  in  reality,  all  the  parties  are  part- 

'  {"If  any  bankrupt  shall,  at  the  time  of  adjudication,  be  liable  upon  any 
bill  of  exchange,  promissory  note,  or  other  obligation  in  respect  of  distinct  con- 
tracts as  a  member  of  two  or  more  firms  carrying  on  separate  and  distinct 
trades,  and  having  distinct  estates  to  be  wound  up  in  bankruptcy,  or  as  a  sole 
trader  and  also  as  a  member  of  a  firm,  the  circumstance  that  such  firms  are 
in  whole  or  in  part  composed  of  the  same  individuals,  or  that  the  sole  con- 
tractor is  also  one  of  the  joint  contractors,  shall  not  prevent  jjroof  and  re- 
ceipt of  dividend  in  respect  of  such  distinct  contracts  against  the  estates  re- 
spectively liable  upon  such  contracts."    U.  S.  Bankrupt  Law  of  1867,  §  21.} 

*  Ex  2^arte  Farr,  1  Rose,  76.  See  also  In  re  Plummer,  1  Phil.  56,  59 ; 
post,  §389. 

3  Heath  V.  Hall,  4  Taunt.  326  ;  Young  v.  Hunter,  10  East,  252  ;  Coll. 
on  P.  B.  4,  c.  2,  §  7,  p.  645,  2d  cd. ;  Gow  on  P.  c.  5,  §  3,  p.  289,  3d  ed. 


614  PARTNERSHIP.  [CHAP»  XV. 

ners,  and  the  bills  or  notes  are  drawn,  or  indorsed,  or 
accepted,  upon  their  joint  partnership  account,  and  yet 
the  parties  appear  only  to  be  separately  bound  upon 
the  face  of  the  instrument,  as  drawers,  or  as  indorsers, 
or  as  acceptors.  In  such  cases,  a  question  has  been 
made,  whether  the  creditor  has  a  right  in  bankruptcy 
to  prove  his  debt  against  the  estates  of  all  the  respec- 
tive parties  (which  is  called  double  proof),  or  must  elect 
to  prove  against  one  only  of  the  estates.^  It  has  been 
held,  that  if  the  creditor  is,  at  the  time  of  taking  the 
negotiable  instrument,  ignorant  of  the  actual  connection 
between  the  parties  in  that  instrument,  he  is  entitled  to 
the  double  proof.^  But,  if  he  is  not  so  ignorant,  it 
seems  doubtful,  in  the  present  state  of  the  authorities, 
whether  he  is  entitled  to  the  double  proof,  or  not.^     Be 

»  {See  U.  S.  Bankrupt  Law  of  1867,  §  21.} 

2  Coll.  on  P.  B.  4,  c.  2,  §  8,  p.  648,  649,  656,  2d  ed. ;  Gow  on  P.  c.  5, 
§  3,  p.  289,  3d  ed. ;  Ex  parte  Benson,  Cook's  B.  L.  253 ;  Ex  parte  La 
Forest,  Id.  251 ;  Ex  parte  Bonbonus,  8  Ves.  540. 

3  Coll.  on  P.  B.  4,  c.  2,  §  8,  p.  649-651,  2d  ed. ;  Gow  on  P.  c.  5,  §  3,  p. 
288,  3d  ed.  —  Mr.  Collyer  (Coll.  on  P.  B.  4,  c.  2,  §  8,  p.  648-651,  2d  ed.) 
has  stated  the  cases  as  follows.  "  The  leading  case  on  this  subject  is  Ex 
parte  La  Forest,  Cook's  B.  L.  251.  There,  Corson  and  Gordon,  partners 
and  turpentine  manufacturers,  entered  into  partnership  with  Whincup  and 
GrifSn,  soap  manufacturers.  The  latter  business  was  carried  on  under  the 
firm  of  Whincup  &  Griffin.  A  joint  commission  was  issued  against  the 
four,  under  which  they  were  found  bankrupts ;  and  the  assignees  possessed 
themselves  of  the  joint  fund  of  the  four,  and  also  the  joint  fund  of  Corson 
&  Gordon,  and  their  respective  separate  estates.  Corson  &  Gordon,  in 
their  partnership  firm,  drew  bills  of  exchange  upon  the  firm  of  Whincup  & 
Griffin,  who  accepted  such  bills.  The  petitioners  discounted  many  of  these 
bills.  The  petitioners  alleged,  that,  at  the  time  of  such  discount,  they  were 
ignorant  of  any  partnership  existing  between  the  four ;  but  that  they  con- 
sidered Corson  &  Gordon,  the  drawers,  and  Whincup  &  Griffin,  the  accep- 
tors, as  two  distinct  firms,  and  thought  that  they  had  the  security  of  the 
funds  of  both  those  firms.  The  petitioners  applied  to  the  commissioners 
to  be  admitted  to  prove  against  the  respective  joint  estates  of  Corson  & 
Gordon,  and  of  Whincup  &  Griffin ;  but  the  commissionei's  relused, 
conceiving  that  the  bills  ouglit  to  be  proved  only  against  the  joint  estates 
of  Wliincup,  Griffin,  Corson,  and  Gordon.  Lord  Loughborough  held,  that, 
admitting  the  allegation  of  ignorance  on  the  part  of  the  petitionei's  to  be  true, 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  615 

this  as  it  may,  it  is  very  certain,  that  the  creditor  cannot 
prove  his  debt  against  the  joint  and  against  the  separate 

they  were  entitled  to  the  proof  which  they  required.  Again,  A.,  B.,  and  C. 
were  partners  in  a  cotton  manufactory,  and  B.  ;'nd  C.  carried  on  a  distinct 
trade  in  partnership,  as  grocers.  The  petitioner  sold  goods  to  B.  and  C.  as 
grocers,  for  which  they  remitted  to  him  a  bill  drawn  by  A.  in  their  favor, 
upon  one  Z.,  and  indorsed  by  B.  and  C.  Z.  accepted  the  bill;  but  it  was 
protested  for  non-payment.  The  drawer,  indorsers,  and  acceptor,  all 
became  bankrupts.  The  petitioner  did  not  know  that  A.  had  any  connec- 
tion in  trade  with  B.  and  C.  Lord  Loughborough  ordered  that  the  peti- 
tioner should  be  at  liberty  to  prove  the  amount  of  the  bill  against  the  joint 
estate  of  B.  and  C,  and  also  against  the  separate  estate  of  A.,  and  be  paid 
dividends  upon  both  estates.  Ex  parte  Benson,  Cook's  B.  L.  253.  Again, 
five  persons,  trading  under  the  firm  of  C.  &  Co.,  drew  a  bill  of  exchange  on 
two  of  the  members  of  the  copartnership,  who  carried  on  a  distinct  trade,  as 
H.  and  G.  The  bill  was  accepted,  negotiated,  and,  in  the  course  of  circu- 
lation, came  into  the  hands  of  the  petitioner,  without  any  knowledge,  on  his 
part,  of  the  connection  between  the  parties.  LTpon  the  bankruptcy  of  C.  & 
Co.  the  petitioner  claimed  to  prove  both  against  the  drawers  and  acceptors. 
Lord  Eldon  held,  that  the  petitioner,  as  ignorant  of  the  connection  of  the 
parties,  was  entitled  to  such  proof.  Ex  parte  Adam,  2  Rose,  36.  In  all 
these  cases,  the  partners,  who  appeared  as  distinct  parties  to  the  bills,  were 
also  in  distinct  partnerships ;  and  yet  the  holders  of  the  bills,  in  order  to 
obtain  double  proof,  were  required  to  prove  their  ignorance,  that  these 
distinct  partnersliips  also  formed  an  aggregate  partnership.  Nevertheless, 
according  to  a  learned  wi'iter.  Lord  Eldon  has  determined,  that,  where  the 
firms  are  in  fact  distinct,  it  is  not  material  that  the  ignorance  of  the  holder, 
that  the  same  parties  were  also  united  in  one  firm,  should  be  requisite  to 
entitle  him  to  proof.  Eden  on  Bankr.  Law,  182.  Now,  although  this 
remark  does  not  seem  to  be  supported  by  any  express  authority ;  yet  it  is 
justified  by  several  dicta  of  Lord  Eldon,  and  by  the  case  of  Ex  j^arte 
Walker,  1  Rose,  441,  which  is  in  point.  There  A.,  a  sole  trader,  B.  and  C, 
partners,  and  D.,  also  a  sole  trader,  engaged  in  a  joint  adventure;  and  for 
a  joint  purchase  of  goods  by  them,  the  vendor,  with  a  knowledge  of  their 
joint  interest,  received  in  payment  a  bill  drawn  by  A.  on,  and  accepted  by 
B.  and  C. ;  Lord  Eldon  held,  that  on  the  bankruptcy  of  A.,  and  of  B.  and 
C.,  the  vendor  was  entitled  to  prove  the  bill  against  both  their  estates. 
On  other  occasions,  likewise,  Lord  Eldon  appears  to  have  adverted  to 
double  proof,  without  ever  referring  to  the  ignorance  of  the  holder  of  the 
double  security,  that  the  distinct  firms  constituted  one  general  firm.  Ex 
parte  Bonbonus,  8  Ves.  540.  On  the  other  hand,  there  is  a  recent  case,  in 
which  Sir  George  Rose  is  reported  to  have  said,  that  the  holder  of  a  bill  is 
not  entitled  to  double  proof,  if  he  knew  the  different  persons  whose  names 
appear  upon  it  to  be  all  members  of  one  joint  firm.  Ex  parte  Hill,  2  Deac. 
249,  261.  LTpon  the  whole,  it  seems  still  open  to  contend,  that  where  a  bill 
is  di'awn  by  some  of  the  partners  upon  the  others,  or  upon  the  whole  firm, 


616  PARTNEESHIP.  [CHAP.  XV. 

estates  of  the  same  parties ;  but  he  must  elect  to  go 
against  the  one,  or  the  other.^ 

§  389.  Another  question  may  arise  in  bankruptcy, 
where  a  creditor  has  a  pledge  or  mortgage  or  other  se- 
curity upon  the  estate  of  the  bankrupt  for  his  debt, 
whether  he  can  retain  it,  and  proceed  in  bankruptcy 
for  the  amount,  or  not.  And,  here,  a  doctrine  prevails, 
which  seems  equally  consonant  to  justice  and  common 
sense ;  and  that  is,  that  the  creditor  in  such  case  may, 
if  he  chooses,  surrender  up  the  pledge  or  mortgage  or 
other  security,  and  come  in  under  the  commission,  for 
his  whole  debt ;  or,  he  may  have  the  pledge  or  mort- 
gage or  other  security  sold,  and  if  it  is  insufficient  to 
pay  the  whole  debt,  he  may  prove  against  the  estate 
for  the  deficiency.^  But  as  the  established  rule  in  bank- 
ruptcy is,  that  the  deduction  of  a  pledge  or  mortgage 
or  other  security  is  never  made,  except  when  it  is  the 
property  of  the  bankrupt,  it  has  been  held,  as  a  conse- 
quence of  that  rule,  that  in  the  case  of  a  separate  pledge 
or  mortgage  or  security  of  property  made  for  a  joint 
debt,  either  by  a  partner  or  by  a  third  person,  the  secu- 
rity may  be  retained,  although  the  whole  joint  debt  be 
proved  under  the  commission.^ 

or  vice  versa,  and  the  bill  purports,  and  the  fact  is,  that  the  drawers  and 
acceptors  likewise  constitute  distinct  firms  respectively,  in  such  case,  the 
holder,  whether  ignorant  or  not  of  the  aggregate  connection  of  the  parties, 
is  entitled  to  pursue  the  contract  appearing  on  the  fiice  of  the  bill,  and  to 
prove  against  both  the  estate  of  the  drawer  and  that  of  the  acceptors." 
See  Wats,  on  P.  c.  5,  p.  274-276,  2d  ed. 

'  Coll.  on  P.  B.  4,  c.  2,  §  8,  p.  651-654,  2d  ed.  {This  whole  subject  of 
double  proof  is  learnedly  discussed  in  Lind.  on  P.  1018-1025.  See  Wick- 
ham  V.  Wickhani,  2  Kay  &  .1.  478.  Ex  parte  Goldsmid,  1  De  G.  &  J.  257  ; 
s.  c.  affirmed  in  House  of  Lords,  sub  nom.  Goldsmid  v.  Cazenove,  5  Jur.  x. 
s.  1230,  and  an  article  in  3  Jur.  n.  s.  pt.  2,  p.  27.} 

=  Coll.  on  P.  B.  4,  c.  2,  §  4,  p.  633,  2d  ed.  ;  Id.  c.  2,  §  7,  p.  645,  646  ; 
Ex  parte  Geller,  2  Madd.  262  ;  Ex  parte  Bennet,  2  Atk.  527  ;  Ex  parte  Parr, 
1  Rose,  76;  Ex  parte  Goodman,  3  Madd.  373;  In  re  Plummer,  1  Phil.  56, 
59;  {U.  S.  Bankrupt  Law  of  1867,  §  20.} 

^  Coll.  on  P.  B.  4,  c.  2,  §  7,  p.  645-647,  2d  ed. ;  Ex  parte  Parr,  1  Rose 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  G17 

§  1390.  It  was  also  for  a  long  time  a  matter  of  doubt, 
whether,  if  a  fii'm  be  indebted  to  one  of  the  partners, 
the  creditors  on  the  separate  estate  of  that  partner 
should  be  admitted  as  creditors  on  the  partnership  es- 
tate, in  competition  with  the  joint  creditors  ;  Lord  Hard- 
wicke  conceived  and  held,^  that,  where  money  had  been 
lent  to  the  partnership  by  a  partner,  who  afterwards 
became  bankrupt,  the  separate  creditors  of  the  latter 
might  prove  the  amount  of  the  loan,  as  a  debt  against 
the  joint  estate.  Lord  Thurlow,  however,  thought  dif- 
ferently ;  and  in  a  subsequent  case,^  he  decided,  that 
proof  could  not,  under  such  circumstances,  be  made. 
He  proceeded  upon  the  principle,  that  the  equities  of 
the  creditors,  whether  joint  or  separate,  must  be  worked 
out  through  the  medium  of  the  partners  ;  and  that  it 
was  a  clear  and  well-established  rule,  that  the  individ- 
ual partner  could  not  himself  prove  against  the  joint 
estate  in  competition  with  the  creditors  of  the  firm, 
who  were  in  fact  his  own  creditors,  and  thereby  take 
part  of  the  fund  to  the  prejudice  of  those,  who  were 
not  only  creditors  of  the  partnership,  but  of  himself. 
Therefore,  where  there  was  a  joint  commission  against 
two  partners,  and  a  separate  commission  against  one  of 
them,  and  the  assignees  under  the  separate  commission 
petitioned  to  be  admitted  creditors  under  the  joint  com- 
mission for  a  sum  of  money  brought  by  the  bankrupt, 
whom  they  represented,  into  the  partnership,  beyond 
his  share,  and  as  being,  therefore,  a  creditor  upon  the 
partnership,  for  that  sum  ;  Lord  Thurlow  refused  it, 
upon  the  ground,  that  proof  of  a  debt  due  to  an  indi- 

76;  Ex  parte  Peacock,  2  Glyn  &  J.  27;  In  re  Plummer,  1  Phil.  56,  59; 
Ex  parte  Bowden,  1  Deac.  &  Ch.  135;  {Lind.  on  P.  990;  Ex  parte  Leicester- 
shire Banking  Co.,  De  Gex,  292.  Rolfe  i'.  Flower,  Law  llep.  1  P.  C.  27. 
But  see  Harmon  v.  Clark,  13  Gray,  114,  122.} 

1  Ex  parte  Hunter,  1  Atk.  223. 

2  Ex  parte  Lodge,  Cook's  B.  L.  534 ;  s.  c.  1  Ves.  Jr.  166. 


618  PARTNERSHIP.  [CHAP.  XV. 

vidual  partner  could  not  be  allowed  to  come  in  con- 
flict with  the  proofs  of  the  joint  creditors.^  The  rule 
introduced  by  Lord  Thurlow,  has  since  his  time  been 
in  many  cases  acted  upon  and  confirmed.^ 

§  391.  The  like  question  may  arise  in  the  converse 
case,  where  the  joint  creditors  seek  to  prove  a  debt, 
due  from  a  single  partner  to  the  partnership,  against 
the  separate  estate  of  that  partner.  And  here,  also, 
it  is  now  the  settled  rule,  that,  where  one  partner  has 
become  indebted  to  the  firm,  or  has  taken  more  than 
his  share  out  of  the  joint  funds,  the  joint  creditors  are 
not  to  be  admitted  to  prove  against  the  separate  estate 
of  that  partner,  until  his  separate  creditors  are  satis- 
fied, unless  it  can  be  shown,  that  in  drawing  out  the 
money,  the  partner  has  acted  fraudulently,  with  a  view 
to  benefit  his  separate  creditors,  at  the  expense  of  the 
joint  creditors.^ 

*  Ex  parte  Burrell,  Cook's  B.  L.  532;  Ex  parte  Parker,  and  Ex  parte 
Pine,  Ibid.;  Gow  on  P.  c.  5,  §  3,  p.  290,  291,  3d  ed. 

^  Ex /larie  Reeve,  9  Ves.  588;  Ex  parte  Adams,  1  Rose,  305;  Ex  parte 
Harris,  Id.  437;  Ex  parte  Sillitoe,  1  Glyn  &  J.  374,  382;  Gow  on  P.  c.  5, 
§  3,  p.  290,  291,  3d  ed. ;  Rodgers  v.  Meranda,  7  Ohio  St.  179,  193;  Wats, 
on  P.  c.  5,  p.  278-280,  3d  ed.  —  In  this  and  the  three  succeeding  sections, 

1  have  followed  for  the  most  part  literally  the  language  of  Mr.  Gow,  as  at 
once  full  and  accurate  upon  the  points.     {Lind.  on  P.  994  ;  Ex  parte  Brown, 

2  Mont.  D.  &  De  G.  71 8.  A  testator  directed  that  it  should  be  lawful  for  his  wife 
to  retain  and  employ  not  exceeding  £6,000  in  the  trade  which  he  was  carrying 
on  at  his  death,  and  he  appointed  his  wife  and  son  executrix  and  executor. 
The  widow  carried  on  the  trade,  taking  the  son  into  partnership.  Held, 
that  the  employment  of  £6,000  of  the  assets  in  the  trade  was  authorized 
by  the  will,  and  gave  no  right  of  proof  in  competition  with  the  joint  creditors, 
and  that  the  son  being  taken  into  partnershijj  made  no  difference.  Ex 
parte  Butterfield,  De  Gex,  570.} 

'  Gow  on  P.  c,  5,  §  3,  p.  316-318  ;  Wats,  on  P.  c.  5,  p.  280-285,  2d  ed. 
Mr.  Gow  on  this  point  says :  "  The  law  sanctioned  by  the  authorities  of  I^ord 
Talbot,  and  Lord  Hardwicke,  formerly  was,  that  if  the  debt,  raised  by  the 
partners  against  an  individual  partner,  arose  out  of  contract,  as  upon  a  loan 
by  the  partnership  to  him,  the  joint  creditors  might  be  admitted  to  prove 
against  the  separate  estate  in  competition  with  the  separate  credit07-s.  But 
the  opinions  entertained  by  those  learned  Judges  have  been  receded  from  in 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  619 

§  392.  But  although  in  cases  of  contract,  in  which 
the  joint  estate  is  increased  at  the  expense  of  the 
separate  estate,  the  funds  are  administered  as  they  are 
constituted  at  the  time  of  the  bankruptcy  ;  yet  there 
are  circumstances  under  which  the  separate  creditors 
will  be  permitted  to  prove,  against  the  joint  estate,  a 
debt  due  from  the  partnership  to  the  individual  part- 
ner.^ To  induce  a  relaxation  of  the  rule,  however,  it 
must  be  made  out,  that  the  separate  effects,  creating 
the  debt,  were  obtained  from  the  separate  to  augment 
the  joint  estate,  either  by  actual  fraud,  or  under    cir- 

more  modern  times ;  and  the  settled  doctrine  now  is,  that  if  the  claim  arise 
out  of  contract,  the  estates  are  to  be  administered  jointly  and  separately,  as 
they  are  actually  constituted  at  the  time  of  the  bankruptcy ;  the  joint  cred- 
itors not  being  permitted  to  recall  into  the  joint  fund,  what  one  partner  has 
by  contract,  express  or  implied,  subtracted  from  the  joint,  and  applied  in 
augmentation  of  his  separate  estate.  This  rule  was  introduced  by  Lord 
Thurlow,  who,  having  much  considered  the  question,  finally  determined,  that 
the  assignees  on  behalf  of  the  joint,  could  not  prove  against  the  separate 
estate,  unless  the  partner  had  taken  the  joint  property,  with  a  fraudulent 
intent  to  augment  his  separate  estate.  Thus,  where  Feudal  was  a  dormant 
partner  with  Lodge,  and  Lodge  took  money  from  the  partnership  to  a  con- 
siderable amount,  without  the  knowledge  of  Feudal,  who  did  not  Intermeddle 
in  the  partnershij)  business,  Lord  Thurlow,  after  taking  time  to  consider, 
thought  he  could  not  permit  the  assignees,  under  a  joint  commission,  to  prove 
against  the  separate  estate  of  Lodge,  without  deciding  upon  a  principle,  that 
must  apply  to  all  cases,  and  constantly  occasion  the  taking  an  account  be- 
tween the  partners  and  the  partnership  in  every  joint  bankruptcy.  He 
said,  that  If  the  affidavits  had  gone  the  length  of  connecting  the  bankruptcy 
with  the  institution  of  the  jjartnershlji  trade,  and  that  Lodge,  with  a  view  of 
swindling  Feudal  out  of  his  property,  had  got  him  into  the  trade,  and  then 
taken  the  effects  of  the  partnership  Into  his  own  hands,  with  a  view  to  his 
separate  creditors,  it  might  have  been  different;  and  the  petition,  on  the 
part  of  the  joint  creditors,  to  prove  against  the  separate  estate,  was  dismissed. 
The  principle  established  by  Lord  Thurlow's  decision  .has  been  acknowledged, 
and  followed  by  Lord  Eldon ;  and  it  Is  now  an  indisputable  rule  In  bank- 
ruptcy, that,  where  the  debt  from  one  partner  to  the  partnership  was  Incurred 
■with  the  privity  of  his  co-partners,  proof  by  the  joint  against  the  separate 
estate  will  not  be  admitted."  See  also  ante,  §  384,  385,  note,  §  390;  Lord 
Eldon's  opinion  in  Ex  parte  Harris,  2  Ves.  &  B.  210,  212,  213,  cited;  {post, 
§  406  ;  Lind.  on  P.  1004  ;  Walton  v.  Butler,  29  Beav.  428.} 

'  Ex  parte  Harris,  1  Eose,  43  7  ;  s.  c.  2  Ves.  &  B.  210 ;  Ex  parte  Yonge, 
3  Ves.  &  B.  31 ;  s.  c.  2  Rose,  40 ;  Ex  parte  Cust,  Cook's  B.  L.  535. 


620  PARTNERSHIP.  [CHAP.  XV. 

cumstances,  from  which  the  law  will  imply  fraud ; 
and,  in  a  legal  sense,  every  appropriation  by  the  firm, 
as  contradistinguished  from  a  taking  either  by  con- 
tract, or  by  loan,  is  considered  fraudulent,  if  it  be  made 
without  the  express  or  implied  authority  of  the  indi- 
vidual partner.^ 

1  Ex  parte  Reid,  2  Rose,  84  ;  Gow  on  P.  c.  5,  §  3,  p.  292,  3d  ed.;  Wats, 
on  P.  c.  5,  p.  280-282,  2d  ed. ;  Coll.  on  P.  B.  4,  c.  2,  §  10,  p.  666-6  72,  2d  ed. ; 
Ex  parte  Harris,  2  Ves.  &  B.  210.  — In  Ex  parte  Harris,  2  Yes.  &  B.  210, 
212,  Lord  Eldon  said:  "  There  has  long  been  an  end  of  the  law  which  pre- 
vailed in  the  time  of  Lord  Hardwicke ;  whose  opinion  appears  to  have  been, 
that,  if  the  joint  estate  lent  money  to  the  separate  estate  of  one  partner,  or 
if  one  partner  lent  to  the  joint  estate,  proof  might  be  made  by  tlie  one  or  the 
other  in  each  case.  That  has  been  put  an  end  to,  among  other  principles, 
upon  this  certainly ;  that  a  partner  cannot  come  in  competition  with  separate 
creditors  of  his  own,  nor  as  to  the  joint  estate  with  the  joint  creditors.  The 
consequence  is,  that  if  one  partner  lends  £1,000  to  the  partnership,  and  they 
become  insolvent  in  a  week,  he  cannot  be  a  creditor  of  the  partnership, 
though  the  money  was  supplied  to  the  joint  estate  ;  so  if  the  jiartnership  lends 
to  an  individual  partner,  there  can  be  no  proof  for  the  joint  against  the  sepa- 
rate estate;  that  is,  in  each  case  no  proof  to  affect  the  creditor,  though  the 
individual  partners  may  certainly  have  the  right  against  each  other.  The 
opinion  of  Loi'd  Talbot  seems  also  to  have  been  in  favor  of  this  proof.  But 
in  and  previously  to  the  year  1790  great  discussion  took  place  at  this  bar; 
the  result  of  which,  according  to  Lord  Thurlow's  opinion,  was  expressed 
particularly  in  the  case  of  Dr.  Fendal  and  Lodge.  The  former,  a  physician, 
embarked  a  very  large  property,  his  whole  fortune,  in  a  partnership  with 
Lodge,  whom  he  permitted  to  have  the  whole  management ;  and,  a  bank- 
ruptcy ensuing.  Lord  Thurlow  held,  that  as  it  was  with  the  knowledge  and 
permission  of  Fendal,  that  the  whole  management  of  the  property  was  with 
Lodge,  he  was  authorized  to  do  as  he  thought  fit  with  the  partnership  prop- 
erty ;  and  Fendal,  therefore,  must  abide  the  consequences  of  what  had  been 
done  most  improperly,  but  under  his  own  authority  most  imprudently  given  ; 
and  there  could,  therefore,  be  no  proof.  The  law  has  been  clear  from  that 
time,  that,  to  make  out  the  right  to  prove  by  the  one  estate,  or  the  other,  it 
must  be  established,  that  the  effects,  joint  or  separate,  have  been  acquired  by 
the  one,  or  the  other,  improperly  and  fraudulently  in  this  sense,  that  they 
have  been  accjuired  under  circumstances  from  which  the  law  implies  fraud  ; 
or  in  this  sense,  to  increase  the  separate  estate  of  one  partner,  that  he  meant 
fraudulently  to  increase  his  own  means  out  of  the  partnership  estate.  Lord 
Thurlow  by  '  fraud '  intended  to  express  what  he  thought  necessary  to  dis- 
tinguish that  from  taking  by  contract,  or  loan,  or  without  the  express  or 
implied  authority  of  the  other  partner ;  and  that  such  act  would  amount  to 
fraud.     Upon  this  case,  I  formerly  expressed  my  opinion ;  and  I  now  lay 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  621 

§  393.  Cases  also  may  arise,  independently  of  any 
fraud,  in  which  the  separate  creditors  will  be  entitled 
to  relief,  and  to  make  proof  of  their  debts  against  the 
joint  estate.  In  cases  of  dormant  partnership,  it  is  a 
general  rule,  that  the  creditors  Avho  have  dealt  with 
the  ostensible  partner,  not  knowing  that  there  is  any 
dormant  partner,  have  a  right  to  treat  their  debts  as 
joint  debts,  or  as  separate  debts,  and  have  an  election 
to  prove  the  same  against  the  joint  estate,  or  against 
the  separate  estate  of  the  ostensible  partner.^  Under 
such  circumstances,  if  such  creditors  should  elect  to 
prove  them  against  the  separate  estate  of  the  ostensi- 
ble partner,  the  separate  creditors  of  the  latter  will  be 
entitled  to  prove  their  debts  against  the  joint  estate, 
and  to  receive  an  equivalent  out  of  any  surplus  of  the 
joint  estate,  which  may  remain  after  satisfying  the 
joint  debts  ;  for  the  same  rule  prevails  in  bankruptcy, 
as  is  adopted  by  Courts  of  Equity  generally,  that  the 
mere  election  of  a  creditor,  who  has  a  right  to  resort  to 
two  funds,  shall  not  deprive  other  creditors,  who  can 
resort  but  to  one  of  those  funds,  of  their  just  rights ; 
but  the  latter  shall  be  allowed,  by  way  of  substitu- 
tion, to  obtain  the  like  benefit  against  the  other  fund, 
as  the  original  creditor  would  have,  if  he  had  not 
made  such  an  injurious  election.^     Therefore,  where  a 

down,  that,  if  in  either  the  expressed  or  implied  terms  of  an  agreement  for 
a  partnership  there  is  a  prohibition  of  the  act,  and  it  is  done  without  the 
knowledge,  consent,  privity,  or  subsequent  approbation  of  the  other  partner, 
before  the  bankruptcy,  and  to  the  intent  to  apply  partnership  funds  to  private 
purposes,  that  is,  prima  facie,  a  fraud  upon  the  partnership." 

'  Coll.  on  P.  B.  4,  c.  2,  §  5,  p.  639,  2d  ed. ;  Ex  parte  Reid,  2  Rose,  84  ; 
Ex  parte  Norfolk,  19  Ves.  455 ;  Ex  parte  Watson,  19  Ves.  459  ;  Gow  on  P. 
c.  4,  §  1,  p.  178,  179,  3d  ed. ;  Id.  c.  5,  §  3,  p.  261,  262.  [See  Van  Valen  v. 
Russell,  13  Barb.  590.]  {Cammack  v.  Johnson,  1  Green,  Ch.  163.  See 
§  263,  note,  and  Elliot  v.  Stevens,  38  N.  H.  311.} 

-  Ex  parte  Reid,  2  Rose,  84;  1  Story,  Eq.  Jur.  §  558-561  ;  Id.  §  663- 
668 ;  Gow  on  P.  c.  5,  §  3,  p.  292,  3d  ed.  ,•  Coll.  on  P.  B.  4,  c.  2,  §  5,  p.  689, 
2ded. 


622  PARTNERSHIP.  [cHAP.  XV. 

joint  commission  issued  against  A.  and  B.,  A.  being  a 
dormant  partner,  and  the  joint  creditors  resorted  to 
the  separate  estate  of  B.,  thereby  diminishing  that 
separate  estate,  and  exonerating  the  joint  estate  of  A. 
and  B.,  so  as  to  produce  a  surplus  of  it,  it  was  held, 
that  the  separate  creditors  of  B.  had  a  lien  upon 
that  surplus  to  the  extent  to  which  their  funds  had 
been  diminished  by  this  election  and  resort  of  the  joint 
creditors.^ 

§  394.  Another  relaxation  of  the  rule,  that  a  part- 
ner cannot  prove  against  a  fii-m,  is  admitted  where 
there  is  a  minor  partnership,  or  house  of  trade,  consti- 
tuted of  persons  who  are  members  of  a  larger  firm, 
and  there  are  distinct  dealings  between  the  distinct 
houses  of  trade,  and  both  firms  become  bankrupt,  the 
one  being  indebted  to  the  other  in  respect  of  such 
dealings  ;  in  such  a  case  proof  may  be  made  of  the 
debt,  in  the  same  manner  as  if  the  dealings  had  been 
among  strangers.^  But  the  question,  what  is  a  deal- 
ing in  a  distinct  trade,  is  always  to  be  looked  at  with 
great  care,  for  the  proof  is  admissible  on  behalf  of  the 
separate  trade  against  the  aggregate  firm,  only  in 
respect  of  dealings  between  trade  and  trade.  If  an 
individual  partner,  who  is  a  separate  trader,  should 
lend  money  to  his  partnership,  the  strict  rule  would 
immediately  apply  to  him,  and  shut  him  out  from  the 
benefit  of  proof;  for  if  it  were  sufficient  to  state,  in 
order  to  bring  the  case  within  the  exception,  that  the 
partner  would  not  have  lent  the  money,  but  as  a  sep- 
arate trader,  the  general  rule  would  be  at  an  end.  It 
is   obvious,  therefore,  that  the  right  of  proof  must  be 

'  Ex  parte  Reid,  2  Rose,  84. 

*  Ex  parte  Hargreaves,  1  Cox,  440;  s.  c.  cited  6  Ves.  123,  747,  and  11 
Ves.  414  ;  Ex  parte  Ring,  Ex  parte  Freeman,  Ex  parte  Johns,  Cook's  B.  L. 
538;  Ex  parte  St.  Barbe,  11  Yes.  413;  Ex  paiie  H^^ham,  1  Rose,  146;  Ex 
paiie  Catesby,  2  Christ.  B.  L.  626,  2d  ed. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  623 

confined  to  distinct  dealings  in  the  articles  of  distinct 
trades  ;  since  a  more  extended  relaxation  of  the  rule 
would,  in  its  consequences,  lead  to  the  destruction  of 
the  rule  itself^  Therefore,  where  two  partners  of  a 
large  banking  firm  carried  on  a  separate  trade  as  iron- 
mongers, and  a  debt  arose  from  the  aggregate  firm  to 
the  separate  trade,  in  respect  of  moneys  procured  for 
the  benefit  of  the  aggregate  firm,  on  the  credit  of  the 
indorsement  of  the  separate  firm,  it  was  held,  that  no 
proof  could  be  made  on  behalf  of  the  firm  of  the  two 
against  the  aggregate  firm  in  respect  of  that  debt.^ 
If  the  firm  consists  of  two  persons  only,  and  one  carry 
on  a  separate  trade  ;  as  they  are  both  liable  for  the 
same  joint  debts,  the  solvent  partner  is  not  entitled  to 
prove,  under  the  commission  against  his  copartner,  a 
debt  for  goods  sold  by  his  distinct  house  to  the  firm, 
until  the  joint  creditors  have  been  satisfied.  It  would 
be  otherwise  in  the  case  of  a  firm  of  A.,  B.,  C,  and  D., 
pro\-ing  against  the  firm  of  A.,  B.,  C,  and  E.  ;  for  the 
former  would  not  be  liable  for  the  joint  debts  of  the 
latter  firm.^ 

§  395.  The  subject  of  set-oif  in  bankruptcy,  as  ap- 
plicable   both    to    separate    debts    and    to    joint   debts, 

^  lEx  parte  Williams,  3  Mont.  D.  &  De  G.  433.] 

*  Ex  parte  Sillitoe,  1  Gl.  &  J.  374.  {B.,  a  banker,  formed  a  partnership 
with  M.  and  P.,  merchants,  under  the  firm  of  M.  &  Co.  There  was  an 
agreement  that  B.  should  accept  bills  for  the  firm  at  a  commission,  and  that 
the  firm  should  negotiate  them  and  keep  B.  in  funds  to  meet  the  acceptances. 
B.,  M.,  and  P.  all  became  insolvent.  M.,  on  behalf  of  M.  &  Co.,  claimed 
to  prove  against  B.'s  estate  for  £5,000  due  to  the  firm  on  their  account. 
Held,  that  the  dealing  between  B.  and  M.  &  Co.  was  not  such  a  separate 
trade  as  to  allow  the  firm  to  prove  against  a  partner's  estate,  and  that  the 
fact  that  all  the  partners  were  insolvent,  and  therefore  had  no  personal 
interest,  made  no  difference.     Ex  j)ai-te  Maude,  Law  Rep.  2  Ch.  550.} 

3  Ex  -jjarte  Adams,  1  Rose,  305 ;  Gow  on  P.  c.  5,  §  3,  p.  292,  293,  3d 
ed. ;  Wats,  on  P.  c.  5,  p.  286-288,  2d  ed.  ;  Coll.  on  P.B.  4,  c.  2,  §  9,  p.  664, 
665,  2d  ed.;  Id.  B.  4,  e.  2,  §  10,  p.  666-672;  Id.  p.  673-678;  {Houseal's 
Appeal,  45  Penn.  St.  484.} 


624  PARTNERSHIP.  [cHAP.  XV. 

might  be  here  mtrodiiced  and  expounded.  But  as  it 
turns  mainly  on  the  positive  provisions  of  the  Statutes 
of  Bankruptcy,  as  to  mutual  debts  and  credits,  or 
on  the  doctrines,  adopted  by  Courts  of  Equity,  and 
founded  upon  the  equities  arising  in  particular  cases, 
it  seems  more  appropriate  for  Commentaries  of  a  more 
extended  character.  It  may,  however,  be  stated,  that 
at  law,  and  in  bankruptcy,  and  indeed  in  equity  gen- 
erally, there  can  be  no  set-off  of  joint  debts  against 
separate  debts,  unless  there  be  some  special  agreement 
between  the  parties  to  that  effect,  or  some  equitable 
cu'cumstances,  creating  it  in  the  particular  case.^ 

§  396.  We  have  already  seen,  that  in  common 
cases  of  a  dissolution,  it  is  competent  for  the  partners 
to  agree  between  themselves,  either  originally  by  their 
articles  of  partnership,  or  by  their  arrangements  at  its 
dissolution,  that  one  partner  may  or  shall  take  the 
whole  partnership  property  at  a  valuation  ;  and  the 
assignment  thereof,  Avhen  made  hona  fide  in  either  way, 
will  be  valid  and  obligatory  upon  the  creditors.^  But 
hi  cases  of  bankruptcy,  the  rule  is  otherwise  ;  for  the 
policy  of  the  bankrupt  laws  intervenes,  and  prevents 
any  effect  being  given  to  any  such  stipulations  or  ar- 
rangements. The  assignees  are  entitled  to  the  interest 
of  the  bankrupt  in  his  property,  whatever  it  may  spe- 
cifically be,  at  the  moment  of  the  act  of  bankruptcy. 
And  no  agreement  made  between  him  and  his  part- 
ners, in  contemplation  of  bankruptcy,  is  permitted  to 
interfere  with  their  rights.  For,  although  the  owner 
of   property   may   generally,   upon   his    own  voluntary 

»  Coll.  on  P.  B.  4,  c.  2,  §  11,  p.  678-685,  2cl  ed. ;  2  Story,  Eq.  Jur. 
§  1430-1444;  Wats,  on  P.  c.  5,  p.  339-350,  2d  ed. ;  Gow  on  P.  c.  3,  §  1, 
p.  137-139,  3d  ed. ;  Id.  c.  5,  §  3,  p.  331-340 ;  {Lind.  on  P.  933-942 ;  Wil- 
liams V.  Brimhall,  13  Gray,  462.} 

«  Ante,  §  208,  358,  359,  372,  373. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  625 

alienation  of  that  property,  qualify  the  interest  of  his 
alienee,  by  a  condition  to  take  effect  upon  the  bank- 
ruptcy of  the  latter  ;  yet  it  would  defeat  the  very  objects 
of  the  bankrupt  laws,  to  allow  a  party  to  qualify  his  own 
interest  therein,  while  it  remains  his  absolute  property, 
by  a  like  condition,  determining  or  controlling  it  in  the 
event  of  his  own  bankruptcy,  to  the  disappointment,  delay, 
or  injury  of  his  creditors ;  for  such  an  event,  by  mere 
operation  of  law,  takes  away  from  him  entirely  the  jus 
disjyoneiidi,  and  transfers  it  to  the  assignees  for  the 
equal  benefit  of  all  his  creditors.^ 

>  Gow  on  P.  c.  5,  §  3,  p.  300,  301,  3d  ed.  ;  Coll.  on  P.  B.  2,  c.  2,  §  2, 
p.  146,  2d  ed. ;  Wilson  v.  Gi-eenwood,  1  Swans.  471,  484.  —  I  have  stated  , 
the  doctrine  positively  in  the  text,  deeming  it  the  just  result  of  the  reason- 
ing in  the  authorities,  whether  the  stipulation  be  in  the  original  articles  of 
partnership,  or  be  made  afterwards.     Mr.  Gow  and  Mr.  Collyer  speak  of  it  as 
a  matter  ojjen  to  doubt,  where  the  stipulation  is  in  the  original  articles. 
In  the  case  of  Wilson  v.  Greenwood,  1  Swans.  471,  481,  482,  Lord  Eldon 
said:   "In  this  case,  the  first  question  is,  whether,  supposing  the  original 
deed  had  provided  for  the  dissolution  of  the  partnership  by  bankruptcy, 
as  it  has  provided  for  the  dissolution  by  other  means,  that  provision  would 
be  good.     I  will  not  say,  that  it  would  not;  but  I  have  heard  nothing  to 
convince  me  that  it  ,would.     From  the  original  deed,  it  is  clear,  that  the 
intention  of  the  pai-ties  was  not,  as  the  defendants  insist,  to  apply  the  special 
provision  to  the  event  of  dissolution  by  bankruptcy.     After  providing  for 
other  cases,  it  expressly  declares  that,  in  case  of  bankruptcy,  the  concerns 
are  to  be  wound  up  in  the  same  way  as  if  no  special  provision  was  made. 
On  this  agreement,  the  parties  proceed  till  the  execution  of  another  deed, 
which,  in  one  sense,   may  be  justly  said  to  be  made  in  contemplation  of 
bankruptcy,  because  it  is  apjilicable  to  the  event  of  bankruptcy  alone.     But 
I  have  no  doubt,  from  the  face  of  it,  that  it  was,  in  a  strict  sense,  in  con- 
templation of  bankruptcy  ;  for  it  contains  a  recital,  which  cannot  be  believed 
by  any  one,  who  looks  at  the  original  deed,  that  the  parties  to  that  deed 
intended  the  same  provision  in  cases  of  bankruptcy  and  insolvency,  as  in 
the  case  of  dissolution  from  other  causes.    I  go  further;  the  inefficacy  of  the 
terms  of  the  agreement,  as  applied  to  bankruptcy,  aiFords  another  proof, 
that  the  application  was  not  designed.     In  the  event  of  dissolution  by  mis- 
conduct, the  parties  were  to  name  a  valuer,  and  the  property  was  to  be 
divided.     If  the  partnership  was  dissolved  by  the  death  of  a  partner,  what 
-was  to  be  done?     His  executors  or  administrators  were  to  name  a  valuer. 
The   deed,  then,  contemplating  bankruptcy  and  insolvency,  the  provision 
for  insolvency  is  sufficient,  because,  while  not  yet  become  a  bankrupt,  the 

40 


626  PARTNERSHIP.  [CHAP.  XV. 

§  397.  Passing  from  this  subject,  let  lis,  in  the  next 
place,  proceed  to  the  consideration  of  another  subject 
of  inquiry,  which  constantly  arises  in  bankruptcy ;  and 
that  is,  what  property,  not  strictly  belonging  to  the  bank- 
ruj^t,  but  yet  in  his  possession  and  reputed  ownership 
at  the  time  of  his  bankruptcy,  will  pass  to  his  assignees, 
in  opposition  to  the  claims  of  the  real  owner  ?  This 
inquiry  is  equally  as  applicable  to  cases  of  property 
owned  by  partners,  as  it  is  to  property  belonging  to 
particular  individuals.  We  have  already  seen,^  in  what 
cases  partnership  property,  upon  a  dissolution  of  the 
partnership,  may  pass  by  transmutation  or  conversion 
thereof  to  one  or  more  of  the  partners,  or  to  the  sur- 
'vivors  or  remaining  members  of  the  firm.  But  the 
point  here  proposed  for  consideration  turns  altogether 
upon  the  construction  of  a  clause  which  w^as  early  in- 
troduced into  the  English  Statutes  of  Bankruptcy,  and 
has  continued  substantially  in  force  down  to  the  pres- 
ent day,  throughout  all  the  modifications  which  the 
system  has  successively  undergone.  It  was  provided 
by  the  statute  of  21  James  1  (c.  19,  §  11),  that,  if  any 
bankrupt,  at  the  time  of  his  bankruptcy,  shall,  by  the 

insolvent  retains  all  capacities  of  acting.  But  if  he  becomes  bankrupt,  it 
is  impossible  to  contend,  that,  under  this  clause,  he  is  to  name  the  persons 
who  are  to  value  the  interests  of  his  assignees ;  and  no  such  authority  is 
given  to  his  assignees,  for  the  word  '  assigns '  is  not  to  be  found  in  the 
deed.  I  have  no  doubt,  therefore,  whether  on  general  principle,  or  on 
the  construction  of  the  deeds,  that  the  law  of  this  case  is,  that  the  part- 
nership was  dissolved  by  bankruptcy ;  and  the  projjerty  must  be  divided, 
as  in  the  ordinary  event  of  dissolution,  without  special  provision.  The 
consequence  is,  that  the  assignees  of  the  bankrupt  jjartner  are  become, 
quoad  his  interest,  tenants  in  common  Avith  the  solvent  partner ;  and  the 
Court  must  then  apply  the  principle  on  which  it  proceeds  in  all  cases, 
where  some  members  of  a  partnership  seek  to  exclude  other/  from  that 
share  to  which  they  are  entitled,  either  in  carrying  on  the  concern,  or 
in  winding  it  up,  when  it  becomes  necessary  to  sell  the  property,  with  all 
the  advantages  relative  to  good-will."  See  also  the  Reporter's  note,  481, 
note  (a)  ;  ante,  §  207,  208. 

'  Ante,  §  358,  359,  372,  373,  SQG. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  627 

consent  and  permission  of  the  true  owner  or  proprie- 
tary, have  in  his  possession,  order,  or  disposition,  any 
goods  or  chattels,  of  Avhich  he  shall  be  the  reputed 
owner,  and  take  upon  him  the  sale,  alteration,  or  dis- 
position thereof,  as  owner,  the  commissioners  shall  have 
power  to  sell  and  dispose  of  the  same,  to  and  for  the 
benefit  of  the  creditors,  as  fully  as  any  other  part  of  the 
estate  of  the  bankrupt.^ 

§  398.  The  provision  thus  made  was  doubtless  de- 
signed more  fully  to  enforce  the  doctrines  of  the  com- 
mon law,  and  to  aid  in  the  suppression  of  frauds,  by 
preventing  persons  from  giving  an  ostensible  owner- 
ship of  property  to  third  persons,  who  might  thereby 
acquire  a  false  and  collusive  credit,  to  the  ^ross  injury 
of  their  creditors.  To  a  limited  extent,  this  remedial 
justice  might  have  been  ordinarily  obtained,  either  at 
the  common  law,  or  through  the  interposition  of  equity.^ 
But  the  statute  has  erected  it  into  a  positive  rule,  in 
order  to  prevent  cavil,  and  to  operate  by  way  of  pre- 
ventive and  admonitory  justice. 

§  399.  The  general  question,  then,  arises,  When,  and 
under  what  circumstances,  the  bankrupt  can  be  prop- 
erly said  to  have  the  possession,  order,  or  disposition 
of  any  goods  or  -chattels,  or  the  reputed  ownership 
thereof,  with  the  consent  of  the  true  owner  ?  It  has 
been  well  observed,^  that  it  is  the  principle  of  discoun- 
tenancing fictitious  credit,  and  its  concomitant  frauds, 
which  the   statute   enforces.     Indeed  there   can   be  no 

^  1  Cook's  B.  L.  60,  lih  ed. ;  Wats,  on  P.  c.  5,  p.  272-274,  2d  ed.  The 
statute  of  6  Geo.  4,  c.  19,  §  72,  substantially  re-enacts  the  same  provision. 
{So  does  the  statute  of  12  &  13  Vict.  c.  106,  §  125.  There  is  no  such  pro- 
vision in  the  U.  S.  Bankrupt  Act  of  1867.} 

2  See  1  Story,  Eq.  Jur.  §  388-394;  1  Fonbl.  Eq.  B.  1,  c.  3,  §  4 ;  Com. 
Dig.  Chancery,  4,  I.  3 ;  Id.  4  W.  26;  Storrs  v.  Barker,  6  Johns.  Cli.  166, 
169,  172 ;  Pickard  v.  Sears,  6  Ad.  &  E.  469,  474. 

2  Gow  on  P.  c.  0,  §  3,  p.  272,  3d  ed. 


628  PARTNERSHIP.  [CHAP.  XV. 

other  just  ground,  upon  which  one  man's  debts  are 
to  be  paid  out  of  the  property  of  another.  In  further- 
ance of  this  principle  it  has  uniformly  been  held,  that 
such  a  possession  as  is  calculated  to  give  a  delusive 
credit  is  a  reputed  possession,  within  the  meaning  of 
the  statute.  When,  therefore,  the  fact  of  reputed  own- 
ership is  settled,  the  application  of  the  statute  is  easy ; 
for,  from  the  reputed  ownership,  false  credit  arises ; 
from  that  false  credit  arises  the  mischief;  and  to  that 
mischief  the  remedy  of  the  statute  applies.  Bat  to 
make  the  statute  available  to  the  creditors  of  the  party 
in  whose  visible  possession  the  property  has  been,  that  pos- 
session must  continue  up  to  the  time  of  the  bankruptcy ; 
for,  if  withdrawn,  hona  Jide^  by  the  owner,  at  any  time, 
however  short,  before  the  bankruptcy,  the  property 
cannot  be  reclaimed  by  the  assignees.^  But  a  removal 
made  in  contemplation  of  bankruptcy  being  fraudulent, 
will  not  alter  the  possession  in  the  consideration  of  iaw.^ 
And,  to  constitute  a  fraud  on  the  part  of  the  true  owner, 
it  is  necessary  that  the  property  should  be  left  in  the 
order  and  disposition  of  the  bankrupt,  with  his  consent. 
Where  this  is  not  the  case,  it  would  rather  be  to  encour- 
age than  to  check  fraud,  if  what  had  been  surreptitiously 
detained  were  to  be  divested  from  the  innocent  owner, 
and  transferred  to  the  assignees  of  the  bankrupt.^ 

§  400.  In  general,  it  may  be  stated,  that  the  mere 
fact,  that  the  partnership  property,  after  the  dissolution 
of  the  partnership,  remains  in  the  possession  of  one 
partner,  who  afterwards  becomes  bankrupt,  will  not 
be  sufficient,  of  itself,  to  make  him,  in  the  sense  of  the 

^  Jones  V.  Dwyer,  15  East,  21 ;  Ex  jyarte  Smith,  3  Madd.  63 :  s.  c.  Buck, 
149  ;  Storer  v.  Hunter,  3  B.  &  C.  368. 

"  Ex  parte  Smith,  3  Madd.  63. 

3  Ex  parte  Richardson.  Buck.  480,488;  Gow  on  P.  c.  5,  §  3,  p.  272, 
3ded. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  629 

statute,  the  reputed  owner  thereof ;  for  this  is  certainly 
in  consonance  with  the  rights  of  all  the  partners,  as  all 
and  each  of  them  are  equally  entitled  to  the  possession 
and  custody  thereof  The  case  must  go  further,  and 
establish  that  the  other  partners  have,  by  their  own 
acts,  or  contracts,  or  conduct,  conferred  upon  him  the 
exclusive  right,  and  order,  and  disposition  thereof,  be- 
yond the  purposes  belonging  to  the  partnership.  This 
results  from  the  doctrine  already  stated,  that  all  the 
other  partners,  upon  the  bankruptcy  of  any  one  of 
them,  retain  all  their  original  rights  and  interests  in  the 
partnership  effects.^ 

§  401.  In  cases  of  partnership,  where  the  transfer  of 
the  joint  property  from  the  retiring  partners  to  the  con- 
tinuing partners  is  not  made  a  matter  of  contract,  it 
may  be  difficult  to  establish  an  actual  consent  to  any 
change  in  the  right  to  the  property  as  taking  place. 
But,  although  no  actual  consent  can  be  proved,  yet 
for  this  purpose  the  acts  and  conduct  of  the  parties  will 
warrant  the  presumption  of  an  assent ;  and  this  will  be 
inferred,  if,  from  the  time  of  the  dissolution  down  to  the 
time  of  the  bankruptcy,  the  retiring  partners  renounce 
their  equity  of  having  the  partnership  credits  applied 
in  discharge  of  the  part\iership  debts,  and  allow  the 
continuing  partners  to  deal  as  they  think  fit  ^vlth  the 
property,  and  to  act  with  the  world  respecting  it  so  as 
thereby  to  gain  for  themselves  a  false  and  delusive 
credit.-  A  dissolution  on  the  eve  of  the  retirement  of  a 
partner  will  not,  of  itself,  convert  into  separate  property 
the  joint  estate  left  in  the  possession  of  the  partners 
continuing  the  business ;  for  such  a  possession  is  quali- 
fied, and  is  clothed  with  a  trust  to  apply  the  property 

'  Gow  on  P.  c.  5,  §  3,  p.  2G7-2G9,  3d  ed. ;  Id.  p.  271-278 ;  Id.  p.  299- 
305;  Holderness  v.  Shackels,  8  B.  »&  C.  612. 

2  See  West  v.  Skip,  1  Ves.  Sr.  239,  2i2 ;  Ex park'Rnmn,  6  Yes.  119. 


630  PARTNERSHIP.  [CHAP.  XV. 

in  discharge  of  the  joint  debts/  unless,  indeed,  the 
laches  of  the  retiring  partner  has  been  such  as  to  suiFer 
the  joint  property  to  remain  in  the  exclusive  possession 
of  the  continuing  partners  for  such  a  length  of  time  as 
falsely  to  give  them  an  appearance  of  substance.^  A. 
fortiori,  the  statute  will  not  apply  to  a  case  where  the 
joint  property  is  wrongfully  withheld  by  one  partner, 
against  whom  a  bill  in  equity  is  filed  for  an  account, 
and  an  injunction  to  restrain  him  from  disposing  of  it, 
pending  which  he  becomes  a  bankrupt.^  But  if  a  new 
firm  be  constituted  of  some  of  the  members  of  an  old 
firm,  either  wdth  or  without  the  addition  of  others,  and 
the  whole  of  the  stock  in  trade  of  the  old  firm  be  de- 
livered over  to  the  new  firm,  and  they  be  allowed  to 
appear  to  the  world  as  apparent  owners  of  it,  and  after- 
wards become  bankrupts  ;  in  such  a  case  all  the  eff"ects 
of  the  old  partnership,  found  in  specie  amongst  the 
property  seized  under  the  commission,  wdll  vest  abso- 
lutely in  the  assignees ;  and  though  there  be  outstand- 
ing debts  of  the  former  firm  unsatisfied,  these  efi"ects,  so 
found  in  specie,  will  not  be  considered  as  the  joint  es- 
tate of  the  former  firm,  either  for  the  benefit  of  the  joint 
creditors,  or  of  the  partners  who  have  withdrawn  from 
the  firm."* 

'  Per  Lord  Eldon,  Ex  parte  WilHams,  11  Ves.  3,  6. 

*  Gow  on  P.  c.  5,  §  3,  p.  272,  273,  3d  ed. ;  West  v.  Skip,  1  Yes.  Sr. 
239,  242. 

"  Gow  on  P.  c.  0,  §  3,  p.  273,  3d  ed. ;  West  v.  Skip,  1  Yes.  Sr.  239, 
242. 

*  Ex  parte  Ruffin,  6  Yes.  119,  and  Ex  parte  Williams,  11  Yes.  3,  6 ;  Ex 
parte  Fell,  10  Yes.  347  ;  Gow  on  P.  c.  5,  §  3,  p.  272,  273,  3d  ed.  —I  have 
in  this  and  the  two  following  sections  generally  followed  the  language  of  ]\Ir. 
Gow,  and  he  has  illustrated  the  doctrine  here  stated  by  the  following  cases : 
"  Therefore,  where  upon  the  dissolution  of  a  partnership  between  a  father 
and  his  son,  it  was  agreed  that,  until  the  son  was  provided  for,  the  father 
should  allow  him  a  third  of  the  profits  ;  and  the  father  afterwards  formed  a 
partnership  with  a  third  person,  and  carried  into  it  the  stock  belong- 
ing to  the    former    partnership ;    on   a    commission  of   bankruptcy   being 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  631 

§  402.  In  cases  of  conditional  transfers  of  the  joint 
estate  by  some  to  the  other  partners,  if  the  condition  is 
not  performed  before  the  bankruptcy,  the  nature  of  the 
property  is  not  changed  by  the  simple  force  of  the  con- 
tract. But  in  such  cases,  and  in  cases  in  which  the  con- 
sideration for  the  transfer  is  not  paid,  the  property  will 
still  pass,  as  separate  estate  under  the  statute,  if  from 
the  time  of  the  contract  down  to  the  date  of  the  bank- 
ruptcy, the  partners  to  whom  it  is  assigned  are  permit- 
ted by  the  others  to  continue  in  the  sole  possession,  and 
to  carry  on  trade  and  acquire  credit  as  sole  owners 
thereof.  There  can.  indeed,  under  such  circumstances, 
be  no  solid  distinction  between  a  permitted  possession 
under  a  contract,  incomplete  as  regards  the  persons  con- 
tracting, and  one  which  is  tolerated  by  the  parties  inde- 
pendently of  contract.     The  one  must  be  as  productive 

awarded  against  the  father  and  son  it  was  held,  that  then-  joint  property, 
having  been  permitted  by  the  son  to  become  the  visible  property  of  the  new 
partnership,  it  must,  in  the  first  instance,  be  applied  in  satisfying  the  credi- 
tors of  that  partnership ;  and  that  if  afterwards  any  surplus  remained,  the 
share  of  the  father  in  it  would  be  his  own  sejDarate  property,  and,  therefore, 
subject  to  the  claims  of  his  separate  creditors.  And  again,  on  the  dissolu- 
tion of  a  partnership  between  A.,  B.,  and  C,  three  persons,  as  distillers, 
one  of  them  (to  whom  the  property  in  fact  belonged)  leased  to  C.  and  to  one 
J.  the  distil-house  and  premises,  and  the  several  stills,  vats,  and  utensils  of 
trade  specified  in  a  schedule,  as  used  by  the  former  partnership;  and  C.  and 
J.  were  to  carry  on  the  business  on  the  premises,  which  they  accordingly  did 
for  some  time,  but  aftei-wards  became  bankrupts ;  whereupon  a  question 
was  raised,  whether  such  stills,  vats,  and  utensils,  so  continuing  in  the  pos- 
session of  C.  and  J.,  and  used  by  them  in  their  trade,  in  the  same  manner 
as  by  the  former  partners,  passed  under  the  statute  to  the  assignees,  as  be- 
ing in  the  possession,  order,  and  disposition  of  the  bankrupts  at  the  time  of 
their  bankruptcy,  as  reputed  owners  ;  and  it  was  held  that  the  stills,  which 
were  fixed  to  the  freehold,  did  not  pass  to  the  assignees  under  the  word 
goods  and  chattels  in  the  statute ;  but  that  the  vats,  &c.,  which  were  not  so 
fixed,  did  pass  to  the  assignees,  as  being  left  by  the  true  owner  in  the  pos- 
session, order,  and  disposition  (as  it  appeared  to  the  eye  of  the  world)  of 
the  bankrupts,  as  reputed  owners.  So  if  a  country  partnership,  consisting 
of  three  partners,  sell  their  goods  in  London,  in  the  names  of  two  of  the 
firm,  the  property  in  London  will,  it  seems,  be  in  the  order  and  disposition 
of  the  two."     Ibid. 


632  PARTNERSHIP.  [cHAP.  XV. 

of  the  mischief  contemplated  by  the  statute,  as  the 
other  ;  and  both  ought,  therefore,  to  be  held  to  be  within 
its  provisions.  It  has  consequently  been  considered, 
that  an  exclusive  possession,  derived  under  a  contract, 
which,  as  between  the  parties  themselves,  has  not  been 
performed,  is  sufficient  to  operate  a  conversion  of  the 
property,  if  the  meaning  of  the  transaction  was  to  trans- 
mute it,  and  possession  follows  accordingly.^ 

§  403.  With  respect  to  the  description  of  property 
affected  by  the  statute,  it  is  settled  that  no  distinction 
exists  between  debts  due  to  the  partnership  and  other 
property ;  for,  notwithstanding  debts  are  not  assign- 
able at  law,  yet  they  are  still  within  the  scope  of  the 
statute.^  And  where,  upon  the  dissolution  of  a  partner- 
ship, debts  have  been  assigned  by  some  of  the  partners 
to  the  others,  although  by  the  assignment  the  latter  be- 
come the  true  owners  of  them ;  yet  they  will  remain  in 
the^order  and  disposition  of  the  partnership,  and  form 
part  of  the  joint  estate,  unless,  prior  to  the  bankruptcy, 
notice  of  the  assignment  has  been  given  to  the  debtors.^ 

1  Gow  on  P.  c.  5,  §  3,  p.  274,  275,  3d  ed. ;  Ex  parte  Fell,  10  Ves.  347 ; 
Ex  parteV^\\Y\axas,  11  Ves.  8,  6.  — In  Ex  parte  Rowlandson,  1  Rose,  416,  419, 
Lord  Eldon  said  :  "If  one  partner  puts  another  into  the  sole  possession  of 
the  partnership  estate  and  effects,  and  leaves  them  in  his  sole  order  and  dis- 
position, giving  him  title  under  an  instrument  upon  the  face  of  it  giving 
title,  it  would  be  difficult  to  insist  that  he  would  have  a  lien  upon  that  prop- 
erty for  the  consideration  money,  against  the  separate  creditors  of  the 
other ;  considering  that  he  had  by  title,  and  by  his  own  act,  left  this  proper- 
tj^  in  the  sole  order  and  disposition  of  the  other.  Previous  to  the  dissolu- 
tion, the  joint  creditors  had  established  no  lien  on  this  property.  They 
could  only  sue  and  take  out  execution,  either  jointly  or  separately,  against 
the  joint  effects  or  separate  effects  of  their  debtors.  Till  they  had  actually 
matured  their  process  into  an  execution,  they  had  no  means  of  specifically 
attaching  the  partnership  effects,  and  could  only  work  out  their  equity 
through  tl|ie  partner  himself." 

*  Ex  jmrte  Ruffni,  6  Ves.  119,  128;  £'x  parte  Williams,  11  Ves.  3,  6; 
Hornl)lower  v.  Proud,  2  B.  &  Aid.  327  ;  Ex  parte  Enderby,  2  B.  &  C.  389. 

»  Ryall  V.  Rowles,  1  Ves.  Sr.  348 ;  s.  c.  1  Atk.  165 ;  Jones  v.  Gibbons, 
9  Ves.  407  ;  Ex  parte  Monro,  Buck,  300. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  633 

It  is  true,  that  a  partner  stands  in  a  different  situation 
from  a  stranger,  to  whom  the  debts  might  have  been 
assigned ;  because  in  his  character  of  partner,  and  in- 
dependently of  any  assignment,  he  is  personally  com- 
petent to  receive  and  discharge  them.  But  it  is  also 
true,  that,  until  notice  be  given  to  the  debtors,  the  other 
partners  are  equally  competisnt  to  receive  and  give 
acquittances  for  whatever  may  be  due.^  Besides,  the 
partners,  who  receive  the  assignment  without  informing 
the  debtors  of  the  transaction,  would  thereby  enable  the 
others,  if  they  were  so  disposed,  fraudulently  to  obtain 
a  fictitious  credit  with  the  debtors  ;  and,  therefore,  so 
long  as  notice  is  withheld  from  them,  the  order  and 
disposition  of  these  debts  must  remain  in  the  partner- 
ship. Upon  this  principle  it  has  been  held,  that  debts 
due  to  a  partnership,  which,  upon  a  dissolution,  are  as- 
signed by  a  retiring  partner  to  the  continuing  partners,^ 
or  debts,  which,  by  agreement,  are,  on  a  dissolution,  to 
belong  to  one  of  the  partners,^  continue  in  the  order 
and  disposition  of  the  partnership,  and  consequently 
form  part  of  the  joint  estate,  unless,  previously  to  their 
bankruptcy,  the  debtors  are  apprised  of  the  assignment 
or  agreement.  And  it  is  insufficient  in  such  cases  to 
notify  the  dissolution  only  ;  for,  unless  express  notice 
of  the  assignment  be  also  given,  the  order  and  dispo- 
sition will  not  be  altered."*  But  the  operation  of  the 
statute,  and  any  question  respecting  the  transmutation 

*  Duflf  V.  East  India  Co.  15  Ves.  198,  213. 
'  Ex  parte  Burton,  1  Glyn  &  J.  207. 

'  Ex  parte  Usborne,  1  Glyn  &  J.  358. 

*  Ex  parte  Harris,  1  Madd.  583,  587.  —  In  Ex  paj-Ze  Usborne,  1  Glyn  & 
J.  358,  a  notice,  stating  the  dissolution  of  the  partnership  by  mutual  agree- 
ment, and  that  all  debts  due  to  or  from  the  concern  ■would  be  received  and 
paid  by  one  of  the  partners,  was  inserted  in  the  gazette.  But  Sir  John 
Leach  held  such  a  notice  ineffectual,  and  that  the  order  and  disposition  of 
the  debts  owing  by  those  debtors,  who  had  not  'express  notice  of  the  agi'ce- 
ment,  remained  in  the  partnership. 


634  PARTNERSHIP.  [CHAP.  XV. 

of  the  property,  may,  in  all  cases,  be  avoided,  upon  the 
retirement  of  a  partner,  by  his  assigning  to  the  remain- 
ing partners  all  the  effects  in  trust  to  pay  the  debts ; 
because  then,  notwithstanding  there  may  not  be  a 
subsisting  joint  possession,  the  property  would  continue 
subject  to  the  joint  demands,  and  would  not,  by  the 
simple  fact  of  possession,  be  converted  into  separate 
estate.^ 

§  404.  Another  question,  however,  still  remains  to 
be  considered  under  this  head ;  and  that  is,  how  the 
statute,  as  to  reputed  ownership,  affects  dormant  part- 
ners.    After  some  fluctuation  of  judicial  opinion,  the 

^  Ex  parte  Fell,  10  Ves.  347  ;  and  see  Ex  parte  MV'iWmm?,,  11  Ves.  3,  6; 
Ex  parte  Martin,  19  Ves.  491 ;  s.  c.  2  Rose,  331 ;  Gow  on  P.  c.  5,  §  3,  p. 
275-277,  3d  ed.  —  The  Ship  Register  Acts  have  not  affected  this  question  of 
reputed  ownership  at  all,  as  those  statutes  relate  to  transfers  by  the  acts  of 
the  parties,  and  not  to  transfers  by  operation  of  law.  Mr.  Gow  on  this  sub- 
ject says  :  "  The  statute  of  James  is  not  repealed,  and  of  course  those  sec- 
tions of  the  late  general  bankrupt  act,  in  which  the  provisions  in  the  statute  of 
James  have  been  embodied,  are  not  rendered  inoperative  as  to  shipping, 
by  the  Ship  Register  Acts ;  for  these  statutes  relate  to  transfers  made  by 
the  act  of  the  party  only,  viz.  from  a  former  owner  to  a  new  owner,  and 
where  the  transfer  is  capable  of  being  effectuated  in  the  ordinary  way,  by 
the  mere  operation  of  an  instrument  of  assignment  from  the  one  party  to 
the  other,  and  do  not  relate  to  transfers  deriving  their  effect  by  peculiar 
provision  or  operation  of  law,  as  assignments  by  commissioners  of  bank- 
ruptcy to  assignees  under  the  bankrupt  laws  do,  or  titles  passing  to  exe- 
cutors or  administrators  in  case  of  death.  In  these  cases  a  title  may  be 
transmitted  without  any  of  the  forms  required  by  the  statutes ;  and  as  a 
title  may  be  transmitted  without  these  forms  in  the  case  of  bankruptcy 
generally,  it  may  be  so  done  in  a  case  falling  within  the  scope  and  object 
of  the  statute  of  James.  Therefore,  where  A.,  the  owner  of  a  ship,  duly 
assigned  his  interest  in  it  to  B.,  and  B.  became  the  registered  owner; 
but  by  his  permission,  A.  continued  to  have  the  same  in  his  possession, 
order,  and  disposition,  until  he  became  bankrupt,  it  was  holden,  that  A.'s 
assignees  were  entitled  to  the  ship.  And  under  a  commission  of  bank- 
ruptcy against  two  partners,  ships  registered  in  the  name  of  one  of  them, 
but  in  the  ordering  and  disposition  of  both,  form  part  of  the  joint  estate. 
On  the  same  principle,  a  ship  registered  in  the  name  of  two  partners, 
but  which  is  left  in  the  order  and  disposition  of  one  of  them,  will  pass 
to  the  assignees  of  the  latter  on  his  bankruptcy."  See  also  Gow  on  P. 
c.  5,  §  3,  p.  279  ;  Kirkley  v.  Hodgson,  1  B.  &  C.  588. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  635 

doctrine  is  now  finally  settled  that,  in  cases  of  dormant 
partners,  if  the  ostensible  partners  become  bankrupt, 
the  whole  partnership  property  is  to  be  deemed  •  to  be 
in  their  reputed  ownership,  and  the  dormant  partner  is 
excluded  from  any  right  or  title  thereto,  as  against  the 
assignees  in  bankruptcy.^ 

§  405.  Hitherto  we  have  been  principally  examining 
questions  arising  upon  a  dissolution  by  bankruptcy,  so 
far  as  it  affects  the  rights  of  creditors,  either  generally 
or  in  case  of  reputed  ownership  of  property.  Let  us 
now  look  to  some  of  the  rights  of  the  partners  inter 
sese,  consequent  upon  such  a  dissolution.  And  here  it 
may  be  remarked  that,  generally,  the  partners  are  not 
entitled,  in  any  case,  to  come  in  competition  with  the 
joint  creditors  upon  the  partnership  funds,  whatever 
may  be  the  rights  and  equities  which  w^ould  otherwise 
attach  between  them  against  the  bankrupt  partner  or 
partners.^     So,  where  all   the   partners  become  bank- 

1  Gow  on  P.  c.  5,  §  3,  p.  278-280,  3d  ed. ;  Id.  p.  300,  301 ;  Kirkley  v. 
Hodgson,  1  B.  &  C.  588  ;  Ex  parte  Enderby,  2  B.  &  C.  389 ;  {^Ex  parie  Wood, 
De  Gex,  134.]  {This  doctrine  is  now  overthrown.  In  Reynolds  v.  Bowley, 
Law  Rep.  2  Q.  B.  41,  the  Court  of  Queen's  Bench  acted  on  this  doctrine, 
feeling  bound  by  the  authority  of  the  decided  cases,  though  they  doubted 
whether  those  cases  had  been  rightly  decided,  but,  on  appeal,  the  Court 
of  Exchequer  Chamber  reversed  the  judgment,  and  held  that  where  one 
partner  bona  fide  allows  the  other  to  carry  on  the  business  ostensibly  as 
his  own,  the  dormant  partner's  share  in  the  partnership  stock  in  trade 
does  not,  on  the  bankruptcy  of  the  ostensible  partner,  pass  to  the  latter's 
assignees,  as  in  the  possession,  order,  or  disposition  of  the  bankrupt,  as 
reputed  owner.     Reynolds  v.  Bowley,  Law  Rep.  2  Q.  B.  474. -^ 

^  Gow  on  P.  c.  5,  §  3,  p.  293,  3d  ed. ;  Id.  p.  321 ;  Coll.  on  P.  B.  4,  e.  2, 
§  9,  p.  655-658,  2d  ed. ;  ante,  §  390-394 ;  Ex  parte  Kendall,  17  Ves.  514, 
521 ;  Ex  parte  Adams,  1  Rose,  305 ;  Ex  parte  Reeve,  9  Ves.  588.  In  Ex 
■parte  St.  Barbe,  11  Ves.  413,  414,  Lord  Eldon  said:  "There  have  been 
cases  of  a  trade  carried  on  by  three,  and  distinct  trades  by  two,  and  by  one 
of  them,  where  this  sort  of  proof  of  a  debt,  distinctly  due  from  one  partner- 
ship to  the  other,  has  been  permitted  as  between  the  partners,  so  engaged 
in  different  concerns.  The  course  of  the  authorities  has  been,  that  a  joint 
trade  niav  prove  against  a  separate  trade  ;  but  not  a  partner  against  a  part- 
ner.    In  the  case  of  Shakeshaft,  Stirrup,  and  Salisbury,  Lord  Thurlow  went 


636  PARTNERSHIP.  [cHAP.  XV. 

rupt,  the  general  rule  is,  that  the  separate  estate  of 
one  partner  shall  not  claim  against  the  joint  estate  of 
the  partnership,  in  competition  with  the  joint  credi- 
tors ;  nor  the  joint  estate  against  the  separate  estate, 
in  competition  with  the  separate  creditors.  And  the 
creditors  are  not,  in  either  case,  considered  as  satisfied, 
until  they  have  received  the  interest  due  upon  their 
debts  respectively,  as  well  as  the  principal.^ 

§  406.  In  like  manner  a  solvent  partner  cannot 
prove  his  own  separate  debt  against  the  separate 
estate  of  the  bankrupt  partner,  so  as  to  come  in  com- 
petition with  the  joint  creditors  of  the  partnership ; 
for  he  is  himself  liable  to  all  the  joint  creditors ;  and 
therefore  he  ought  not,  in  equity,  to  be  permitted  to 
take  any  of  the  funds  of  the  bankrupt  before  all  the 
creditors,  to  whom  he  is  liable,  are  duly  paid.^  Neither 
can  a  solvent  partner  prove  against  the  separate  estate 
of  the  bankrupt  partner,  in  competition  with  the  sepa- 
rate creditors  of  the  bankrupt,  unless  and  until  all  the 
joint  creditors  of  the  partnership  are  paid,  or  at  least 
unless  and  until  the  joint  estate  is  fully  indemnified 
therefor;^  for  if  a  dividend  were  reserved  to  him  on  such 

upon  tills  distinction ;  that  where  there  is  only  one  partnership  arranging 
different  concerns,  belonging  to  them  all,  in  different  ways,  for  the  benefit 
of  different  parts  of  that  joint  concern,  as  in  that  instance,  the  three  part- 
ners carrying  on  the  business  of  cotton  manuflicturers  in  Lancashire,  and 
two  of  them  in  London,  there  could  not  be  proof  by  the  three  against  the 
two.  But  if  the  trades  are  perfectly  distinct,  then  the  three,  as  cotton 
manufacturers  in  Lancashire,  might  be  creditors  upon  the  separate  concern 
of  the  two,  as  ironmongers  in  London.  I  am  inclined  to  abide  by  that  case 
and  Ex  parte  Johns." 

•  Coll.  on  P.  B.  4,  c.  2,  §  10,  p.  66G-678,  2d  ed. ;  ante,  §  390-393 ; 
|§37G.} 

^  Coll.  on  P.  B.  4,  c.  2,  §  9,  p.  655,  2d  ed. ;  Ex  parte  Reeve,  9  Ves. 
588,  589. 

'  {A  partner  cannot  prove  against  his  copartner  upon  indemnifying  the 
joint  estate ;  he  must  show  that  the  claims  against  it  are  discharged  or  barred. 
Ex  parte  Moore,  2  GI.  &  J.  166.} 


CHAP.  XV.]     .DISSOLUTION RIGHTS    OF    CREDITORS.  6'i7 

proof,  the  joint  creditors  might  he  injured  by  such  sol- 
vent partner  stopping,  in  transitu,  the  surplus  of  the 
separate  estate,  which  would  otherwise  be  carried  over 
to  the  joint  estate ;  or  the  separate  creditors  might  be 
injured  by  their  funds  being  stopped  prospectively,  upon 
the  faith  of  such  partner  being  afterwards  able  to  pay 
the  joint  debts.' 

1  Coll.  on  P.  B.  4,  c.  2,  §  9,  p.  655-658,  2d  ed. ;  Id.  p.  660,  661,  662, 
665;    {Lind.  on  P.  1008.     See  Ex  j^arte  Maude,  Law  Eep.  2  Ch.  550; 
Hill  V.  Beach,  1  Beasl.  31.}     In  Ex  paHe  Reeve,  9  Ves.  588,  589,  Lord 
Eldon  said  :   "  All  these  cases  were  very  fully  discussed  by  Lord  Thurlow,  in 
the  case  of  Lodge  and  Fendal.     Dr.  Feudal  was  a  creditor  of  the  partner- 
ship of  himself  and  Lodge,  for  large  sums  advanced.     They  became  bank- 
rupts immediately  after  the  fomnation  of  the  partnership  ;  and  those  advances 
formed  the  joint  estate  to  be  divided.     There  was  a  struggle  by  Fendal  to 
be  admitted  a  creditor  for  the  amount  of  his  advances,  as  against  the  part- 
nership.    Lord  Thurlow,  after  full  consideration,  was  of  opinion  that  all 
the  authorities  establish  this  :    that  those  who,  being  in  partnership,   are 
themselves,  or  some  of  them,  debtors  to  the  creditors  of  every  class,  cannot 
come  in  comj^etition  with  the  creditors.     After  their  demands  are  liquidated 
finally,  the  paitners  may  be  creditors  upon  each  other ;    but  not  before. 
The  course  in  bankruptcy  has  been,  to  stop  the  proof  at  the  date  of  the 
commission,  which  is  founded  upon  this ;  that  the  debt  to  be  proved  is  the 
debt  due  before  the  commission,  taking  the  commission  to  follow  rapidly 
upon  the  act  of  bankruptcy ;   Avhich,  however,  is  frequently  not  the  case. 
It  is  true,  now,  a  great  deal  of  debt  accrued  after  the  bankruptcy  is  paid 
under  it ;   for  instance,  all  interest  accrued,  though  after  the  date  of  the 
commission,  if  the  state  of  the  effects  allows  it,  upon  a  sort  of  equitable 
principle,  the  interest  being  considered  as  a  kind  of  adjunct  or  shadow  of 
the  principal  debt,  which  was  due  before  the  bankruptcy.     It  is  now,  there- 
foi-e,  clearly  settled,  that  where  there  is  a  partnership  and  separate  debts 
also,  the  partnership  shall  not  be  admitted  a  creditor  upon  any  individual,  or 
any  individual  upon  the  pai'tnership,  until  the  creditors  of  the  individual 
and  the  creditors  of  the  partnership  are  satisfied  to  the  extent  of  20s.  in  the 
pound,  out  of  the  respective  estates;  also,  that  where  the  separate  creditors 
ai'e  paid  20s.  in  the  pound,  and  there  is  a  surplus,  that  surplus  shall  not  go 
immediately  to  pay  interest  to  the  separate  creditors ;  but  shall  go  to  make 
the  joint  creditors  equal  with  them  as  to  the  principal.     No  decision,  how- 
ever, has  gone  this  length ;  that,  if  both  the  joint  and  the  separate  creditors 
are  paid  to  the  extent  of  20*.  in  the  pouud,  upon   the  payment  to  that 
amount  to  the  creditors  of  each  class,  a  partner  shall  not  be  admitted  a 
creditor  upon  the  partnership,  or  upon  the  individual.     But  I  cannot  dis- 
tinguish the  cases ;  for  if  the  principle  is,  that  neither  the  partnership  nor 
the  individual  debtor  shall  claim  in  competition  with  the  creditors,  and  if 


638  PARTJSERSHIP.  ,     [CHAP.  XV. 

§  407.  Subject,  however,  to  these  exceptions  in  favor 
of  the  joint  creditors  and  separate  creditors,  and  also  to 
that  respecting  reputed  ownership,  which  has  been  pre- 
viously mentioned,  the  solvent  partners  retain  their  full 
right,  power,  and  authority,  over  the  partnership  prop- 

tlie  creditors  are  entitled  to  any  interest,  the  interest  is  as  much  a  debt  as 
the  capital ;  and  that  principle  will  prevent  either  the  partnership  or  the 
individual  debtor  ranking  with  the  other  creditors,  until  all  their  demand  is 
satisfied ;  which  includes  both  the  principal  and  interest  of  their  debts." 
See  also  Ex  parte  Moore,  2  Glyn  &  J.  166.  Mr.  CoUyer  on  P.  (p.  658, 
659,  3d  ed.)  has  on  this  subject  added  :  "  But  the  general  rule  in  question, 
like  all  other  general  rules,  is  qualified  in  cases  of  necessity.  Therefore, 
when  the  solvent  partner,  without  his  own  defiiult,  is  unable  to  procure  a 
discharge  from  every  joint  creditor,  —  as,  for  instance,  where  one  of  the 
joint  creditors  is  a  lunatic,  —  in  such  case,  it  seems  he  will  be  permitted  to 
prove  against  the  separate  estate,  upon  giving  security  for  the  debt  which 
cannot  be  discharged,  and  paying  the  residue  of  the  joint  debts.  Ex  parte 
Yonge,  3  Ves.  &  B.  31.  There  are  some  cases,  also,  where,  notwithstand- 
ing the  retiring  partner  has  not  paid  all  the  demands  of  the  partnership,  he 
has  been  permitted  to  prove  against  the  joint  estate,  on  the  ground  of  the 
joint  creditors'  having  assented  to  the  arrangements  made  between  the 
retiring  and  remaining  partners,  or  being  barred  by  length  of  time  from 
objecting  to  the  retiring  partner's  proof.  Thus,  where  a  partnership  had 
been  dissolved  upon  the  terms  of  the  retiring  partner  taking  a  security  from 
the  remaining  partner  for  the  balance  due  to  him,  and  the  remaining  part- 
ner was  treated  by  the  joint  creditors  as  their  sole  debtor,  until  he  after- 
wards became  bankrupt ;  it  was  held  that  the  retiring  partner  might  prove 
his  debt  against  the  separate  estate  of  the  bankrupt,  although  some  of  the 
partnership  debts  were  unpaid.  Ex  parte  Grazebrook,  2  Deac.  &  Ch.  186. 
In  this  case  it  may  be  remarked,  that  the  retiring  partner  had  been  a  dor- 
mant partner.  So,  where  upon  the  death  of  one  of  three  partners,  his 
executors  carried  on  the  trade  with  the  surviving  partners  for  a  twelve- 
month, and  then  dissolved  the  partnership,  upon  which  occasion  the  two 
continuing  partners  gave  the  executors  a  bond,  to  secure  the  balance  due 
to  them,  and  more  than  six  years  afterwards  the  two  became  bankrupt ;  it 
was  held  that  the  executors  had  a  right  to  prove  the  amount  of  the  bond 
against  the  joint  estate  of  the  two  continuing  partners.  Ex  parte  Hall,  3 
Deac.  125.  Again,  where  a  person  on  the  eve  of  bankruptcy  induces 
another,  by  fraudulent  means,  to  become  his  partner,  and  the  latter  advances 
capital  to  the  concern,  a  case  might  be  stated  where  the  latter  would  be 
allowed  to  prove  the  amount  of  the  capital  so  advanced,  pari  passu  with  the 
separate  creditors  of  the  bankrupt.  However,  such  proof  will  not  be  al- 
lowed where  the  person  defrauded  has  held  himself  out  to  the  world  as  a 
partner,  though  only  for  a  short  time." 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  639 

erty  after  bankruptcy,  in  the  same  manner  and  to  the 
same  extent  as  if  no  bankruptcy  of  a  particular  partner 
had  occurred.^  Their  lien,  also,  remains  in  full  force, 
not  only  to  have  the  partnership  funds  applied  to  the 
discharge  of  the  partnership  debts  and  liabilities  ;  but 
also  to  the  discharge  of  all  the  debts  due  by  the  part- 
nership to  them,  or  any  of  them,  as  well  as  for  their  own 
distributive  shares  in  the  surplus.  Hence  they  have  a 
right  to  priority  of  payment  of  the  debts  due  by  the 
bankrupt  to  the  partnership,  in  preference  to  his  sepa- 
rate creditors  ;  and  if  the  joint  funds  should  prove  insuf- 
ficient to  discharge  the  debt,  they  have  a  right  to  insist 
upon  coming  upon  the  separate  estate  of  the  bankrupt 
therefor,  imri  passu,  with  the  separate  creditors.^  In 
such  a  case  the  debt  is  deemed,  in  equity,  a  separate 
debt  of  the  bankrupt,  secured  also  by  a  lien  on  the  joint 
fund.^ 

§  408.  In  cases  of  this  sort  there  is  no  difference, 
whether  the  partnership  is  general  or  is  only  for  a  sin- 
gle adventure  ;  or,  indeed,  whether  the  parties  are  strictly 
to  be  treated  as  partners  or  as  part-owners,  if  in  the  par- 
ticular adventure  there  is,  either  by  contract,  or  by 
usage,  or  by  custom,  a  lien  of  the  co-adventurers  upon 
the  property  engaged  therein,  and  the  produce  thereof, 
for  the  proportion  of  the  outfit  and  expenses  incurred 
by  one  or  more  of  them,  for  the  common  benefit.^     In 

'  Ante,  §  341 ;  Gow  on  P.  c.  5,  §  3,  p.  300-305,  3d  ed. ;  Id.  p.  321- 
323 ;  Wats,  on  P.  c.  5,  p.  302,  2d  ed. ;  Id.  p.  314-324;  Coll.  on  P.  B.  4, 
c.  2,  §  9,  p.  655,  2d  ed. ;  Id.  p.  661,  662. 

2  Gow  on  P.  c.  5,  §  3,  p.  321-323,  3d  ed. ;  Ex  jmrte  Terrell,  Buck,  345 ; 
Coll.  on  P.  B.  4,  c.  2,  §  9,  p.  655,  656,  2d  ed. ;  Id.  p.  661,  662 ;  Fereday  v. 
Wightwick,  Taral.  250;  Ex  parte  Reeve,  9  Ves.  588;  Ex  parte  Drake 
cited  1  Atk.  225;  Taylor  v.  Fields,  4  Ves.  396;  s.  c.  15  Ves.  559,  n. ; 
Holderness  v.  Shackels,  8  B.  »&  C.  612.     {See  Hill  v.  Beach,  1  Beasl.  31.} 

'  ]\[any  cases  illustrative  of  this  doctrine  of  the  text  Avill  be  found  stated 
in  Gow  on  P.  c.  5,  §  3,  p.  321-327,  3d  ed. 

*  Gow  on  P.  c.  5,  §  3,  p.  303,  304,  3d  ed. 


640  PARTNERSHIP.  [cHAP.  XV. 

every  such  case,  the  lien  of  the  other  co-adventurers 
thereon  will  be  deemed  to  include  all  such  outfits  and 
expenses,  as  well  as  their  own  shares  in  the  adventure.^ 
Hence,  where  the  part-owners  of  a  ship  were  engaged  in 
the  whale  fishery,  and  the  usual  mode  of  managing  the 
cargo  in  such  cases  was,  that,  on  the  arrival  of  the  vessel 
at  the  homeward  port,  the  whalebone  was  taken  into 
the  possession  of  the  ship's  husband,  and  sold  by  him, 
and  the  proceeds  Avere  applied  towards  the  discharge  of 
the  expenses  of  the  ship  ;  and  the  blubber  was  deposited 
in  a  warehouse  belonging  to  one  of  the  owners,  but  rented 
by  all  the  owners  of  the  ship  ;  and  the  oil  produced  from 
it  was  put  into  casks,  each  owner's  share  being  weighed 
out,  and  placed  separately  in  the  warehouse,  in  casks, 
marked  with  his  initials  ;  and,  after  the  division,  the 
practice  was  for  the  warehouseman  to  deliver  to  the 
order  of  each  part-owner  his  share  of  the  oil,  unless 
notice  was  given  by  the  ship's  husband  that  the  own- 
er's share  of  the  disbursements  had  not  been  paid ; 
and,  in  that  case,  the  warehouseman  was  accustomed 
to  detain  the  oil  until  the  demand  had  been  satisfied ; 
it  was  held  that  the  other  co-adventurers  had  a  lien, 
under  such  circumstances,  upon  all  the  imdelivered  oil 
in  the  possession  of  the  warehouseman,  for  the  unpaid 
disbursements  ;  that  the  assignees  of  the  owner,  who 
had  become  bankrupt,  took  the  same  oil  subject  to  that 
lien,  and  that  the  lien  was  not  divested  by  the  separa- 
tion of  the  share  of  the  bankrupt,  and  placing  it  in  the 
casks  marked  with  his  name.~ 

'  Ibid. 

^  Holderness  v.  Shackels,  8  B.  &  C.  612.  Mr.  Justice  Bayley,  in  deliv- 
ering his  opinion  in  this  case,  fully  expounded  the  general  doctrine. 
"  Where  there  is,"  said  he,  "  a  joint  adventure,  which  produces  certain  goods, 
the  proper  course  is,  first  to  deduct  all  the  expenses  which  have  been  incurred 
in  order  to  obtain  those  goods,  and  then  to  divide  the  residue  among  the 
shareholders,  in  proportion  to  the  shares  to  which  each  is  entitled  respect- 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  641 

§  409.  These  seem  to  be  the  most  material  consider- 
ations, respecting  the  effects  and  consequences  of  the 

ively.  In  this  case  the  joint  adventurers  obtained  a  quantity  of  oil  in  bulk. 
No  partner,  or  representative  of  a  partner,  has  a  right  to  his  ali(iuot  part 
of  that  oil,  until  he  has  paid  his  share  of  the  expense  of  procuring  it.  That 
will  be  the  case,  whether  the  shareholder  has  become  a  bankrupt  or  con- 
tinues solvent.  If  he  continues  solvent,  he  may  pay  his  share  of  the  outfit 
and  of  the  expense.  If  he  does  not  pay  it  in  money,  the  other  part-owners 
have  a  right  to  see  that  an  aliquot  part  of  what  has  been  gained  in  the  ad- 
venture be  retained,  so  as  to  pay  that  share  of  the  outfit,  which  he  ought  to 
pay.  In  this  case  Foxton  became  bankrupt,  and  having  become  bankrupt, 
if  he  could  have  paid  in  money  his  share  of  the  outfit  there  would  have  been 
twenty-nine  tons  of  oil  coming  to  him.  He  could  not  pay ;  and,  therefore, 
as  it  seems  to  me  the  justice  and  the  law  of  the  case  is,  that  his  share  of  the 
expense  should  be  paid  out  of  the  twenty-nine  tons,  and  that,  until  he  has 
paid  his  share  of  the  expense,  he  cannot  claim  that  quantity.  It  has  been 
said  that  there  has,  in  this  case,  been  a  delivery,  and  that  in  consequence  of 
that  delivery,  the  rights  of  Foxton  and  of  his  assignees  are  different  from 
what  they  otherwise  would  have  been.  But  it  seems  to  me  that  there  has 
not  been  a  perfect  delivery..  It  would  have  been  perfect  if  the  other  part- 
owners  had  been  dispossessed  of  the  oil.  That  has  not  been  done.  The 
property  still  remained  in  the  warehouse,  and  was  the  joint  property  of  all. 
A  part  only  has  been  removed.  The  removal  of  that  part  does  not  vary 
the  right  as  to  the  residue.  It  is  clear  that  the  assignees  cannot  recover  the 
twenty-nine  tons  before  they  pay  Foxton's  share  of  the  expense.  The  other 
part-owners  might  say,  there  are  twenty-nine  tons  allotted  to  you ;  you  may 
take  possession  of  all  to  which  you  will  be  entitled,  but  you  must  first  pay 
your  share  of  the  expense ;  nine  tons  will  be  sufficient  for  that  purpose ; 
you  may,  therefore,  take  away  twenty  tons.  The  right  of  the  other  part- 
owners  is  not  varied  by  their  having  allowed  the  bankrupt  to  take  away 
twenty  tons.  That  being  so,  the  plaintiffs  are  not  entitled  to  recover.  It 
has  been  urged  that  there  has,  in  this  case,  been  a  change  of  possession,  by 
reason  of  Locking's  having  debited  the  bankrupt  in  account,  with  a  portion 
of  the  rent.  But  that  portion  of  the  rent  must  have  been  paid  by  the  bank- 
rupt before  he  took  away  the  oil,  in  specie  ;  or  it  might  have  been  deducted 
out  of  his  share  of  the  produce,  if  he  compelled  the  other  shareholdei-s  to 
sell,  in  order  to  pay  his  share  of  the  expense.  The  usage  being  for  the 
pai't-owners  to  detain  the  oil,  until  each  part-owner's  share  of  the  expense 
has  been  paid,  it  seems  to  me  that  the  ftict  of  debiting  the  party  with  ware- 
house rent  can  have  no  effect.  I  think,  therefore,  that  the  plaintiffs  have 
not  made  out  their  right  to  the  residue  of  the  oil."  The  part-owners  of  the 
ship  would  be  deemed  partners  in  this  adventure  (although  not  in  the  ship 
itself),  as  sharing  the  net  profits  of  the  adventure,  upon  the  grounds  sug- 
gested in  the  preceding  sections  as  to  joint  adventurers,  and  sharing  the  net 
profits.     Ante,  §  27,  3-1,  oi),  40,  55.     See  also  Mr.  Bai'on  Parke's  Remarks 

41 


642  PARTNERSHIP.  [CHAP.  XV. 

dissolution  of  a  partnership  by  bankruptcy,  which  are 
important  to  be  brought  before  the  reader,  in  order  to 
explain  and  ilhistrate  the  general  distinction  between 
the  case  of  a  dissolution  by  bankruptcy,  and  other  cases 
of  dissolution.  A  more  minute  inquiry  into  the  various 
details  of  the  system,  would  occupy  a  large  space,  alto- 
gether disproportionate  to  its  relative  usefulness  in  an 
elementary  work  of  this  nature,  and  serve  to  perplex 
and-  obscure  what  might,  otherwise,  be  justly  applicable 
to  the  systems  of  bankruptcy  and  insolvency  in  other 
countries,  which  differ  in  some  particulars  from  that  of 
England.  And,  here,  these  Commentaries,  so  far  as  they 
respect  the  subject  of  Partnership,  might  be  concluded ; 
for  it  is  not  within  the  scope  thereof  to  examine  at  large 
the  nature  and  extent  of  the  remedies  by  or  against 
partners,  either  at  the  common  law,  or  in  equity, 
whether  they  respect  the  government,  or  mere  private 
individuals.  Those  topics  properly  belong  to  a  Treatise 
of  a  very  different  character,  where  the  principles  of 
pleading,  in  its  most  general  sense,  are  to  be  brought 
under  review,  and  expounded  with  all  their  abstruse 
and  intricate  learning. 

§  410.  The  subject,  however,  of  Part-ownership  in 
goods  and  chattels,  as  contradistinguished  from  Part- 
nership, has  come  incidentally  under  discussion  in 
several  parts  of  the  present  Commentaries ;  ^  and  it 
has  been  commonly  thought,  from  its  close  analogy 
to  partnership,  that  a  brief  exposition  of  the  general 
principles  applicable  thereto  is  peculiarly  appropriate 
in  such  a  connection.  Pothier  has,  accordingly,  thought 
it  worthy  to  be  separately  discussed  in  an  Appendix 
to  his  Treatise   on  Partnership.      He   considers  every 

in  Pearson  v.  Skelton,  Tyrw.  &  G.  848;  s.  c.  1  M.  &  W.  504;   [Hawes  v. 
Tillingliast,  1  Gray,  289.] 
'  Ante,  §  89,  90. 


CHAP.  XV.]       DISSOLUTION RIGHTS    OF    CREDITORS.  643 

community  of  property,  or,  as  we  should  call  it,  every 
tenancy  in  common  of  property,  not  a  partnership,  or 
affected  by  any  repugnant  convention,  to  be  a  kind  of 
quasi-contvact,  or  ^«asi-partnership  ;  whether  it  be  a  uni- 
versal community  or  a  community  of  particular  things. 
And  he  illustrates  the  subject  by  examples,  which,  al- 
though perfectly  accurate  in  the  foreign  and  Roman  law, 
where  there  may  be  a  title  by  descent  to  every  species  of 
property,  real  as  well  as  personal,  are  not  so  striking  in 
our  law ;  to  wit,  by  cases  of  a  community  of  property 
(hiens)  under  a  succession  or  descent  to  many  heirs,  and  of 
legacies  bequeathed  jointly  to  many  legatees.^  He  states 
the  distinction  between  such  a  community  of  interest  m 
property  and  partnership,  as  principally  consisting  in 
these  circumstances,  that  partnership  is  founded  neces- 
sarily in  the  voluntary  consent  of  the  parties,  and  takes 
place  by  and  under  one  and  the  same  title ;  whereas,  in 
other  cases  of  mere  community  of  interest,  these  ingre- 
dients are  not  essential.  Certainly,  they  are  not.  But 
they  may  (as  Pothier  admits),  nevertheless  co-exist  in  the 
latter  cases ;  ^  and,  therefore,  they  do  not  seem  to  con- 
stitute, philosophically  or  logically,  an  appropriate  dis- 
tinction. Thus,  for  example,  two  persons  may  agree  to 
purchase  a  ship  together  in  equal  moieties,  and  to  hold 
the  same  as  tenants  in  common ;  and  they  may  take  the 
ship  at  the  same  time  by  the  same  title  deed.^  The 
true  distinction  seems  to  be,  that  there  is  no  community 
of  interest  in  the  entirety  of  the  property  in  the  latter 
cases ;  whereas,  in  partnership,  there  always  is  such  a 
community  of  interest,  founded  upon  the  positive  con- 
sent of  the  parties."* 

§  411.  Following,  therefore,  the  example  of  Pothier, 

1  Poth.  de  Soc.  n.  2,  3 ;  Id.  App.  n.  181-183;  ante,  §  3,  4.  , 

*  Poth.  de  Soc.  n.  183.  ^  ^^te,  §  3,  4. 

*  Ante,  §  89-91  •  Gow  on  P.  c.  2,  §  2,  p.  32,  3d  ed. 


644  PARTNERSHIP.  [cHAP.  XV. 

as  well  as  that  of  some  of  the  most  distinguished  ele- 
mentary writers  on  Partnership  at  the  common  law, 
who  have  in  the  like  manner  discussed  in  supplementary 
tracts  the  leading  outlines  of  this  branch  of  the  law,^ 
the  present  work  will  be  concluded  with  a  chapter 
devoted  to  the  same  purpose. 

'  Coll.  on  P.  B.  5,  c.  4,  p.  793,  2d  ed. ;  Wats,  on  P.  c.  4,  p.  227,  2d  ed. ; 
2  Bell,  Comm.  B.  7,  c.  4,  p.  655,  &c.,  5th  ed. 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       645 


CHAPTER   XVI. 


PART-OWNERS RIGHTS,  POWERS,  AND  LIABILITIES  OF. 

§  412.  Part-ownership  in  real  estate. 

413.  Personal  property  may  be  held  in  joint  tenancy,  or  tenancy  in 

common. 

414.  Rights  of  tenants  in  common  of  chattels. 

415.  Ships. 

41G.  Acquirement  and  transfer  of  property  in  ships. 

417.  Ship-owners  are  tenants  in  common. 

418.  Employment  of  ships.     Ship's  husband. 

419.  Contribution  to  expenses  incurred  by  common  consent. 

420.  French  law. 

421.  No  right  of  contribution  if  no  consent. 

422.  Alleged  reasons  of  this  rule. 

423.  Its  doubtful  propiiety. 

424.  Contrary  doctrine  of  many  maritime  jurists  and  codes. 

425.  Doctrine  of  the  Consolato  del  Mare. 

426.  Of  Pothier. 

427.  No  right  of  employment  against  the  consent  of  any  owner. 

428.  Unless  on  giving  indemnity. 

429.  Roman  and  French  law. 

430.  Law  of  other  foreign  nations. 

431.  Doubtful  advantage  of  the  English  law. 

432.  Appointment  of  a  master. 

433.  434.  Rights  of  majority  and  minority  in  the  French  law. 

435.  Equal  division  of  ojnuion  among  the  owners. 

436.  Foreign  law. 

437.  Sale  in  case  of  disagreement  as  to  employment. 

438.  The  English  Admiralty  cannot  decree  a  sale  in  such  case. 

439.  Doctrine  in  America. 

440.  Liability  for  expenses  incurred  by  common  consent. 

441.  Part-owners  have  a  lien  on  cargo  shipped  on  joint  account. 
442-444.  Lien  on  a  ship  for  advances. 

445.  Right  to  displace  master. 

446.  Part-owner  cannot  insure,  borrow  money,  or  pledge. 

447.  Dissolution  of  connection  between  part-owners. 

448.  Molloy's  opinion  on  constructive  ownership. 

449.  Remedies  of  part-owners  against  each  other. 

450.  451.  Roman  law. 


646  PARTNERSHIP.  [CHAP.  XVI. 

452.  French  law. 

453.  Part-owners  not  bound  by  each  other's  declarations. 

454.  Joinder  by  part-owners  in  suits  against  third  persons. 

455.  Rights  of  third  persons  against  part-owners  In  cases  of  contract. 

456.  French  and  Dutch  law. 

457.  Roman  law. 

458.  In  cases  of  tort. 
459-461.  Roman  law. 

462.  Foreign  law. 

463.  Closing  remarks. } 

§  412.  We  have  already  seen,  that  persons  may  be- 
come part-owners  (or,  as  Pothier  denommates  them, 
q^lasi  partners,  quasi-associes),^  of  movable  or  personal 
property,  as  well  as  of  real  estate,  without  being  part- 
ners.^ As  to  part-ownership  in  real  estate,  not  held  as 
partnership  property  or  assets,  it  does  not  properly  fall 
within  the  scope  of  the  present  Commentaries  ;  but  it 
belongs  rather  to  a  Treatise,  which  is  to  unfold  the 
general  rights  incident  and  appertaining  to  real  prop- 
erty, in  which  the  rights  of  persons  holding  real  estate 
in  joint-tenancy,  in  coparcenary,  and  in  tenancy  in  com- 
mon, are  discussed  and  distinguished.  A  very  succinct, 
but  at  the  same  time  an  accurate  account  of  that  sub- 
ject, will  be  found  in  the  elegant  Commentaries  of  Sir 
William  Blackstone.^  W^hat  is  proposed  to  be  consid- 
ered in  the  present  chapter,  will  simply  relate  to  part- 
ownership  in  movable  or  personal  property. 

§413.  The  general  distinctions  between  joint-ten- 
ancy, tenancy  in  common,  and  partnership,  have  already 
been  sufficiently  pointed  out  in  the  preceding  pages ;  ^ 
and,  therefore,  need  not  again  be  here  adverted  to. 
Movable  or  personal  property  may  be  held  in  joint- 
tenancy,  which,  of  course,  gives  the  jus  accrescencU,  or 
right  of  survivorship,  of  the  whole  property  to  the  sur- 

>  Toth.  de  Soc.  App.  n.  184-186.  "  Ante,  §  3  ;  Id.  §  89-94. 

3  2  Bl.  Comm.  178-194.  ■»  Ante,  §  89-91,  410. 


t 

CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       647 

vivor,  unless  the  joint-tenancy  is  severed  in  the  Hfetime 
of  the  parties ;  or  it  may  be  held  in  tenancy  in  com- 
mon, which  gives  to  each  tenant  an  undivided,  but,  at 
the  same  time,  a  distinct  and  independent  interest 
therein,  which  does  not  pass  to  the  survivor,  but  belongs 
to  the  personal  representatives  of  the  party  upon  his 
decease.^  But  there  can,  strictly  speaking,  be  no  estate 
in  coparcenary  of  movable  or  personal  property  at  the 
common  law ;  because  the  latter  title  arises  only  by 
descent ;  and,  at  the  common  law,  there  can  be  no 
descent  of  such  property.^ 

§  414.  In  general,  the  rights,  duties,  obligations, 
authorities,  and  liabilities  of  part-owners  are  the  same, 
in  relation  to  every  kind  of  personal  property  ;  and 
therefore,  whatever  is  affirmed  in  relation  to  one,  will 
apply  to  all  others,  unless  in  cases,  where,  from  the 
peculiar  nature  and  uses  of  a  particular  species  of  such 
property,  or  the  peculiar  customs  and  usages  apper- 
taining thereto,  a  different  rule  arises,  by  implication  of 
law,  to  govern  or  affect  it.  Thus,  for  example,  if  two 
persons  are  tenants  in  common  of  a  horse,  or  other  per- 
sonal chattel,  each  has  an  equal  right  to  the  possession 
and  use  thereof;  ^  and  each  can  sell  only  his  own  un- 
divided share  thereof.^  If  one  tenant  in  common  takes 
exclusive  possession  of  a  personal  chattel,  refusing  to 
the  other  any  possession  or  use  thereof,  the  latter  has 
no  remedy  whatsoever  by  action ;  but  he  may  take 
the  chattel,  if  he  can  find  it,  from  him  who  hath  done 
him  the  wrong. ^  In  relation  to  expenses,  it  may  be 
stated  that  neither  of  such  owners  has  a  right  to  incur 
any  expense    thereon,  which   shall  bind  the   other  to 

'  2  Bl.  Coram.  399  ;  ante,  §  89.  *  2  Bl.  Coram.  399. 

3  Co.  Litt.  200,  a;  3  Kent,  153. 

"  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  811,  2d  ed. ;  Abbott  on  Shipp.  B.  1,  c.  1, 
§  2,  p.  3,  5th  ed. ;  3  Kent,  153,  154. 
=  Co.  Litt.  199  b,  200  a. 


648  PARTNERSHIP.  [CHAP.  XYI. 

contribution  therefor,  ^Yithout  some  proof  of  an  express 
or  implied  authority  therefor,  even  when  the  expenses 
are  absolutely  indispensable  for  the  due  preservation 
thereof.  This  is  unquestionably  true  at  the  common 
law,  in  the  case  of  inanimate  or  dead  chattels.  But, 
probably,  in  the  case  of  a  tenancy  in  common  of  a 
horse,  or  other  animal,  in  the  absence  of  all  controlling 
circumstances,  a  presumption  would  be  sustained,  that 
the  necessary  expenses  of  the  keep  thereof  were  to  be 
borne  by  the  mutual  contributions  of  both,  from  the 
very  nature  of  the  chattel,  and  the  mutual  use  and 
benefit  intended  to  be  derived  therefrom  by  the  tenants 
in  common.  However,  if  a  positive  or  implied  prohibi- 
tion were  shown,  the  same  rule  would  prevail  as  in  the 
ordinary  cases  of  dead  chattels. 

§  415.  But  the  most  useful  as  well  as  the  most 
various  illustrations  of  this  subject,  may  be  derived  from 
a  class  of  chattels  constantly  found  engaged  in  com- 
merce and  navigation,  that  is  to  say,  ships  ;  the  fitting 
out  and  the  employment  of  which  have  given  rise  to 
many  important  questions ;  and,  therefore,  the  doc- 
trines applicable  to  ships  seem  especially  to  require  a 
full  exposition  in  this  place.  In  our  subsequent  in- 
quiries, the  main  topics  discussed  wall  be  the  rights, 
powers,  duties,  obligations,  and  liabilities  belonging  to 
part-owners  of  ships,  as  well  inter  sese,  as  in  respect  to 
third  persons. 

§  416.  Ships  are  strictly  and  technically  denominated 
chattels,  or  personal  property,  at  the  common  law,  al- 
though they  are  distinguishable  from  most  other  kinds 
of  personal  property  by  the  peculiar  solemnities  which 
belong  to  the  mode  in  which  the  title  thereto  is  ordina- 
rily acquired,  transferred,  and  made  susceptible  of 
pledge,  lien,  or  mortgage.  Ordinarily,  it  is  well  known 
that  the  title  to  personal  goods  and  chattels  will  pass  by 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       6-49 

mere  delivery  and  change  of  possession.  But  it  is  not 
generally  so  in  respect  to  the  title  to  ships.  In  most,  if 
not  in  all,  commercial  countries,,  the  title  thereto  is  now 
usually  acquired,  and  transferred,  and  evidenced  by 
written  documents  ;  ^    and  statute  enactments  in  those 

^  Whether  a  delivery  of  a  ship  by  parol,  without  any  bill  of  sale  or  other 
AYritten  instrument  of  transfer,  be  sufficient  to  pass  a  good  title  to  the  ship, 
has  been  thought  not  quite  settled  in  our  laAv.  It  is  true  that  a  ship  is  a 
mere  personal  chattel,  and  personal  chattels  ordinarily  may  pass  by  delivery 
only,  without  any  written  evidence  of  contract  or  title.  But  the  text  shows 
that,  from  very  early  times,  a  different  course  has  been  pursued  in  respect 
to  ships;  and  if  the  universal  maritime  usage  has  been  to  evidence  a  trans- 
fer of  ships  by  written  documents,  that  usage  would  seem,  prima  facie,  to 
form  a  part  of  our  municipal  law,  —  the  law  merchant  being  a  part  of  the 
common  law.  There  is  a  dictum  in  the  case  of  Lamb  v.  Durant,  1 2  Mass. 
54,  in  which  it  is  declared  that  ships  may  pass  by  delivery  only,  as  well 
as  any  other  chattel,  so  far  as  respects  the  property  of  the  vessel.  And  a 
like  expression  fell  from  the  Court  in  Taggard  v.  Loring,  16  ^lass.  336. 
But  in  neither  of  these  cases  was  the  point  directly  before  the  Court.  On 
the  other  hand,  there  is  no  case  in  the  English  Jurisjjrudence  in  which  it  has 
been  decided  that  a  transfer  by  parol  is  sufficient  to  pass  the  title.  The 
point  was  made  in  Rolleston  v.  Hibbert,  3  T.  R.  406,  by  counsel;  and 
Lord  Kenyon  then  said :  "  It  was  first  contended,  that  it  was  not  necessary 
that  the  property  in  a  ship  should  pass  by  a  written  instrument.  On  that 
point  I  give  no  opinion  because  it  is  not  necessary."  This  language  shows 
that  no  such  point  was,  at  that  time,  deemed  settled  in  the  common  law ; 
otherwise  it  would  at  once  have  been  recognized.  Lord  Stowell,  on  the 
other  hand,  in  the  case  of  The  Sisters,  5  Rob.  1.55,  manifestly  shows  his 
own  opinion  to  be,  that  a  bill  of  sale  is  necessary.  His  words  are  too  re- 
markable to  be  omitted.  "  It  has  been  contended  in  argument  (says  he) , 
that  the  effect  of  a  bill  of  sale  alone  would  not  be  material,  because  this  was 
a  foreign  ship,  in  respect  to  which  it  might  not  be  requisite  that  it  should 
pass  by  a  bill  of  sale.  It  is  said  that  the  agreements  to  be  found  in  these 
letters  (i.  e.  in  that  case),  and  the  actual  delivery  under  it,  would  be  suf- 
ficient to  establish  the  equitable  title ;  and  a  reference  has  been  made  on 
this  subject  to  some  opinions  at  common  law,  which  are  said  to  have  been 
given  in  favor  of  such  a  title.  The  opinions  of  gentlemen  of  that  bar  must 
undoubtedly  be  entitled  to  entire  respect,  on  a  question  of  municijjal  law. 
But  this  is  a  question  of  a  more  general  nature,  arising  out  of  a  system  of 
more  general  law;  out  of  the  universal  maritime  law,  which  constitutes  a 
part  of  the  professional  learning  of  this  Court  and  it^s  practisers.  Accord- 
ing to. the  ideas  which  I  have  always  entertained  on  this  question,  a  bill  of 
sale  is  the  proper  title  to  which  the  maritime  Courts  of  all  countries  would 
look.     It  is  the  universal  instrument  of  transfers  of  ships  in  the  usage  of  all 


650  PARTNERSHIP.  [CHAP.  XVI. 

countries  create  many  regulations,  respecting  the  mode 
of  acquiring,  and  transferring,  and  evidencing  that  title, 
as  well  for  municipal  purposes  and  policy,  as  for  the  due 
ascertainment  and  proof  of  the  national  character  of 
the  ship,  and  its  right  to  protection  and  privileges  upon 
the  ocean. ^ 

§  417.    Property  in  a  ship  may  be  acquired  by  two  or 

maritime  countries;  and,  in  no  degree,  a  peculiar  title  deed  or  conveyance 
known  only  to  the  law  of  England.  It  is  what  the  maritime  law  expects ; 
what  the  Court  of  Admiralty  would,  in  its  ordinary  practice,  require ;  and 
what  the  legislature  of  this  country  has  now  made  absolutely  necessary,  with 
regard  to  British  subjects,  by  the  regulations  of  the  statute  law."  In  Ex 
parte  Halkett,  19  Ves.  474,  Lord  Chancellor  Eldon  said:  "  It  is  laid  down 
that  the  ship  may  be  bound  by  bill  of  sale,  but  it  cannot  be  by  parol."  Mr. 
Jacobsen,  in  his  Sea-Laws  (B.  1,  c.  2,  p.  17,  21),  manifestly  considers  a  bill 
of  sale  Indispensable,  by  maritime  usage,  to  pass  the  title.  In  the  case  of 
Ohl  V.  Eagle  Ins.  Co.  4  Mason,  172  ;  s.  c.  Id.  390,  the  question  underwent 
considerable  discussion.  See  also  Atkinson  v.  Maling,  2  T.  R.  462,  466  ; 
Sutton  V.  Buck,  2  Taunt.  302,  and  particularly  the  argument  of  the  defend- 
ant's counsel,  305;  Abbott  on  Shipp,  Pt.  1,  c.  1,  §  5,  p.  12;  Zouch,  Adm. 
Jur.  V.  103.  {See  1  Pars.  Mar.  Law,  47;  and  also  Metcalf  v.  Taylor,  36 
Me.  28;  Chadbourne  v.  Duncan,  Id.  89;  and  McMahon  v.  Davidson,  12 
Minn.  357;  In  all  which  a  bill  of  sale  was  considered  unnecessary.} 

1  Abbott  on  Shipp.  Pt.  1,  c.  1,  §  1,  p.  1,  5th  ed. ;  Id.  c.  2,  §  1,  p.  23;  1 
Valin,  Comm.  LIv.  1,  tit.  14,  art.  1,  p.  340,  341 ;  Id.  Liv.  2,  tit.  10,  art.  1,  p. 
601,  602. — The  present  British  Ship  Registry  Act  of  3  «&  4  Wm.  4, 
c.  55,  will  be  found  at  large  In  the  Appendix  to  Mr.  Sergeant  Shee's  very 
valuable  edition  of  Lord  Tenterden's  Treatise  on  Shipping;  and  the  nature 
and  objects  and  construction  of  the  various  clauses  of  the  old  Act  will  be 
found  In  Lord  Tenterden's  Text,  Pt.  1,  c.  2,  p.  47-83,  London  ed.  1840. 
The  American  Ship  Registry  Acts  will  be  found  In  the  Appendix  to  the 
American  edition  of  Abbott  on  Shipping  (1829);  and  the  nature,  objects, 
and  construction  of  the  various  clauses  thereof.  In  the  notes  to  chapter  sec- 
ond of  the  text  to  that  edition,  from  p.  23  to  68.  See  also  3  Kent,  139-150. 
One  of  the  most  prominent  differences  between  the  British  and  the  American 
system  is,  or  at  least  was,  that,  by  the  former,  no  title  could  be  accjuired  or 
transferred  except  in  the  manner  prescribed  by  the  Registry  Act;  but.  In  the 
latter,  the  transfer  may  be  good  and  valid  In  law,  although  the  requisites  of 
the  Registry  Act  are  not  complied  with.  But  then,  by  such  non-compliance, 
the  ship  will  lose  her  American  character  and  privileges  as  a  registered  ship. 
It  is  not  within  the  design  of  these  Commentaries  to  go  into  any  details  on 
this  subject.  They  will  properly  find  a  place  In  a  Avork  on  the  Law  of  Ship- 
ping and  Navigation. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       651 

more  persons,  either  by  building  it  at  their  own  ex- 
pense, or  by  the  purchase  of  a  part  thereof  of  the  sole 
owner,  or  by  a  joint  purchase  of  the  whole  of  another 
person.^  But,  whether  acquired  by  the  joint  building, 
or  by  a  part  purchase,  or  by  a  joint  purchase,  the  par- 
ties, in  the  absence  of  all  positive  stipulations  to  the 
contrary,  become  entitled  thereto,  as  tenants  in  common, 
and  not  as  joint-tenants.^  In  this  respect,  it  will  make 
no  difference,  whether  the  title  is  acquired  at  one  and 
the  same  time,  by  and  under  one  and  the  same  instru- 
ment, or  whether  it  is  acquired  at  different  times,  and 
under  different  instruments,^  this  is  a  natural,  if  not 
a  necessary  result  of  the  doctrine,  that  the  jus  accre- 
scendl  has  no  existence  among  merchants,  or  in  the  busi- 
ness of  commerce  and  navigation.  A  different  doctrine, 
which  should  introduce  into  the  maritime  law  the  nar- 
row doctrine  of  the  common  law,  as  to  joint-tenancy 
and  the  right  of  survivorship,  would  be  fatal  to  the  in- 
terests of  commerce,  and  overthrow  the  plain  dictates 
of  public  policy.  The  whole  course  of  commercial  usage 
and  opinion  has  settled  the  doctrine  the  other  way; 
and  accordingly,  upon  the  death  of  one  of  the  part- 
owners,  his  executors  and  administrators  become  ten- 
ants in  common  of  the  ship,  with  the  survivors."*     Of 

*  Abbott  on  Sliipp.  Pt.  1,  c.  1,  §  1,  p.  1,  5th  ed. ;  Jacobsen's  Sea-Laws, 
by  Frick,  c.  3,  p.  36,  37,  ed.  1818. 

-  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  1,  p.  68,  oth  ed. ;  Id.  §  9,  p.  79,  5th 
Am.  ed.  note  (1)  ;  Abbott  on  Shipp.  by  Shee,  Pt.  1,  c.  3,  §  5,  p.  96,  6th 
ed.  1840;   [Macy  v.  DeWolf,  3  Wood.  &  M.  193.] 

*  Coll.  on  P.  B.  5,  c.  4,  p.  793,  2d  ed. ;  Doddington  v.  Hallet,  1  Ves.  Sr. 
497  ;  3  Kent,  151 ;  Nicoll  v.  Mumford,  4  Johns.  Ch.  522  ;  Wats,  on  P.  c.  1, 
p.  54;  Id.  c.  2,  p.  67;  Id.  91;  Ex  parte  Young,  2  Ves.  &  B.  242,  243; 
Jacobsen's  Sea-Laws,  by  Frick,  c.  3,  p.  36,  37,  ed.  1818. 

*  Abbott  on  Shipp.  Pt.  1,  c.  1,  §  1,  p.  1 ;  Id.  c.  3,  §  1 ;  Nicoll  v.  Mumford, 
4  Johns.  Ch.  522 ;  s.  c.  20  Johns.  611 ;  Dunham  v.  Jarvis,  8  Barb.  88,  94.  — 
In  the  5th  London  edition  of  Abbott  on  Shipping,  Pt.  1,  c.  3,  §  1,  the  fol- 
lowing note  (a)  occurs  :  "  This  is  the  most  usual  practice.  If  the  interests 
are  not  severed  and  distinguished  in  this  way,  but  the  entire  ship  is  granted 


652  PARTNERSHIP.  [CHAP.  XVI. 

course,  the  general  rule  of  law,  as  to  the  rights  of  ten- 
ants in  common,  prevails  in  regard  to  ships,  that  each 
part-owner  can  sell  only  his  own  share  thereof;^  where- 
as, in  cases  of  partnership  (although  not  in  cases  of 
joint-tenancy),  any  one  partner  can  sell  the  entirety  of 
the  ship.^ 

to  a  number  of  persons  generally,  it  is  apprehended  they  become  joint-tenants 
at  law,  and  that  the  rule  Jus  accrescendi  inter  mercatores  locum  non  habet, 
which  is  applicable  to  a  ship,  is  to  be  enforced  only  in  a  Court  of  Equity." 
To  which  the  American  Editor  (1829)  has  subjoined  the  following  comment: 
"  This  is  not  a  note  of  the  original  author,  but  of  his  English  editor.  The 
point  stated  in  it  seems  new,  and  is  apparently  contrary  to  what  is  laid  down 
in  Watson  on  Partnership,  where  he  seems  to  consider  the  rule,  as  to  the 
Jus  accrescendi,  not  applicable  either  to  partnerships  generally,  or  to  owner- 
ship of  vessels  in  shares,  but  as  an  exception  created  by  the  law  merchant, 
and  necessary  for  the  advancement  of  commerce.  In  chapter  1,  p.  54,  he 
says :  '  If  several  either  build  or  purchase  a  shiji,  they  are  part-owners  or 
partners  as  to  this  concern.'  And  again,  in  chapter  2,  p.  67  :  '  There  is  no 
difference  in  the  interest  of  partners  in  goods  to  be  disposed  of  in  the  course 
of  trade,  and  in  a  chattel,  the  keeping  and  employment  of  which  constitute 
the  object  of  the  partnership.  The  part-owners  of  a  shij)  are  tenants  in 
common  with  each  other  of  their  respective  interests.'  He  afterwards  says, 
in  chapter  2,  p.  91,  that  a  part-owner  of  a  ship  can  only  dispose  of  his  own 
share,  and  not  of  that  of  his  co-owners,  even  if  it  be  partnership  property. 
The  case  of  The  King  v.  Collector  of  the  Customs,  2  M.  &  S.  223,  proceeds 
on  the  principle,  that  the  same  rule,  as  to  non-survivorship,  exists  as  to 
property  in  ships,  as  in  common  jjartnership  property.  Xo  allusion  was 
there  made  as  to  the  necessity  of  a  suit  in  equity  by  the  representative  of 
the  deceased  in  any  case ;  and  the  particular  shai'es  of  each  party  in  the 
ship  ai'e  not  stated  or  referred  to  as  material  facts.  In  America  it  has  not 
been  unusual  to  omit  any  specification  of  the  shares  of  each  part-owner, 
both  in  the  register  and  bill  of  sale ;  and  it  has  never  been  yet  decided,  that 
such  an  omission  made  the  parties  joint-tenants  with  benefit  of  survivorship. 
Mr.  Collyer  entertains  the  like  opinion  with  the  American  editor.  Coll.  on 
P.  B.  5,  c.  4,  p.  793,  2d  ed.  It  may  be  added,  that  this  is  now  the  general 
understanding  of  the  doctrine  in  America.  3  Kent,  40;  Id.  151.  In  Ohl 
V.  Eagle  Ins.  Co.,  4  Mason,  172,  390,  the  Court  thought  that  if  no  other 
distinct  shares  appeared  in  the  register  or  bill  of  sale,  the  parties  must,  in 
the  absence  of  all  other  proof,  be  presumed  to  hold  in  equal  moieties.  See 
also.  In  the  matter  of  Blanshard,  2  B.  &  C.  244;  Ex  paiie  Young,  2  Yes. 
&  B.  242;  Nicoll  v.  Mumford,  4  Johns.  Ch.  522;  s.  c.  20  Johns.  611,  and 
615,  note." 

'  Hopkins  v.  Forsyth,  14  Penn.  St.  34.     Case  of  a  steamboat. 

'^  Abbott  on  Shipp.  Pt.  1,  c.  1,  §  2,  p.  3,  5th  ed. ;  ante,  §  89-91 ;  2  Bell, 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       653 

§  418.  It  is.  obvious,  that  a  personal  chattel,  vested 
in  several  distinct  proprietors,  cannot  be  advantageously 
possessed  or  enjoyed,  unless  by  common  consent  and 
agreement  among  them  all.^  For,  as  each  has  an  equal 
title  to  the  possession  and  use  thereof,  no  one  can  oust 
the  others  of  that  possession  or  use ;  and,  when  once  a 
struggle  or  controversy  exists  among  them  for  the  ac- 
complishment of  purposes  adverse  to  each  other,  the 
mischief  must  be  immediate  to  the  interest  of  some,  and 
perhaps  ultimately  ruinous  to  that  of  all.  This  remark 
applies  with  peculiar  force  to  ships,  which  (as  has  been 
quaintly,  but  truly  said)  were  "  originally  invented  for 
use  and  profit,  not  for  pleasure  or  delight ;  to  plough 
the  sea,  not  to  lie  by  the  walls."  ^     Hence,  while  the 

Comm.  B.  7,  c.  4,  p.  655,  5th  ed. ;  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  811 ,  2d 
ed. ;  Jacobsen's  Sea-Laws,  by  Frick,  c.  3,  p.  36,  37,  ed.  1818.  — Mr.  Chan- 
cellor Kent  (3  Kent,  54),  has  well  stated  the  distinction  between  part- 
ownership  in  ships  and  partnership  in  ships.  He  says  :  "  The  cases  recognize 
the  clear  and  settled  distinction  between  part-owners  and  partners.  Part- 
ownership  is  but  a  tenancy  in  common,  and  a  person  who  has  only  a  part 
interest  in  a  ship,  is  generally  a  jiart-owner,  and  not  a  joint-tenant  or 
partner.  As  part-owner  he  has  only  a  disposing  power  over  his  own 
interest  in  the  ship,  and  he  can  convey  no  greater  title.  But  there  may  be 
a  partnership,  as  well  as  a  co-tenancy,  in  a  vessel;  and,  in  that  case,  one 
part-owner,  in  the  character  of  partner,  may  sell  the  whole  vessel ;  and  he 
has  such  an  implied  authority  over  the  whole  partnership  effects,  as  we  have 
already  seen.  The  vendee,  in  a  case  free  from  fraud,  will  have  an  inde- 
feasible title  to  the  whole  ship.  When  a  person  is  to  be  considered  as  a 
part-owner,  or  as  a  partner,  in  a  ship,  depends  upon  circumstances.  The 
former  is  the  general  relation  between  ship-owners,  and  the  latter  the 
exception,  and  requires  to  be  especially  shown.  But  as  the  law  presumes, 
that  the  common  possessors  of  a  valuable  chattel  will  and  desire  whatever 
is  necessary  to  the  jireservation  and  profitable  employment  of  the  common 
property,  part-owners,  on  the  spot,  have  an  implied  authority  from  the 
absent  part-owners,  to  order  for  the  common  concern  whatever  is  necessary 
for  the  preservation  and  proper  employment  of  the  ship.  They  are  analo- 
gous to  partners,  and  liable  as  such  for  necessary  repairs  and  stores  ordered 
by  one  of  themselves ;  and  this  is  the  princii^le  and  limit  of  the  liability  of 
part-owners." 

'  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  2,  p.  68,  5th  ed. 

2  Molloy,  B.  2,  c.  1,  §  2;  Godolph.  Adm.  Jur.  Intr.  p.  13 ;  The  Apollo, 
1  Hagg.  Adm.  306,  312;  3  Kent,  151,  152. 


654  PARTNERSHIP.  [CHAP.  XYI. 

possession,  use,  and  employment  of  other  personal  chat- 
tels have  been  generally  left  to  the  free  and  unrestricted 
discretion  of  the  proprietors  thereof,  and  their  own  sense 
of  the  necessity  of  mutual  co-operation  and  forbearance 
for  their  mutual  benefit,  it  has  been  the  policy  of  mari- 
time nations,  from  a  very  early  period,  to  provide  reg- 
ulations respecting  the  joint  ownership  of  ships  in  order 
to  prevent  the  obstinacy  of  one  or  more  proprietors  from 
interfering  with  the  just  rights  and  interests  of  the  rest, 
as  well  as  to  promote  the  general  advancement  of  com- 
merce and  navigation,  and  to  add  to  the  resources  of 
national  wealth  and  national  power.     Hence  in  cases  of 
ships,  almost  all  maritime  nations,  in  modern  times,  have 
provided  regulations,  by  which  some  of  tlie  part-owners 
of  the  ship  shall  be  at  liberty,  notwithstanding  the  dis- 
sent of  others,  to  employ  it  in  trade  and  navigation,  for 
their  own  profit,  and  at  their  own  expense  and  risk.     Of 
course,  if  all  are  agreed,  and  all  consent,  the  employment 
and  the  expenses  and  the  profits  are  to  be  on  the  joint 
account  and  for  the  joint  benefit. .    In  such  cases,  it  is 
not  unusual  for  all  the  owners,  by  common  consent,  or 
a   fixed    agreement   among  themselves,   to   appoint    an 
agent  (who  may  be  either  a  part-owner,  or  a  stranger) 
to   superintend  the  management  and  concerns   of  the 
ship,  who  (as  has  been  justly  said),  by  a  very  intelligible 
figure  of  speech,  is  called  the  ship's  husband,  and  who 
directs  the  repairs,  appoints  the  ofi5.cers  and  mariners, 
and  generally  conducts  all  the  aff"airs  and  arrangements 
for  the  due  employment  of  the  ship  in  commerce  and 
navigation.^ 

'  Abbott  on  Shipp.  Pt.  1,  c.  8,  §  2,  p.  68,  5tli  ed. ;  Card  v.  Hope,  2  B. 
&  C.  061 ;  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  810,  2d  ed. ;  3  Kent,  151,  156 ;  1 
Bell,  Comm.  B.  3,  Pt.  1,  c.  4,  §  2,  p.  503,  504,  5th  ed. ;  Jacobsen's  Sea- 
Laws,  by  Frick,  c.  3,  p.  38,  39,  ed.  1818.  —  Mr.  Collyer  on  this  subject 
says:  "  In  order  to  administer  the  afiliirs  of  the  ship  with  unanimity,  it  is 
usual  to  appoint  a  ship's  husband.     He  may  be  either  a  part-owner  or  a 


CHAP.  XYI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       655 

§  419.  It  follows,  of  course,  that  wherever  the  ship 
is  reasonably  repaired,  or  necessary  expenses  are  in- 
curred, by  the  consent  of  all  the  owners,  for  the  common 
benefit,  each  part-owner  is  bound  to  contribute  his  share 
thereof;  and,  if  the  whole  has  been  paid  by  one  part- 
owner,  he  has  a  right  at  law  to  recover  their  several 
contributory  shares  from  each  of  the  others.^  Now,  in 
this  respect,  the  case  differs  from  one  of  a  mere  partner- 
ship in  a  ship ;  for  in  the  latter  case  (as  we  have  seen),- 
no  partner  has  any  right  of  contribution  against  the 
others  for  any  sums  paid,  or  expenses  incurred  on  the 
joint  account,  until  all  the  partnership  concerns  are  ad- 
justed ;  and,  then,  only  in  equity.^  There  is,  on  the 
other  hand,  in  some  respects,  a  coincidence  between  the 
cases  ;  for  in  each  of  them  all  the  parties  are  at  the 
common  law  jointly  liable,  in  soUdo,  for  the  whole  debt 

stranger,  and  may  be  appointed  by  writing  or  parol.  His  duties  are  to  see 
to  the  proper  outfit  of  the  vessel ;  to  have  a  proper  master,  mate,  and  crew ; 
to  see  to  the  furnishing  of  provisions  and  stores ;  to  see  to  the  regularity  of 
all  the  clearances  from  the  custom-house  ;  to  settle  the  contracts  ;  to  enter  into 
pi'oper  charter-parties,  or  engage  the  vessel  for  general  freight ;  to  settle  for 
freight  and  adjust  averages  with  the  merchant;  to  preserve  proper  certificates 
and  documents  in  case  of  future  disputes  with  insurers  or  freighters,  and  to 
keejj  regular  books  of  the  shiji.  But  without  special  powers  he  cannot  borrow 
money  generally  for  the  use  of  the  ship,  though  he  may  settle  accounts  and 
grant  bills  for  them,  which  will  form  debts  against  the  concern.  Nor  can  he, 
without  special  authority,  insure  the  ship."  See  also  1  Bell,  Comm.  B.  3, 
Pt.  1,  c,  4,  §  2,  p.  603,  504,  5th  ed. ;  Sims  v.  Brittain,  4  B.  »&  Ad.  375 ;  3 
Kent,  157  ;  {post,  §  443,  446  ;  1  Pars.  Mar.  Law,  97  ;  Preston  v.  Tamplin,  2  11. 
&  N.  363,  s.  c.  affirmed  on  appeal,  Id.  684.  On  the  appointment  and  com- 
pensation of  ship's  husband,  see  Benson  v.  Heathorn,  1  You.  &  C,  C.  C. 
326 ;  Smith  v.  Lay,  3  Kay  &  J.  105 ;  Ritchie  v.  Couper,  28  Beav.  344 ;  IMil- 
ler  V.  Mackay,  31  Beav.  77  ;  Same  v.  Same,  34  Beav.  295 ;  Brenan  v.  Pres- 
ton, 10  Hare,  331,  s.  c.  2  De  G.  M.  &  G.  818,  Semble,  that  if  one  of  the 
part-owners  acts  as  ship's  husband,  he  is  not  entitled,  in  the  absence  of  ex- 
press or  implied  agreement,  to  any  commission.  Miller  v.  Mackay,  31 
Beav.  77.} 

»  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  13,  15,  p.  82,  84,  5th  ed. ;  {post, 
§440-444;  See  Chappell  v.  Bray,  30  Law  J.  N.  s.  Exch.  24;  Starbuck 
V.  Shaw,  10  Gray,  492.} 

2  Ante,  §  219,  220,  260.  '  Ante,  §  219-221,  260. 


656  PARTNERSHIP.  [cHAP.  XVI. 

to  third  persons,  who  have  credited  them  for  the  repairs, 
or  other  expenditures,  for  the  common  benefit.^ 

§  420.  The  French  law  agrees  with  ours,  so  far  as  it 
makes  all  the  part-owners  liable  in  the  like  manner  as 
partners,  to  contribute  their  proportion  of  all  the  ne- 
cessary debts  and  reasonable  expenses,  incurred  for  the 
common  benefit.  But,  if  one  part-owner  only  has  con- 
tracted with  the  creditor,  the  latter  can  have  no  re- 
course for  the  debt,  except  against  the  particular  part- 
ner with  whom  he  has  contracted.  However,  upon 
payment  of  it,  that  party  has  his  remedy  over  against 
the  others  for  their  contributory  shares.^  On  the  con- 
trary, in  cases  of  mere  commercial  partnerships,  the 
French  law  makes  each  partner  liable,  in  solldo,  to  the 
creditor  for  the  whole  debt.^  If,  indeed,  all  the  part- 
owners  have  jointly  contracted  with  the  creditor,  each 
will  be  liable  to  him  in  severalty  for  his  own  share  of 
the  joint  debt ;  ^  and  for  that  only,  unless  they  have  all 
agreed  to  be  bound  in  solldo.^  The  law  of  Holland  is, 
in  this  respect,  coincident  with  the  French  law,  making 
the  several  part-owners  in  all  cases  chargeable  for  the 
repairs  and  other  expenses  upon  the  ship,  only  accord- 
ing to  their  respective  interest  in  the  ship.*^  In  all 
cases  of  this  sort,  however,  we  are  to  understand,  that 
the  expenses  are  incurred  with  the  consent  of  all,  or 
at  least  of  a  majority  of  the  part-owners ;  for  neither  a 
single  part-owner,  nor  a  minority  of  the  part-owners, 
have  any  right  to  make  any  such  repairs,  or  incur  any 
such  expenses,  against  the  will  of  the  majority ;    the 

1  3  Kent,  156,  {post,  §455.} 

"  Poth.  de  Soc.  n.  187 ;  Id.  n.  185  ;  Id.  n.  86  ;  Abbott  on  Sbipp.  Pt.  1, 
c.  3,  §  15,  5th  ed. 

^  Potli.  de  Soc.  n.  96 ;  ante,  §  102,  105,  109. 

*  Poth.  de  Soc.  n.  186,  187.  »  Poth.  de  Soc.  n.  186,  187. 

*  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  84,  5th  ed.,  who  cites  Vmn.  in  Peck- 
iuin,  p.  155. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       657 

latter  having  (as  we  shall   presently  see),  a  complete 
authority  to  regulate  the  whole  concerns  of  the  ship.^ 

§  421.  Where,  however,  no  common  consent  or 
agreement  exists  among  the  owners,  as  to  the  posses- 
sion, use,  enjoyment,  or  preservation  of  the  ship,  it 
becomes  necessary  to  ascertain,  what,  at  the  common 
law,  are  the  ordinary  rights,  duties,  obligations,  and 
liabilities  of  the  part-owners,  either  inter  sese,  or  in 
respect  to  third  persons.  And  in  the  first  place,  as 
between  the  part-owners  themselves.  The  inquiry, 
which  is  here  first  naturally  presented,  is.  What  are 
the  rights,  and  duties,  and  liabilities  of  the  part-owners 
of  a  ship  to  each  other  in  respect  to  repairs  and  other 
expenditures,  made  by  any  of  them  for  the  proper  or 
necessary  preservation  thereof?  The  general  under- 
standing at  the  common  law  is,  that,  if  there  be  no 
express  or  implied  agreement  between  the  owners, 
either  by  their  conduct,  or  by  their  acts,  sanctioning 
any  such  repairs  or  expenditures,  although  any  one  or 
more  of  the  owners  have  a  right  to  incur  them  ;  yet 
they  have  no  remedy  over  against  the  others  for  con- 
tribution thereto  ;  but  they  must  themselves,  whether 
they  constitute  a  majority  or  minority  of  the  owners, 
bear  the  whole  charge.^ 

§  422.  The  reason,  usually  given  for  this  doctrine,  is, 
that  no  one  part-owner  has  a  right  to  compel  another, 
against  his  will,  to  incur  any  burden  or  expense,  even 
although  necessary  for  the  preservation  of  the  common 
property  ;  but  it  should  be  left  to  his  own  free  choice. 
For,  otherwise,  in  case  one   part-owner  were   poor,  it 

'  Post,  §  426,  427. 

-  Abbott  on  Shipp.  Pt.  l,c.  3,  §  2,  p.  69-71,  oth  ed. ;  3  Kent,  153,  154 
[Macy  V.  De  Wolf,  3  W.  &  M.  193]  ;  {Brodie  v.  Howard,  17  C.  B.  109 
Curling  V.  Robertson,  7  Man.  &  G.  336 ;  Hardy  v.  Sproule,  31  Me.  71 
Stednian  v.  Feidler,  20  N.  Y.  437.  See  Revens  v.  Lewis,  2  Paine,  C.  C.  202 
Elder  v.  Larrabee,  45  Me.  590 ;  post,  §  455.  { 

42 


658  PARTNERSHIP.  [cHAP.  XVI. 

might  operate  as  a  grievous  evil,  and  compel  him  to 
sell  his  share  by  a  sort  of  forced  sale.^  Perhaps  the 
doctrine  may  have  been  founded  upon  the  analogy  to 
cases  of  joint  ownership  of  lands  and  woods,  under  the 
old  common  law,  where  no  one  owner  was  bound  to 
contribute  to  the  repairs  of  the  fences  and  other  melio- 
rations made  upon  the  common  property,  although  for 
the  common  benefit,  unless  done  with  the  common  con- 
sent and  agreement  of  all  the  owners,  or  justified  by  a 
special  custom.^  But  there  was  an  exception  in  cases 
of  houses  and  mills,  which  being  of  a  higher  legal 
consideration,  for  the  habitation  of  man,  and  for  the 
general  good  of  the  realm,  the  common  law  required 
all  the  owners  to  contribute  towards  the  necessary 
repairs  thereof.^  There  seems  to  be  great  good  sense 
in  this  distinction  ;  and  certainly  it  is  not  less  applicable 
to  the  case  of  ships,  wiiich  are  for  the  use  and  habita- 
tion of  man,  and  the  general  good  of  the  country,  than 
it  is  to  houses  and  mills.  The  Roman  law  positively 
affirms  the  like  doctrine  of  contribution,  in  respect  to 
reparations  of  houses  held  in   common.'*    And,  hence, 

1  Ibid. 

2  Lewis  Bowie's  Case,  11  Co.  79,  b.  82,  b.  ;  Co.  LItt.  200,  b. 

3  Fitzh.  Nat.  Brev.  127;  Id.  162;  Co.  Litt.  200,  b.  —  Lord  Holt  Is  re- 
ported in  Tenant  v.  Goldwin,  2  Ld.  Raym.  1089,  1093,  to  have  said:  "  That 
the  writ  Is  grounded  upon  the  custom  of  the  place,  and  not  upon  the 
common  law ;  and  there  Is  such  a  custom  In  many  places,  and  there  is  no 
other  authority  for  It."  It  Is  not  a  little  remarkable,  that  neither  Lord 
Coke,  nor  FItzherbert,  in  affirming  the  doctrine,  makes  any  allusion  what- 
ever to  any  such  custom ;  but  they  put  It  as  a  doctrine  of  the  common 
law;  and  put  it  upon  the  express  ground,  "that  owners  are  In  that  case 
(as  Lord  Coke  says)  bound,  p7'o  bono  publico,  to  maintain  houses  and 
mills,  which  are  for  the  habitation  and  use  of  men."  Mr.  Chief  Justice 
Parsons,  in  delivering  the  opinion  of  the  Court  In  Carver  «.  Miller,  4  Mass. 
5')9,  561,  states  it  to  be  a  clear  doctrine  of  the  common  law.  The  like 
doctrine  was  affirmed  by  Mr.  Justice  Jackson,  In  delivering  the  opinion 
of  the  Court  in  Doane  v.  Badger,  12  Mass.  65,  70.  But  see  Converse  v. 
Ferre,  11  Mass.  325,  326. 

*  D.  17,  2,  52,  10;  Poth.  Band.  17,  2,  n.  53  ;  Domat,  3,  1,  5,  art.  6-8. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       659 

some  maritime  writers  in  modern  times  have,  as  we 
shall  presently  see,  applied  it  by  analogy  to  the  case 
of  part-ownership  of  ships. ^ 

§  423.  Whether,  indeed,  this  supposed  doctrine  of 
the  common  law,  as  to  ships,  is  founded  upon  satisfac- 
tory principles  or  not,  may  perhaps  be  thought  to  de- 
serve more  grave  consideration  than  it  seems  hitherto 
to  have  received.  If  we  look  to  the  general  policy  of 
shipping  and  navigation,  in  all  commercial  nations,  and 
the  objects  for  which  joint  ownership  in  ships  is  allowed 
and  encouraged,  that  is,  to  create  a  large  and  flourish- 
ing marine  trade  by  the  union  of  small  capitalists,  and 
thereby  augmenting  private  wealth  as  well  as  national 
interests,  w^e  shall  see  at  once  why  the  ordinary  rules 
with  regard  to  joint  ownership  in  other  personal  prop- 
erty have  been  made  to  yield  in  the  case  of  ships,  and 
have  either  been  wholly  set  aside,  or  controlled  by 
principles  of  a  more  equitable  and  liberal  character. 
Now  it  is  scarcely  practicable  to  state  a  single  reason, 
why  the  ordinary  rules  should  have  been  relaxed  in 
other  cases,  which  is  not  strictly  applicable  to  the  case 
of  repairs,  necessary  and  proper  for  the  due  preserva- 
tion of  the  ship.  In  a  just  and  reasonable  sense,  all 
such  repairs  are  for  the  common  benefit  of  all  the 
owners,  in  order  to  prevent  the  utter  ruin  and  destruc- 
tion of  the  common  property  ;  and  they  also  generally 
enhance  the  value,  as  well  as  preserve  the  sound  state 
of  the  property. 

§  424.  It  is  clear  (as  has  been  already  suggested)," 
that  many  of  the  maritime  Jurists,  as  well  as  some  of 
the  positive  codes  of  modern  maritime  nations,  assert 
the  doctrine  that  all  the  owners  of  a  ship  are  bound  to 
contribute  according  to   their   shares,  for  all  expenses 

^  Abbott  on  Shipp.  Pt.  1,  c.  o,  §  2,  p.  G8,  69,  5th  ed.     post  §  424,  note. 
'  Ante,  §  422. 


660  PARTNERSHIP.  [CHAP.  XVI. 

inciuTecl  in  the  necessary  reparation  thereof  by  any 
one  of  the  owners  ;  and  this  duty  may  be  enforced  by 
suit  in  case  of  their  neglect  or  refusal.  Straccha  af- 
firms this  in  positive  terms,  and  in  this  he  is  followed 
by  Roccus  and  other  jurists.^  It  has  also  the  sanc- 
tion of  the  highest  tribunals  of  Genoa,  one  of  the  most 
enlightened  commercial  states  in  the  early  progress  of 
commercial  enterprise  in  the  Mediterranean.^  Nay,  in 
some  States  and  by  some  jurists  the  doctrine  has  been 
pressed  further ;  so  that  if  the  negligent  owner  did 
not,  after  due  notice,  within  a  limited  time,  pay  his 
proportion  of  the  repairs  with  interest,  he  forfeited  his 
title  to  his  share  in  the  ship  ;  a  severe  and  harsh  regu- 
lation, which  is  scarcely  consonant  to  the  liberal  spirit 
of  maritime  jurisprudence.^ 

1  Straccha,  de  Nav,  Pars  2,  n.  8,  p.  420,  ed.  1669  ;  Roccus,  de  Nav.  n.  22  ; 
2  Emerig.  Traite  des  Contrats  k  la  Grosse,  c.  4,  §  4,  p.  427-429,  ed.  1783. 

"  Decis.  Rotse  Genuse,  Decis.  170,  n.  3 ;  Straccha,  de  Merc.  285,  ed. 
1669. 

^  Ibid. ;  Straccha,  de  Nav.  Pars  2,  n.  8,  p.  420,  ed.  1669  ;  Roccus,  de  Nav. 
n.  22  ;  2  Emerig.  Traite  des  Coutrats  a  la  Grosse,  c.  4,  §  4,  p.  427,  ed.  1783. 
—  Straccha,  in  the  passage  referred  to,  says:  "Naves  plerunque  refectione 
egere,  nemo  est,  qui  nesciat ;  et  innuit  Jurisc.  (in  1.  fin.  ff.  de  exer.)  Nee 
etiam  longo  tempore  durant,  licet  novis  tabulis  reficiantur ;  ut  scribit  Ange. 
(in  1.  foramen,  ti".  de  ser.  urb.  praj.)  Unde  proxime  accedit  ad  propositas 
quajstiones  ilia  dubitatio.  Duos  fingito  exercitores,  seu  ejusdeni  navis  do- 
minos  ;  alteram  cessantem,  et  negligentem  reficere ;  alterum  vero  navim,  quae 
vitium  fecerat,  communi  nomine  refecisse.  Puto,  si  intra  quatuor  menses  so- 
cius  cessans  numos  pro  portione  erogatos  cum  centesimis  usuris,  non  restituerit 
consocio,  qui  refecerit,  ex  oratione  Divi  Marci  reficienti  jus  dominil  pro  soli- 
do  vendicare,  vel  obtinere  decretum  esse.  (L.  si.  fratres.  §  idem  respondit. 
Vers,  idem  respondit  socius,  qui  cessantis.  fF.  pro  socio.  1.  si.  ut  proponis.  C. 
de  sedifi.  privat.)  Qua?  jura  singulariter  notanda  inquit  Areti.  (Inst,  de 
act.  §  sequens.  n.  13.)  socium  cessantem  reficere  rem  communem.  Si  enim 
alter  reficit,  et  cessans  intra  quatuor  menses  non  restituit  partem  impensarum 
cum  usuris,  perdit  dominium  sua^  partis,  et  reficienti  acquiritur.  Probat  et 
conimendat  ibidem  Jason,  (sub  num.  48.)  et  idem  Jason,  (in  repet.  1.  quo- 
minus,  ff.  de  Hum.  n,  112,  et  in  1.  creditor,  n.  7-  ff.  si  cert,  pcta.)  Hoc  idem 
placuit  Veron.  (in  tract,  de  servi.  urb.  pra^di.  in  tit.  de  refect,  rub.  59.  vers, 
quarto  qua?ritur),  subdens,  id  valde  notandum  esse.  Et  vide  Mars.  (sing. 
359.  niille)."     The  passage   in   the  Digest  (17,  2,  52,  10),  is    as   follows: 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PAUT-OWNERS.       661 

§  425.  Above  all,  the  Consolato  del  Mare  has  ex- 
plicitly sanctioned  the  doctrine,  and  declared,  that 
when  the  partowner-master  (Patron,  Senyor  de  la  Nau) 
finds  that  the  ship  needs  repairs  in  the  place  of  resi- 
dence of  the  owners,  if  all  of  them,  upon  notice, 
consent  to  have  them  made,  he  may  repair  the  ship  at 
the  expense  of  all,  and  hire  money  on  the  share  of  any 
delinquent  part-owner  who  fails  to  discharge  his  por- 
tion. If  the  owners  deem  the  repairs  improper,  be- 
cause the  ship  is  not  worth  repairing,  then  either  the 
partowner-master  or  the  other  owners  may  compel  a 
public  sale  of  the  ship.  But  if  such  master  repairs 
the  ship  without  the  consent  of  the  other  part-owners, 
none  of  them  will  be  liable  to  him  for  such  repairs  ; 
but  he  must  reimburse  himself,  as  he  may,  out  of  the 
earnings  of  the  ship.^ 

§  426.  Pothier  has  affirmed  the  general  doctrine  of 
the  liability  of  every  part-owner  to  contribution  for  all 
repairs,  reasonably  [utllement)  made  upon  the  common 
property,  at  least  if  he  does  not  abandon  his  part  of 
the  property  ;    and  he  applies  it  to  ships.^     He  takes 

"  Idemrespondit:  Socius,  qui  cessantis  cessantlumve  portiones  insuhe  resti- 
tuerit,  quamvis  aut  sortein  cuin  certis  usuris  intra  quatuor  menses,  postquam 
opus  refectuiu  erit,  recipere  potest,  exigendoque  privilegio  utetur,  aut  deinceps 
propriam  rem  babebit,  potest  tamen  pro  socio  agere  ad  hoc,  ut  consequatur, 
quod  sua  intererat.  Finge  enim,  nialle  eum  raagis  suum  consequi,  quam  do- 
minium insulae  :  Oratio  enimD.  Marci  idcirco  quatuor  mensibus  finit  certas 
usuras,  quia  post  quatuor  dominium  dedit." 

1  Consolato  del  Mare,  c.  200  [245]  ;  Id.  c.  194  [239] ;  Id.  c.  197,  [242]. 
I  quote  from  Pardessus's  edition,  Tom.  2,  p.  237-240 ;  Id.  p.  223-227 ;  Id. 
p. 231-233. 

«  Poth.  de  Soc.  App.  n.  187 ;  Id.  n.  192  ;  Id.  n.  86.  His  language  is  (n.  187)  : 
"  A  regard  des  dettes  contractees  pour  les  affaires  de  la  communaute  durant 
la  communaute,  tel  que  seroit  un  march^  fait  avec  des  ouvriers  pour  des  re- 
parations a  faire  a  quelque  heritage  commun,  il  n'y  a  que  celui  des  quasi-asso- 
cies,  qui  les  a  contractees,  qui  en  soit  tenu  envers  les  cr^anciers,  sauf  a  lui  a 
s'en  faire  indemniser  par  ses  quasi-associes,  pour  la  part  que  chacun  d'eux  a 
dans  la  connnunaute,  lorsqu'elles  ont  ili  utilement  contractees.     Lorsque  ces 


662  PARTNERSHIP.  [cHAP.  XYI. 

the  appropriate  distinction  in  such  cases,  that  the  other 
part-owners  are  not  liable  to  the  mechanics  who  have 
made  the  repairs  ;  but  only  to  the  part-owner  who  has 
procured  them  to  be  made.^  And  he  founds  himself 
upon  the  doctrine  of  the  Pandects.  Si  cedes  communes 
sint,  aid  paries  commimis,  et  ewn  rejicere,  vel  demolire, 
vel  in  eimi  immitere  quid  ojms  sit,  communi  dividundo 
judicio  eint  agendum,  aut  inierdicto  uti  j^ossidetis  expe- 
rimur.^  The  same  doctrine  is  maintained  in  the  Insti- 
tutes, as  arising,  quasi  ex  contractu,  in  all  cases  where 
one  proprietor  incurs  expenses  upon  the  common  prop- 
erty, which  are  for  the  benefit  of  all.  Item,  si  inter 
aliquos  communis  res  sit  sine  societate,  veluti  quod j^ariter 
eis  legata  donatave  esset,  et  alter  eorum  altein  ideo  tene- 
atur  communi  dividundo  judicio,  cpiod  solus  fructus  ex  ea 
re perceperit,  aut  quod  socius  ejus  solus  in  earn  rein  neces- 
sarias  imp)ensas  fecerit ;  non  intelligitur  ex  contractu pro- 
prie  ohligatus  esse  ;  quippe  nihil  inter  se  contraxerunt ; 

quasi-associes  les  ont  contractees  ensemble,  s'il  n'yapas  une' clause  de  soli- 
darite  exprimee,  chacun  d'eux  n'en  est  teiiu  envers  le  creancler  que  pour  sa 
portion  virile  ;  de  nieme  que  nous  Pavons  decide,  supra,  a  Tegard  des  socie- 
t^s  particulieres,  qui  ne  sontpas  societes  de  commerce  ;  sauf  a  se  faire  raison 
entre  eux  de  ce,  que  chacun  d'eux  en  doit  porter  de  plus  ou  de  moins  que 
cette  portion  virile,  eu  egard  a  la  part  qu'il  a  dans  la  communaute."  Again 
he  adds  (n.  192) :  "  C'est  encore  une  des  obligations,  que  forme  la  commu- 
naute, que  chacun  des  quasi-assocles  est  oblige  de  contribuer  pour  la  part,  qu'il 
a  dans  la  communaute,  aux  reparations  qui  sont  a  faire  aux  choses  communes,  a 
moins  qu'il  ne  voulut  abandonner  la  j^art,  qu'il  a  dans  la  chose."  Emerigon 
thinks  that  the  jurists  who  maintain  the  doctrine,  that  the  share  of  a  de- 
linquent owner  is  forfeited  by  omitting,  after  notice,  within  the  limited 
time,  to  pay  his  contributory  portion,  is  founded  upon  a  mistaken  ap- 
plication of  the  Law  of  the  Emperor  Adrian  (Cod.  8,  10,  4),  respecting  re- 
pairs on  houses,  which  he  deems  to  be  a  mere  local  regulation  for  the  im- 
provement of  Rome.  2  Emerig.  Traite  des  Contrats  a  la  Grosse,  c.  4,  §  4,  p. 
427,  ed.  1783.  But  Emerigon  insists,  equally  with  Pothier,  that  the  delin- 
quent owner  is  liable  to  contribution  ;  and  that,  upon  his  refusal,  the  other 
owners  may  borrow  the  money  on  bottomry  on  his  share.  2  Emei'ig.  Traite 
des  Contrats  a  la  Grosse,  c.  4,  §  4,  p.  429,  ed.  1783. 

'  Ibid.  ;  ante,  §  420. 

2  D.  10,  3,  12 ;  Poth.  Pand.  14,  3,  n.  67 ;  Poth.  de  Soc.  n.  86,  192. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       663 

sed^  quia  ex  maleficio  non  tenetw\  quasi  ex  contractu 
teneri  vicletur} 

§  427.  In  the  next  place,  as  to  the  employment  and 
equipment  of  the  ship  for  any  voyage    or   adventure. 

1  Inst.  3,  28,  3.  See  also  D.  17,  2,  52,  10.  It  should  be  recollected 
that,  in  the  Roman  law,  no  such  distinction  generally  prevailed  between  real 
estate  and  personal  estate,  as  is  recognized  in  the  common  law.  Both 
might  descend,  and  be  devised  in  the  same  way,  and  both  were  generally 
affected  by  the  same  incidents.  Vinnius,  in  commenting  on  the  text,  says  : 
"  Tertia  species,  qu£e  quasi  ex  contractu  obligationem  producit,  est  com- 
munio  rerum  inter  aliquos  citra  societatem  suscepta.  Rerum  communio  sic 
inter  aliquos  constituta,  sive  hereditatis  inter  coheredes,  sive  rerum  singu- 
larum  inter  eos,  quibus  eadem  res  legata  aut  donata  est,  quive  simul  eandem 
rem  emerunt  sine  alFectione  societatis,  duarum  rerum  obligationem  parit ; 
nam  et  consortem  ad  rerum  divisionem  obligat,  et  in  communione  manenti 
prEestationibus  quibusdam,  ad  eam  communionem  pertinentibus,  implicat 
(1.  item,  Labeo.  22,  §  4,  flim.  ere.  1.  4,  §  3,  comm.  divid.).  Prima  et  prae- 
cipua  hie  obligatio  est,  quod  consors,  si  sponte  communionem  omittere  nolit, 
conijiellatur  ad  divisionem  judicio  divisorio  ;  in  quo  hoc  maxime  agi  constat, 
ut  sua  cuique  parte  adjudicata,  a  communione  quam  nee  suscipere,  nee 
retinere  quisquam  cogitur  (1.  26,  §  4,  de  cond.  ind.  1.  ultim.  C.  comm.  div. 
discedatur.  1.  1,  fam.  ere.  1.  1,  comm.  divid.  §  quaedam.  20,  1  inf.  de  act.). 
Divisio  rerum  qualis  sit,  quffi  in  ea  adjudicatio,  quseve  mutua  condenmatio, 
explicatur  (§  4,  et  seqq.  inf.de  offic.  jud.).  Praestationes  personales  indu- 
cuntur  vel  lucri,  vel  damni,  vel  impensarum  nomine.  (1.  3,  comm.  div.) 
Lucri,  ut,  si  quid  ad  unum  e  consortibus  ex  re  communi  pervenit,  id  ceteris 
communicet.  (1.  3,  C.  eod.  d.  §  4,  inf.  de  oflF.  jud.  et  hoc  text.)  Damni, 
ut,  si  quid  damni  in  re  communi  datum  aut  factum  est  culpa  aut  negligentia 
unius,  id  ceteris  proportione  cujusque  sarciat  (1.  16,  §  pen.  1.  heredes.  25, 
§  non  tantum.  16,  et  §  item  culpa.  18,  1.  inter  coheredes.  44,  §  quod  ex  fact. 
5  fam.  ercisc).  Culpa  autem  non  ad  exactissimam  diligentiam  dirigitur; 
quoniam,  qui  rem  cum  alio  communem  habet,  propter  suam  partem  causam 
habet  gerendi ;  et  ideo  non  major  diligentia  ab  eo  exigitur,  quam  qualem 
suis  rebus  adhibere  consuevit  (d.  1.  heredes.  25,  §  non  tantum.  16).  Im- 
pensarum, ut,  si  qu£e  ab  uno  in  res  communes  factae  sunt,  quas  propter 
partem  suam  necesse  habuit  facere,  ei  a  ceteris  pro  rata  refundantur." 
Vinn.  Comm.  ad  Inst.  3,  28,  3,  p.  716,  717,  ed.  1726.  The  doctrine  of 
the  text,  as  stated  by  Pothier  and  upheld  by  the  Roman  law,  is,  probably, 
to  be  received  with  the  qualification,  that  the  repairs  have  been  made  with- 
out any  actual  knowledge  or  dissent  of  the  other  owners ;  for  by  the  French 
law,  as  we  shall  immediately  see,  the  majority  of  the  owners  in  interest 
have  the  entire  control  and  management  of  all  the  concerns  of  the  ship ; 
and,  by  the  Roman  law,  even  in  cases  of  partnership,  one  partner  alone 
might,  by  his  single  prohibition,  prevent  the  others  from  binding  him  by 
any  of  their  acts  or  contracts.     Ante,  §  124. 


664  PARTNERSHIP.  [CHAP.  XVI. 

We  have  already  seen  that,  in  cases  of  partnership  at 
the  common  law,  the  majority  of  the  partners,  in  the 
absence  of  all  contrary  stipulations,  possess  entire 
authority  to  regulate  and  transact  all  the  concerns  of 
the  partnership  ;  and  that  this  majority  is  to  be  de- 
cided by  the  majority  of  persons,  and  not  by  that  of 
interest  in  the  partnership.^  The  French  law  has,  on 
this  point,  adopted  the  rule  of  the  common  law  ;  and 
each,  in  this  respect,  differs  entirely  from  the  Roman 
law,  by  which  (as  we  have  seen)  a  single  partner 
might  prohibit,  as  far  as  he  was  concerned,  any  partic- 
ular act  or  contract  of  the  other  partners,  so  that  it 
should  not  bind  him.^  But,  in  relation  to  the  part- 
owners  of  ships,  a  different  rule  prevails  at  the  com- 
mon law  ;  for  (as  we  have  seen)  no  one  or  more  of 
the  owners,  whether  a  majority  or  a  minority,  can, 
by  incurring  expenses  or  making  repairs  upon  the 
ship,  oblige  the  other  owners  to  contribute  thereto, 
unless  they  have  expressly  or  impliedly  consented  to 
the  same.^ 

§  428.  What,  then,  it  may  be  asked,  is  to  be  done 
in  case  of  any  dissent  by  one  or  more  of  the  part- 
owners,  not  only  as  to  the  repairs,  but  as  to  the  em- 
ployment of  the  ship  upon  any  projected  voyage  or 
adventure  ?  Is  the  ship  to  remain  idle,  and  rot  at  the 
wharf]     Or,  may  the  ship  be  equipped  and  employed, 

1  Ante,  §  123,  124.     See  3  Kent,  153-155. 

2  Ante,  §  124;  3  Kent,  153-155. 

^  Abbott  on  Shipp.  Part  1,  c.  3,  §  2,  p.  70,  71,  5th  ed. ;  ante,  §  123, 
124.  —  The  case  of  Steamboat  Orleans  v.  Phoebus,  11  Pet.  175,  is  directly 
in  point.  The  English  authorities  above  cited  seem  to  leave  the  matter  in 
doubt.  Upon  principle,  there  does  not  seem  any  just  reason  why  the 
minority  should  not  possess  the  same  rights,  as  to  the  employment  of  the 
ship,  as  the  majority,  if  the  latter  refuse  to  employ  her.  And  the  policy 
of  the  general  rule  would  seem  fairly  to  reach  such  a  case,  since  otherwise 
the  ship  must  remain  unemployed,  and  earn  no  freight  for  any  one.  See 
3  Kent,  151,  152,  156. 


CHAP.  XYI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       665 

SO  as  to  earn  freight  and  subserve  the  general  commer- 
cial policy  of  the  country,  as  Avell  as  the  private  inter- 
est of  the  other  owners  ?  The  common  law  has  here 
adopted  and  followed  out  the  doctrines  of  Courts  of 
Admiralty,  founded  upon  the  enlarged  and  equitable 
principles  of  maritime  jurisprudence.  It  authorizes  the 
majority,  in  value  or  interest,  to  employ  the  ship  upon 
any  probable  design ;  and  yet,  at  the  same  time,  it 
takes  care  to  secure  the  interests  of  the  dissentient 
minority  from  being  lost,  in  any  employment  which 
he  or  they  disapprove.^  If  the  majority  choose,  there- 
fore, to  employ  the  ship  upon  any  particular  voyage  or 
adventure,  they  have  a  right  so  to  do,  upon  giving 
security  by  stipulation  to  the  minority,  if  required,  to 
bring  back  and  restore  the  ship  to  them,  or  in  case  of 
her  loss,  to  pay  them  the  value  of  their  shares.^  When 
this  is  done,  the  dissentient  part-owners  bear  no  portion 
of  the  expenses  of  the  outfit ;  and  they  are  not  entitled 
to  sliarc  in  the  profits  of  the  undertaking  ;  but  the 
ship  sails  wholly  at  the  charge  and  risk,  and  for 
the  profit,  of  the  others.^     And  a  complete  jurisdiction 

1  Abbott  on  Shipp,  Pt.  1,  c.  3,  §  2,  p.  70,  71,  oth  ed. ;  Godolph.  Adm. 
Jur.  Intr.  p.  13  ;  The  Apollo,  1  Hagg.  Adm.  306,  312  ;  In  the  matter  of 
Blanshard,  2  B.  &  C.  2U,  248,  249  TMolloy,  de  Jure  Mar.  B.  2,  c.  1,  §  2, 
p.  308,  10th  ed.  1778;  Id.  §  3,  p.  310;  Sir  Leoline  Jenkins's  Works,  by 
Wynne,  vol.  1,  p.  76,  84;  Id.  p.  792;  Jacobsen's  Sea-Laws,  by  Fi-ick, 
0.  3,  p.  43-45,  ed.  1818. 

?  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  3,  p.  70,  5th  ed. ;  3  Kent,  151,  152; 
Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  806-808,  2d  ed. ;  Molloy,  B.  2,  c.  1,  §  3; 
2  Bro.  Civil  and  Adm.  Law,  131 ;  The  Apollo,  1  Hagg.  Adm.  306 ;  Ex 
paiie  Blanshard,  2  B.  «&  C.  244,  249 ;  AVillings  r.  Blight,  2  Pet.  Adm.  288 ; 
Sea-Laws,  441,  ed.  1705;  Cai'd  r.  Hope,  2  B.  »fe  C.  661,  674,  675;  Steam- 
boat Orleans  r.  Phoebus,  11  Pet.  175;  {Revens  v.  Lewis,  2  Paine,  C.  C. 
202.  The  ^Marengo,  1  Sprague,  506.  And  see  Southworth  i'.  Smith,  27 
Conn.  355. } 

2  Ibid.  ;  Sir  Leoline  Jenkins's  Works,  by  Wynne,  vol.  1,  p.  76;  Id.  p. 
792;  Jacobsen's  Sea-Laws,  c.  3,  p.  43-45,  ed.  1818;  {Davis  v.  Johnston, 
4  Sim.  539 ;  The  Marengo,  (U.  S.  Dist.  Court  for  Mass.)  1  Am.  Law  Rev. 
88.     See  Taylor  v.  Richards,  3  Gray,  326.} 


66Q  PARTNERSHIP.  [cHAP.  XVI. 

exists  in  the  Court  of  Admiralty,  not  only  to  compel 
such  a  stipulation  to  be  given  by  the  majority  at  the 
instance  of  the  minority  ;  but,  also,  if  the  ship  is  in 
possession  of  the  minority,  to  compel  the  delivery 
thereof  upon  giving  such  a  stipulation  to  the  majority.* 

1  Ibid. ;  The  Jobn  of  London,  1  Hagg.  Adm.  S42,  346  ;  The  Pitt,  1  Hagg. 
Adni.  240.  {On  the  jurisdiction  of  equity  in  such  cases,  see  Haly  v.  Good- 
son,  2  Mer.  77  ;  Christie  v.  Craig,  2  Mer.  137  ;  Castelli  v.  Cook,  7  Hare, 
89;  Darby  v.  Baines,  9  Hare,  369  ;  Brenan  v.  Pi-eston,  10  Hare,  331;  s.  c. 
2  De  G.  M.  &  G.  813;  Southworth  v.  Smith,  27  Conn.  355;  2  Pars.  Mar. 
Law,  565,  n. }  —  Mr.  Abbott  has  stated  the  whole  doctrine  with  great  clearness 
and  accuracy  in  the  passage  above  referred  to.  He  says  :  "  The  law  of  this 
country  appears  to  possess  an  important  advantage  over  all  the  ordinances 
that  have  been  cited ;  because,  while  it  authorizes  the  majority  in  value  to 
employ  the  ship  '  upon  any  probable  design,'  it  takes  care  to  secure  the 
interest  of  the  dissentient  minority  from  being  lost  in  the  employment,  of 
which  they  disapprove.  And  for  this  purpose  it  has  been  the  practice 
of  the  Court  of  Admiralty,  from  very  remote  times,  to  take  a  stipulation 
from  those  who  desire  to  send  the  ship  on  a  voyage,  in  a  sum  equal  to  the 
value  of  the  shares  of  those  who  disapprove  of  the  adventure,  either  to 
bring  back  and  restore  to  them  the  ship,  or  to  pay  them  the  value  of  their 
shares.  When  this  is  done,  the  dissentient  part-owners  bear  no  portion  of 
the  expenses  of  the  outfit,  and  are  not  entitled  to  a  share  in  the  profits  of  the 
undertaking ;  but  she  sails  wholly  at  the  charge  and  risk,  and  for  the  profit 
of  the  others.  This  security  may  be  taken  upon  a  warrant  obtained  by 
the  minority  to  arrest  the  ship.  And  it  is  incumbent  on  the  minority  to 
have  recourse  to  such  proceedings,  as  the  best  means  of  protecting  their 
interest ;  or,  if  they  forbear  to  do  so,  at  all  events  they  should  expressly 
notify  their  dissent  to  the  others,  and,  if  possible,  to  the  merchants  also 
who  freight  the  ship.  For  it  has  been  decided,  that  one  part-owner  cannot 
recover  damages  against  another,  by  an  action  at  law,  upon  a  charge  of 
fraudulently  and  deceitfully  sending  the  ship  to  foreign  parts,  where  she 
was  lost.  And  it  has  also  been  decided  in  the  Court  of  Chancery,  that 
one  part-owner  cannot  have  redress  in  equity  against  another  for  the  loss 
of  a  ship  sent  to  sea  without  his  assent.  These  decisions  are  consonant  to 
the  general  rule  of  law,  that  where  one  tenant  in  common  does  not  destroy 
the  common  property,  but  only  takes  it  out  of  the  possession  of  another, 
and  carries  it  away,  no  action  lies  against  him ;  but  if  he  destroys  the  com- 
mon property,  he  is  liable  to  be  sued  by  his  companion.  And  in  a  case 
tried  befoi-e  Chief  Justice  lung,  wherein  it  appeared,  that  one  part-owner 
had  forcibly  taken  a  ship  out  of  the  possession  of  another,  secreted  it,  and 
changed  its  name ;  and  that  it  afterwards  came  into  the  possession  of  a 
third  person,  who  sent  it  to  Antigua,  where  it  was  sunk  and  lost ;  the  Chief 
Justice  left  it  to  the  jury  to  say,  under  all  the  circumstances  of  the  case, 


CHAP.  XYI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       667 

On  the  other  hand,  if  the  majority  do  not  choose  so  to 
employ  the  ship,  the  minority  possess  the  same  right 
upon  giving  the  hke  security,  and  are  in  Uke  manner 
to  be  entitled  to  all  the  profits  of  the  voyage  or  adven- 
ture, and  are  to  bear  all  the  expenses  and  outfits  and 
risks  thereof.^ 

§  429.  In  this  respect  the  common  law  differs  essen- 
tially from  the  French  law.^  The  French  law,  in  the 
absence  of  any  positive  stipulation  of  the  part-owners 
to  the  contrary,  gives  complete  authority  to  a  majority 
in  interest  (not  in  number)  to  make  repairs  and  incur 
expenses  on  the  ship  for  the  common  benefit,  to  which 
all  the  other  joint  owners  will  be  bound  to  contribute, 
notwithstanding  their  dissent.  The  Ordinance  of  Louis 
XIV.  of  1681,  expressly  declares,  that  in  all  things 
which  concern  the  common  interest  of  the  proprietors 
of  the  ship,  the  opinion  of  the  majority  shall  be  fol- 
lowed ;  and  that  shall  be  reputed  to  be  the  majority 
which  holds  the  largest  shares    of  the  ship.^     In  this 

whether  it  was  not  a  destruction  of  the  ship  by  the  means  of  the  defend- 
ant; and  they  finding  it  to  be  so,  the  plaintiff  recovered  the  vaUie  of  his 
share.  The  Court  of  Common  Pleas  afterwards  approved  of  the  direction 
of  the  Chief  Justice.  If  a  part-owner  expressly  notify  his  dissent,  the 
Court  of  Chancery  will  not  compel  him  to  contribute  to  a  loss.  If  the 
minority  happen  to  have  possession  of  the  ship,  and  refuse  to  employ  it, 
the  majority  also  may  by  a  similar  warrant  obtain  possession  of  it,  and  send  it 
to  sea,  upon  giving  such  security."     Post,  §  -434:. 

'  Steamboat  Orleans  v.  Phoebus,  11  Pet.  175  ;  The  Apollo,  1  Hagg.  Adm. 
p.  306,  312  ;  Ex  parte  Blanshard,  2  B.  &  C.  214,  219.  See  Godolph.  Adm. 
Jur.  Intr.  p.  13  ;  Molloy,  de  Jure  Mar.  B.  2,  c.  1,  §  2 ;  Abbott  on  Shipp.  Pt. 
1,  c.  3,  §  6,  p.  71,  75,  5th  ed. ;  2  Bro.  Civ.  and  Adm.  Law,  131 ;  Sea-Laws, 
442,  3d  ed. ;  Willings  v.  Blight,  2  Pet.  Adm.  288 ;  3  Kent,  155-157 ;  ante, 
§  427,  note.     But  see  The  Elizabeth  &  Jane,  1  W.  Rob.  278. 

2  See  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  4,  p.  575-;584,  ed.  1766 ;  Abbott 
on  Shipp.  Pt.  1,  c.  3,  §  3,  p.  69,  5th  ed. 

'  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  6,  p.  575.  The  present  commercial 
code  of  France  gives  the  like  authority.  Code  de  Comm.  art.  220 ;  1  Bou- 
lay  Paty,  Droit  Comm.  tit,  3,  §  5,  p.  340 ;  2  Emerig.  Traite  des  Contrats  A 
la  Grosse,  c.  4,  §  4,  p.  427,  ed.  1783;  3  Pardessus,  Droit  Comm.  art.  621, 
p.  43,  41 ;  3  Kent,  155-157. 


668  PARTNERSHIP.  [cHAP.  XYI. 

respect  the  French  law  seems  to  have  followed  out 
the  doctrine  promulgated  upon  some  other  occasions 
in  the  Roman  law.  Such,  for  example,  as  in  the  case 
of  creditors  —  Pari  autem  quantUate  dehiii  inventa,  dis- 
pari  vero  creditorum  niimero ;  tunc  amplior  2^cirs  cre- 
ditorum  obtineat^  ita,  ut  quod  plurihus  placeat^  hoc  sfa- 
tiicdur}  And  again,  in  the  case  of  the  arbitrators: 
Judicknn  enlm  integrum  est,  quod  j^hirimoriim  sententiis 
coinj^robaiur.^  And  again  :  JIajorem  esse  ^:>«r/e?n,  p7'o 
modo  dehiti,  non p)ro  nmnero  p)ersonaruin,  ijlacuit  ;^  and 
again ;  Quod  major  pars  Curiae  effecit,  pro  eo  hahetur, 
ac  si  omnes  egerint.^  And  in  answer  to  the  question, 
what,  in  a  just  sense,  may  be  deemed  repairs  or  expenses 
for  the  common  benefit,  Valin  does  not  scruple  to  declare, 
that  they  are  such  as  are  reasonable  and  fit,  in  order  to 
put  the  ship  in  a  state  to  earn  freight,  and  to  be  suitably 
navigated  during  the  contemplated  voyage  or  adventure. ° 
§  430.  The  laws  of  other  foreign  maritime  nations 
seem  generally  to  coincide  with  these  provisions  of  the 
French  law,  and  abundantly  show,  that  the  doctrine  is 
not  founded  upon  any  peculiar  policy  of  France.^  The 
Ordinances  of  the  Hanse  Towns  of  1591  and  1614,  ex- 
pressly affirm  the  doctrme,  stating  it,  in  one  place,  to  be 
conformable  to  ancient  usage ;  and,  in  another  place, 
to  be  conformable  to  the  ancient  usages   of  the  sea.''' 

^  Cod.  7,  71,  8,  cited  1  Yalin,  Comm.  Liv.  2,  tit.  8,  art.  4,  p.  575;  D.  2, 
14,  8;  Kuricke,  Jus  Hanseat.  tit.  5,  art.  7,  p.  758,  759. 

""  Cited  1  Valin,  Comm.  575.  See  also  D.  50,  1,  19 ;  Id.  4,  8,  17,  7 ; 
Id.  4.  8,  27,  3. 

3  D.  2,  14,  8 ;  cited  1  Valin,  Comm.  576. 

*  D.  50,  1,  19 ;  cited  1  Valin,  Comm.  577.  See  also  the  passage,  D.  17, 
2,  52,  10,  referred  to^ante,  §  424,  note. 

'  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  5,  p.  579. 

*  Styppman,  Jus  Mar.  p.  416,  n.  101-104;  Scrip.  Xaut.  Fascic.  Heinec. 
p.  416,  ed.  1740 ;  Kuricke,  Jus  Hanseat.  tit.  5,  art.  7,  p.  755,  758,  759 ;  1 
BoulayPaty,  Droit  Comm.  tit.  3,  §  5,  p.  344-346;  Jacobsen's  Sea-Laws,  by 
Frick,  c.  3,  p.  40,  41,  ed.  1818. 

^  2  Pardessus,  Collect,  de  Lois  Mar.  p.  526  ;  Droit  Mar.  de  la  Ligue  Anse- 


CHAP.  XTI.I    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       669 

The  ordinance   of  Rotterdam  of  1721;^  that  of  Ham- 
burg of.  1276 ;  -    that   of  Lubec    of   1299  ; '    and  also 

atique  Reces.  tie  1591,  art.  57  ;  Id.  Reces.  de  1614,  art.  7,  p.  546 ;  Abbott 
on  Shipp.  Pt.  1,  c.  3,  §  3,  p.  70;  Cleirac,  Us  et  Cout.  Ordin.  Hanseat.  art. 
59,  p.  211,  ed.  1661 ;  Id.  p.  107,  ed.  1788 ;  Malyne,  Lex  Merc.  p.  128,  ed. 
1636.  —  I  copy  from  Pardessus's  unrivalled  edition,  in  this  and  the  follow- 
ing citations.     Kuricke,  in  his  Commentaries  on  the  Hanseatic  Ordinance 
(Kuricke,  Jus  Hanseat.  tit.  5,  art.  7,  p.  758,  759,  ed.  1740),  gives  the 
general  provisions  of  the  principal  ordinances  of  different  countries.     His 
language  is:   "Jus  Wisbycen.  art.  65,  hoc  in  casu,  quando  nimirum  inter 
exercitorera  et  nauclerum    conveniri   non   potest,  statuit,  nauclerum  nihi- 
lorainus  posse  navim  illam  ducere  pro  naulo,  quod  viri  boni  sequum  esse 
judicaverint.     Et  art.  66,  in  genere  sancitur,  quod  omnes  exercitores,  quid- 
quid  in  reparationem  navis  nauclerus  impendent,  vel  etiam  pro   ejusdem 
necessitate  emerit,  ad  obolum  usque  solvere  teneantur.     Jus  Pruthenicum 
(1.  4,  tit.  19,  art.  4,  §  3),  generaliter  vult,  quod  illi,  qui  niinores  partes  in 
navi  habent,  sequi  debeant  eos,  qui  plus  in  eo  possident.     Jus  vero  Lube- 
cense  (1.  6,  tit.  4,  art.  6),  alternative  idem  statuit,  nimirum  illos,  qui  minus 
in  navi  possident,  reliquos,  qui  plus  tenent,  aut  sequi,  aut  totam  navim  certa 
pecunia  asstimare  debere,  optione  aliis  data,  utrum  tantumdem  dare,  aut 
accipere  veliut,  emptoremque  reliquis  exercitoribus  pecuniam  istam  intra 
sex  hebdomadas  postmodum  solvere  teneri.      Jus  Danicum  art.  61,  idem 
prajcipit,  et  addit,  quod  si  nulla  ratione  inter  se  convenire  possint,  navim 
tamen  otiosam  jacere  non  oporteat,  sed  exercitorum  potior  pars  illam  in 
suum  commodum,   suo  periculo,  e;sercere  possit ;  illis  vero,  qui  exercere 
navera  noluerunt,  nulla  vecturje  portio  danda  sit.      Eodem   etiam  tendunt 
Statut.  Hamburg.  (Part.  2,  tit.  13,  artic.  2,  et  Grot.  d.  intr.  part.  23).    Utut 
autem  hfec  expediti  sint  juris  eo  in  casu,  ubi  plures  exercitores  existunt, 
quteri  tamen  potest,  quid  hoc  in  casu,  ubi  duo  tantum  sunt  exercitores,  et 
quidem  inter  se  dissentiontes,  juris  sit  ?     Certe  quum  pra3valere  debet,  qui 
navim  navigare,  quam  otiosam  domi  manere  mavult,  inde  concludi  potest, 
quod  Ulpianus  dissertis  verbis  (in  1.  12,  §  1  ff.  de  usufruct.)  scribat :  Xavis 
usufructu   legato,   navigatum  mittendam    navim,  licet  naufragii   periculum 
immineat ;  navim  enim  ad  hoc  parari,  ut  naviget,  dummodo  tamen  id  apto 
et  non  adverso  navigationis  tempore  tiat,  navisque  idoneis  hominibus  com- 
mittatur  (1.  16,  §  1,  et  1.  36,  in  fin.  ff.  de  R.  Y.)  et  gubernatore  sit  instructa 
(1.   13,  §  2,  ff.    locat)."      See  also   2   Emerig.   Traite   des   Contrats   a  la 
Grosse,  c.  4,  §  4,  p.  427,  428,  ed.  1783 ;  Id.  454,  455,  Ed.  of  Boulay  Paty, 
1826. 

»  Ordin.  of  Rotterdam,  1721,  art.  172  ;  2  Magens  on  Ins.  108  ;  Abbott  on 
Shipp.  Pt.  1,  c.  1,  §  3,  p.  70,  5th  ed.;  3  Kent,  153. 

«  Ordin.  of  Hamburg,  1276,  art.  24;  3  Pardessus,  Collect,  de  Lois  .Mar. 
p.  346. 

3  Ordin.  of  Lubec,   1299,   art.   25;    3   Pardessus,   Collect,  de  Lois  Mar, 
p.  410. 


670  PARTNERSHIP.  [CHAP.  XVI. 

the  laws  of  Wisbuy  (although  not  printed  m  tlie  com- 
mon editions)/  contain  provisions  to  the  same  effect. 

§  431.  It  has  been  supposed  by  a  learned  writer 
upon  this  subject,  that  the  common  law  has  in  this 
respect  an  important  advantage  over  all  these  ordi- 
nances ;  because,  while  it  authorizes  the  majority  in 
value  to  employ  the  ship  upon  any  probable  design, 
it  takes  care  to  secure  the  interest  of  the  dissentient 
minority."  Perhaps  it  may  not  be  so  very  manifest, 
that  such  an  advantage  really  exists ;  for,  although 
the  majority  are  thus  entitled  to  employ  the  ship,  yet 
the  minority  cannot  derive  the  slightest  advantage 
from  that  employment  ;  and  they  may,  and  indeed 
must,  be  affected  somewhat  in  their  interest  from  the 
natural  diminution  of  value  of  the  ship,  by  the  mere 
wear  and  tear  of  the  voyage  or  adventure,  even  if  no 
accident  occurs  to  prevent  her  safe  return.  It  is  no- 
where affirmed,  that  the  minority  are  entitled  to  any 
compensation  for  such  diminished  value  ;  and  the 
general  theory  of  the  common  law  upon  the  rights  of 
part-owners,  certainly  authorizes  every  part-owner  to 
use  the  ship  for  his  own  purposes,  without  any  liability 
to  repair  the  natural  or  necessary  waste  or  decay  occa- 
sioned thereby.     On  the  other  hand,  although  the  for- 

'  Laws  of  Wisbuy,  1841,  art.  65,  66  ;  1  Pardessus,  Collect,  de  Lois  Mar.  p. 
522,  523.  See  also  Pardessus's  note  to  Tom.  1,  p.  522,  523,  notes  9, 10,  and  his 
note  to  Tom.  2,  p.  526,  n.  (2).  In  these  notes  he  states,  that  these  articles 
are  not  found  in  the  editions  of  1505,  or  the  MSS.  of  1533  and  1537,  but  are 
in  that  of  1541,  of  Gripswald.  The  Consolato  del  Mare  gives  to  the  master- 
owner  (Patron,  Senyor  de  la  Nau),  who  undertakes  to  build  a  ship,  a  right  to 
compel  other  persons,  who  have  engaged  to  take  particular  shares  in  the  ship, 
to  pay  their  proportions  of  the  expenses  of  building  the  same ;  or,  upon  their 
default,  to  hire  money  on  their  shares  for  the  same  purpose.  Consolato  del 
Mare,  c.  3,  [48],  as  given  in  2  Pardessus,  Collect,  de  Lois  Mar.  p.  50.  I 
have  not  discovered  in  that  venerable  collection  any  traces  of  the  law  as 
to  the  employment  and  outfits  of  tlie  ship,  when  some  of  the  owners  dissent. 
See  also  Jacobsen's  Sea-Laws,  by  Frick,  c.  3,  p.  40-43,  ed.  1818. 

^  Abbott  on  Sliipp.  Pt.  1,  c.  3,  §  4,  p.  70. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       671 

eign  laws  and  ordinances  give  the  majority  the  right 
to  impose  the  burden  of  sharing  the  expenses  upon 
the  minority ;  yet  the  latter  are  to  share  fully  in 
the  profits,  if  any,  in  the  voyage  or  adventure,  accord- 
ing to  the  well-known  maxim :  Secundum  naturam  esl, 
commoda  cujusque  rei  eum  sequi^  qiiem  sequuntur  in- 
commoda} 

§  43*3.  The  common  law  not  only  thus  gives  to  the 
majority  in  interest  of  the  part-owners  the  right  and 
authority  to  employ  the  ship  upon  any  proper  voyage 
or  adventure ;  but  also  confers  upon  the  majority  the 
right  and  authority  in  all  cases  to  appoint  the  master 
and  officers  and  crew  of  the  ships,  and  to  displace  them 
at  their  pleasure,  even  although  the  master  should  be  a 
part-owner.-  But,  then,  this  authority  must  be  exer- 
cised by  a  free  and  impartial  judgment  in  the  choice  of 
the  master  and  officers  and  crew,  and  especially  in  the 
choice  of  the  master,  who  is  intrusted  wdth  the  manage- 
ment of  the  outfit,  and  with  the  navigation  of  the  ship. 
Any  contract,  therefore,  made  by  some  of  the  ^^ixt- 
owners  only,  which  is  calculated  to  have  the  effect  of 
fettering  their  judgment,  and  of  binding  them  to  ap- 
point, or  to  concur  in  the  appointment  of  particular 
persons  as  master  and  officers,  is  a  violation  of  that 
duty.  The  violation  of  duty  becomes  greater  and  more 
odious,  if  the  contract  is  founded  upon  motives  of  pecul- 
iar sain  and  advantasfe  to  the  contractors ;  for  all  the 
part-owners  ought  to  share  ratably  in  every  profit  that 
may  be  made  of  the  ship.     And  if  such  contracts  could 

'  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  5,  p.  577-579;  D.  50,  17,  10.— 
The  Danish  Ordinance,  art.  61,  according  to  Kuricke,  is  simihxr  to  the  law 
of  England.  See  above,  §  430,  note ;  Jacobseu's  Sea-Laws,  by  Frick,  c.  3, 
p.  37,  40-43. 

^  This  is  also  the  rule  of  the  French  law.  1  Boulay  Paty,  Droit  Comm. 
tit.  3,  §  5,  p.  340.     {Post,  §445.} 


672  PARTNERSHIP.  [CHAP.  XVI. 

be  allowed  by  law,  they  must  operate  as  a  discourage- 
ment to  persons  to  become  part-owners  of  ships. ^  In- 
deed, the  duty  is  not  owing  singly  to  the  other  part- 
owners,  and  to  charterers  (if  any),  but  also  to  all  whose 
life  or  property  may  be  embarked  in  her.  Such  a  con- 
tract is,  therefore,  utterly  void,  as  against  public  policy, 
and  the  true  interests  of  commerce  and  navigation. 
Upon  this  ground  a  contract,  made  by  two  part-owners, 
who  were  the  ship's  husbands,  with  a  third  person  to 
sell  him  a  part  of  their  shares,  and  he  to  be  appointed 
master  (they  holding  the  majority  of  interests),  and  they 
to  be  continued  as  th-e  ship's  husbands,  and  he  or  they 
to  have  the  appointment  of  his  successor,  as  master,  has 
been  held  to  be  utterly  void.~ 

§  -433.  We  have  already  seen  that  the  French  Ordi- 
nance declares,  that  the  opinion  of  the  majority  of  the 
owners  of  a  ship,  is  to  govern  in  every  thing  which  con- 
cerns the  common  interest  of  the  owners.  {En  tout  ce 
qui  concerne  V inter et  commiin  des  j)yo2yrietaires.)  ^  But 
the  question,  as  to  the  extent  of  the  power  of  the  major- 
ity to  bind  the  minoi^ty  by  their  acts,  or,  in  other  words, 
what  is  to  be  deemed  in  the  sense  of  the  Ordinance  for 
the  common  interest,  is  a  matter  still  left  open  to  con- 
struction and  interpretation.  Here,  Valin  is  very  ex- 
plicit ;  and  he  declares  that  it  extends  not  only  to  the 
repairs  of  the  ship,  but  to  the  enterprise  and  voyage  in 
which  the  ship  is  to  be  engaged,  to  the  choice  of  the 
master,  officers,  and  crew,  and  also  to  the  outfits  and 
engagements  for  the  voyage.  But  it  does  not  extend 
to  any  right  to  compel  the  dissenting  owners  to  con- 
tribute their  shares  to  a  cargo  for  the  ship  for  the  same 

1  CarfLu.  Hope,  2  B,  &  C.  C61,  674,  675.  I  have  followed  nearly  the 
very  words  of  Lord  Tenterden,  in  his  able  judgment  in  this  case. 

2  Card  V.  Hope,  2  B.  &  C.  661,  674,  675. 

3  Ante,  §  429. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  TART-OWNERS.       673 

voyage.^  As  to  the  repairs  and  other  legitimate  expen- 
ditures and  charges  for  the  voyage,  if  the  dissenting  own- 
ers refuse  to  contribute  their  shares,  it  is  competent  for 
the  majority,  after  such  refusal  and  due  proceedings 
had,  to  take  up  the  amount  on  bottomry  for  the  account 
and  risk  of  the  dissenting  owners.^ 

§  434.  But  suppose  a  majority  of  the  owners  are 
against  any  employment  of  the  ship*  upon  any  adven- 
ture or  voyage  whatsoever  at  a  particular  period,  as  not 
being  for  the  interest  of  the  concern,  and  the  minority 
are,  at  the  same  time,  ready  and  willing  to  employ  the 
ship  upon  a  particular  adventure  or  voyage,  the  ques- 
tion then  arises  whether,  in  the  sense  of  the  Ordinance, 
the  majority  have  still  the  right  to  control  the  minority, 
and  prevent  any  such  employment.  The  answer  given 
by  Valin,  in  the  affirmative,  seems  entirely  satisfactory 
in  its  reasoning,  as  a  just  exposition  of  the  Ordinance.^ 

»  1  Valin,  Comm.  Liv.  2,  tit.  9,  art.  5,  p.  576-580,  ed.  17G6  ;  3  Pardessus 
Droit  Comm.  art.  621,  p.  44,  45  ;  3  Kent,  156,  157. 

^  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  5,  p.  576,  577,  579;  3  Pardessus,  Droit 
Comm.  art.  621,  p.  44-46. 

3  1  Valin,  Comm.  Liv.  2,  tit.  3,  art.  5,  p.  582,  583 ;  1  Boulay  Paty,  Droit 
Comm.  tit.  3,  §  5,  p.  344,  345-348 ;  Kuricke,  Jus  Hanseat.  tit.  5,  art.  7,  p. 
758,  759,  ed.  Heinecc.  Scrip.  Naut.  Fascic.  ed.  1740.  Several  of  the  mari- 
time Jurists  of  other  countries  entertain  a  different  opinion.  Mr.  Chancellor 
Kent  has  summed  up  the  opinions  on  each  side  with  his  usual  ability  and 
accuracy.  "By  the  French  law,  the  majority  in  interest  of  the  owners 
control  the  rest,  and  in  that  way  one  part-owner  may  govern  the  manage- 
ment of  the  ship,  in  opposition  to  the  wishes  of  fifty  other  part-owners, 
whose  interests  united  are  not  equal  to  his.  This  control  relates  to  the 
etiuipment  and  employment  of  the  ship,  and  the  minority  must  contribute. 
But  they  cannot  be  compelled  to  contribute  against  their  will  for  the  cargo 
laden  on  board,  though  they  will  be  entitled  to  their  portion  of  the  freight. 
If  the  part-owners  be  equally  divided  on  the  subject,  the  opinion  in  favor  of 
emploving  the  ship  prevails,  as  being  most  ftivorable  to  the  interests  of  uav- 
jiration.  Many  of  the  foreign  Jurists  contend,  that  even  the  opinion  of  the 
minority  ought  to  prevail,  if  it  be  in  favor  of  employing  the  ship  on  some 
foreign  voyage.  Emerigon,  Ricard,  Straccha,  Kuricke,  and  Cleirac,  are  of 
that  opinion.  But  Valin  has  given  a  very  elaborate  consideration  to  the  sub- 
ject, and  he  opposes  it  on  grounds  that  are  solid,  and  he  is  sustained  by  the 

43 


674  PARTNERSHIP.  [CHAP.  XYI. 

"Whether  the  common  law  has  adopted  the  like  rule 
seems,  in  the  present  state  of  the  authorities,  doubtful, 
although  the  old  writers  manifestly  lean  in  favor  of  it.^ 

§  435.  A  question  far  more  nice  and  difficult,  is  to 
decide  what  is  to  be  done  where  the  part-owners  have 
equal  interests,  and  are  equally  divided  as  to  the  em- 
ployment of  the  ship  upon  any  particular  voyage  or 
adventure.  Within  this  predicament  several  cases  may 
arise:  (1.)  Where  the  part-owners  are  equally  divided 
as  to  the  employment  of  the  ship  upon  any  voyage 
or  adventure  whatsoever,  one  being  in  favor  and  the 
other  against  any  such  employment,  upon  the  ground, 
that  at  the  time  it  will  be  either  unprofitable,  or  very 
hazardous,  under  all  the  circumstances ;  (2.)  Where 
each  part-owner  is  equally  willing  to  have  the  ship 
employed  in  some  voyage  or  adventure,  but  they  differ 
as  to  the  voyage ;  or,  (3.)  Where  each  part-owner  is 
ready  to  take  the  whole  ship  for  a  voyage,  to  be 
planned  by  himself,  but  he  will  not  engage  with  the 
other  in  any  voyage  whatsoever.  What  is  to  be  done 
in  such  a  case?  An  opinion  has  been  expressed  by 
certain  learned  writers  that,  in  the  first  case,  the  part- 
owner  who  is  willing  to  employ  the  ship  for  a  voyage 
or  adventure  is  entitled  to  have  it  delivered  to  him  for 
that  purpose,  upon  giving  the  usual  security ;  and  this, 
indeed,  seems  to  be  the  actual  practice  in  the  Admi- 
ralty of  England.^ 

provisions  of  the  old  ordinance  and  of  the  new  code.  Boulay  Paty  follows 
the  opinion  of  Valin  and  of  the  codes,  and  says  that  the  contrary  doctrine 
■would  enable  the  minority  to  control  the  majority,  contrary  to  the  law  of 
every  association,  and  the  plainest  principles  of  justice.  The  majority  not 
only  thus  control  the  destination  and  equipment  of  the  ship,  but  even  a  sale 
of  her  by  them  will  bind  the  right  of  privileged  creditors  after  the  perfoi-m- 
ance  of  one  voyage  by  the  purchaser,  but  not  the  other  part-owners." 

1  Willings  V.  Bhght,  2  Pet.  Adm.  288  ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  4-6, 
p.  70-76 ;  ante,  §  427,  428.     See  The  EUzabeth  &  Jane,  1  W.  Rob.  278. 

*  Abbott  on   Shipp.  Pt.  1,  c.  3,  §  6,  p.  75,  5th  ed. ;  1   Mont,  on  P.  B.  2, 


CHAP.  XYI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.        675 

§  436.  Cleirac  adopts  the  like  opinion,  in  Avhicli  he 
has  also  the  support  of  other  Jurists.^  Straccha,  in 
particular,  puts  the  case  directly.  Et  ego  Jingo  tibi  que- 
stionem :  Duos  esse  Dominos  navis^  alterinn  velJe  congruo 
tempore  adnavlgandum  ipsam  navim  navigatiim  inittere^ 
aHerum  vero  malle  in  portu  permanere  ;  et  ptrceferendum 
ilium  existimo^  qui  rem  ad  usumparatum  uti  velit,  et  uti- 
liter  agere,  recusante  socio.^  The  reason  seems  to  be, 
that  ships  are  designed  for  navigation  ;  and,  thus  em- 
ployed, they  support  a  great  public  commercial  policy.^ 
The  French  Ordinance  seems  to  justify  the  same  course, 
leaving,  however,  the  question,  as  to  the  propriety  of 
the  projected  voyage,  open  for  discussion.^ 

§  437.  But  the  two  last  cases  (there  being  an  equal- 
ity of  interests)  have  been  thought  by  some  distin- 
guished Jurists  to  be  wholly  unprovided  for  by  the 
common  law ;  for,  under  such  circumstances,  there 
seems  to  be  no  ground  for  giving  any  preference  to 
either  part-owner.^     In  cases  of  this  sort,  there  is  no 

c.  1.  Molloy  holds  this  opinion.  MoUoy,  Ae  Jure  Mar.  B.  2,  c.  1,  §  2,  p. 
308,  10th  ed.  17  78.  But  see  The  Elizabeth  &  Jane,  1  W.  Rob.  278;  {and 
2  Pars.  Mar.  Law,  555,  note.} 

'  Cleirac,  Us  et  Cout.  Ordin.  Hanseat.  art.  59,  p.  211,  ed.  1661. 

^  Straccha,  de  Navib.  Pars  2,  n.  6,  p.  420,  ed.  1669.     ■ 

3  See  Cleirac,  Us  et  Cout.  Ordin.  Hanseat.  art.  59,  p.  211,  ed.  1661  ;  1 
Valin,  Comm.  Liv.  2,  tit.  8,  art.  5,  p.  585,  586  ;  Kuricke,  Jus  Hanseat.  tit.  5, 
art.  7;  Scrip.  Naut.  Fascic.  p.  758,  759,  ed.  1740;   ante,  §  429,  430,  note, 

*  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  6,  p.  585,  586. 

'  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  5,  p.  72-76,  5th  ed. ;  Id.  §  7,  p.  75,  76; 
Ouston  V.  Hebden,  1  Wils.  101.  —  In  this  case  a  part-owner,  possessed  of  a 
small  share,  instituted  a  suit  in  the  Court  of  Admiralty,  against  the  major 
part-owner,  who  was  also  master,  and  who  insisted  upon  making  a  voyage 
■with  the  ship,  praying  that  the  shi  >  might  be  sold,  or  the  party  have  such 
other  remedv  as  might  be  thought  proper  by  the  Admiralty;  and  the  other 
applied  to  the  Court  of  King's  Bencli  to  prohibit  the  Admiralty  from  pro- 
ceedin"-  in  the  suit.  But  Chief  Justice  Lee  said :  "  I  have  no  doubt  but  the 
Admiralty  has  a  power  in  this  case  to  compel  a  security,  and  this  jurisdiction 
has  been  allowed  to  that  Court  for  the  public  good.  Indeed  the  Admiralty 
has  no  jurisdiction  to  compel  a  sale;  and  if  they  should  do  that,  you  might 


676  PARTNERSHIP.  [cHAP.  XVI 

doubt  that,  under  the  Ordinance  of  France,  of  1681, 
a  sale  may  be  decreed  to  be  made  by  the  proper  tri- 
bunal, and  the  proceeds  divided  among  the  owners 
according  to  their  respective  shares.^  Malyne  evi- 
dently supposes  that  the  general  maritime  law  author- 
izes a  sale  to  be  made  by  the  proper  Court  of  Admi- 
ralty, in  all  cases  where,  by  reason  of  the  disagreement 
of  the  part-owners,  the  ship  cannot  be  employed, 
whether  there  be  an  equality  in  the  dissenting  interests 
or  not."  Molloy  adopts  the  same  opinion  ;  and  it  has 
apparently  the  support  of  others  of  the  Old  English 
maritime  writers,  as  a  generally  recognized  practical 
rule.^  The  Consolato  del  Mare  seems  to  uphold  the 
doctrine  that,  at  least  after  the  first  voyage  of  a  ship 
which  is  owned  by  the  master  and  other  persons,  the 
part-owners  may  compel  a  sale  of  the  ship,  in  case  of 
a  disagreement  between  them.'*  The  law  of  Scotland 
gives  a  right,  as  it  should  seem,  in  all  cases,  to  the  dis- 

have  a  prohibition  after  sentence;  or  we  may  grant  a  prohibition  against 
selling,  or  compelling  the  party  to  sell,  or  to  buy  the  shares  of  others."  This 
was  agreed  to  by  the  whole  Court,  and  the  case  ended  by  prohibiting  the 
Court  of  Admiralty  to  direct  a  sale,  but  leaving  the  Court  at  liberty  to 
compel  security. 

1  1  Valin,  Liv.  2,  tit,  8,  art.  6,  p.  584-586  ;  1  Boulay  Taty,  Droit  Comm. 
tit.  3,  §  5,  p.  359-366  ;  2  Emerigon,  Traite  des  Contrats  a  la  Grosse,  c.  4,  §  4, 
p.  427,  428,  ed.  1783;  Id.  p.  454,  455,  ed.  of  Boulay  Paty,  1827;  3  Par- 
dessus,  Droit  Comm.  art.  623,  p.  46,  47 ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  7,  p. 
75,  76,  5th  ed.  —  The  present  Commei'cial  Code  of  France  also  provides, 
that  the  vessel  shall  not  be  adjudged  to  be  sold  in  order  to  a  distribution  of 
the  proceeds  among  the  joint  owners,  except  U25on  the  application  of  a  moiety 
in  value  of  the  said  owners,  unless  there  be  a  written  agreement  to  the  con- 
trary. Code  de  Commerce,  art.  220 ;  2  Locre,  Esprit  de  Code  de  Comm.  p. 
52-54;  1  Boulay  Paty,  Droit  Comm.  tit.  3,  §  5,  p.  359-366. 

2  Malyne,  Lex  Merc.  c.  30,  p.  120,  121,  ed.  1636. 

3  Molloy,  de  Jure  Mar.  B.  2,  c.  1,  §  3,  p.  310,  ed.  1778  ;  2  Bro.  Civ.  &  Adm. 
Law,  131. 

■*  2  Pardessus,  Collect,  de  Lois  Mar.  p.  62,  citing  Consol.  del  Mare,  art.  10 
[55];  Id.  p.  207,  citing  Consol.  del  Mare,  art.  184  [229];  Id.  p.  233,  citing 
Consol.  del  Mare,  art.  199  [244]  ;  Id.  p.  237,  238,  citing  Consol.  del  Mare,  art. 
200  [245]. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       677 

senting  partners,  to  offer  their  shares  for  sale  to  the 
other  owners  at  a  particular  price  ;  and,  if  this  offer  is 
not  accepted,  then  to  require  a  judicial  sale  to  be  made 
of  the  ship,  and  the  proceeds  to  be  divided  among 
them.^ 

'  Bell's  (Wm.)  Diet,  of  Law  of  Scotland,  voce,  Sett.,  Action  of,  p.  910; 
Id.  Ship.  p.  915,  ed.  1838:  1  Bell,  Comm.  B.  3,  Ft.  1,  c.  4,  §  11,  p.  504, 
5th  ed. ;  3  Kent,  153,  note  (b).  —  In  the  work  called  "  The  Sea-Laws,"  the 
like  doctrine  is  affirmed.  Sea-Laws,  p.  441,  ed.  1705.  In  several  of  the 
foreign  ordinances  an  alternative  is  given  to  the  dissenting  part-owners, 
either  to  buy,  or  to  sell  their  respective  shares  in  the  ship  at  a  fixed  price ; 
and  if  they  refuse,  the  majority  or  a  minority  may  employ  the  ship  in  naviga- 
tion. See  Kuricke,  Jus.  Hanseat.  tit.  5,  art.  7 ;  Scrip.  Xaut.  Fascic.  p. 
758,  759,  ed.  1740,  Heinecc.  See  also  the  opinion  of  Mr.  Justice  Wash- 
ington, in  Davis  v.  The  Seneca,  18  Am.  Jurist,  p.  486,  490,  491.  Mr. 
Justice  Washington  in  this  case  said:  "Our  attention  is  then  invited  to  the 
civil  law,  or  rather  to  the  Roman  marine  code,  another  legitimate  source  of 
general  maritime  law;  in  which  we  find  sundry  wise  provisions  for  adjusting 
disputes  between  part-owners  of  vessels,  from  which  the  three  following 
rules  may  be  deduced.  1.  That  the  opinion  and  decision  of  the  majority 
in  interest  of  the  owners,  concerning  the  employment  of  the  vessel,  is  to 
govern ;  and,  therefore,  they  may,  on  any  probable  design,  freight  out  or 
send  the  ship  to  sea,  though  against  the  will  of  the  minority.  2.  But  if  the 
majority  refuse  to  employ  the  vessel,  though  they  cannot  be  compelled  to  it 
by  the  minority,  neither  can  their  refusal  keep  the  vessel  idle,  to  the  injury 
of  the  minority,  or  to  the  public  detriment;  and  since,  in  such  a  case,  the 
minority  can  neither  employ  her  themselves,  nor  force  the  majority  to  do  so, 
the  vessel  may  be  valued  and  sold.  3.  If  the  interests  of  the  owners  be 
equal,  and  they  differ  about  the  employment  of  the  vessel,  one-half  being 
in  favor  of  employing  her,  and  the  other  opposed  to  it,  in  that  case  the  will- 
ing owner  may  send  her  out."  Mr.  Bell,  speaking  on  this  subject,  after 
stating  the  English  rule,  says:  "  In  Scotland  the  remedy  has  been  by  sale. 
Not  only  in  the  case  of  equality,  but  even  where  the  minority  opposed  the 
employment,  the  dissentient  owners,  minority,  or  equal,  have,  in  admiralty, 
been  entitled  to  insist,  either  for  a  sale,  or  that,  at  a  price  put  on  the  sliares, 
the  other  owners  shall  purchase  their  shares,  or  be  obliged  to  part  with  their 
own.  This  doctrine  was  grounded  on  the  consideration,  that  part-owners, 
though  not  properly  copartners,  freqliently  suffer  by  the  contracts  or  delin- 
quencies of  shipmasters,  perhaps  not  of  their  own  choosing;  for  which  they 
are  answerable,  at  least  to  the  value  of  their  own  share.  And  the  same 
doctrine,  though  not  supported  by  such  considerations  of  hazard,  was,  in 
modern  times,  applied  to  the  case  of  a  brewery  held  in  common.  Wliich  of 
these  rules  ought  now  to  prevail  in  this  united  country,  it  migiit  be  presump- 
tuous to  say.     But  it  may  be  necessary  to  reconcile  thera  in  some  future 


678  PARTNERSHIP.  [cHAP.  XVI. 

§  4e38.  It  has  also  been  generally  supposed,  that, 
according  to  the  common  law  of  England,  in  no  case 
whatsoever  of  a  disagreement  of  the  part-owners,  as  to 
the  employment  of  the  ship  upon  any  particular  voy- 
age, does  there  exist  any  jurisdiction  in  the  Court  of 
Admiralty  (and,  if  that  Court  has  it  not,  no  other  Court 
has)  to  order  a  sale  thereof,  whether  the  ship  be  owned 
in  equal,  or  in  unequal  shares.  It  is  true,  that  the  terms 
of  the  commissions,  granted  to  the  Judges  of  that  Court, 
include  jurisdiction  of  all  matters,  which  concern  own- 
ers and  proprietors  of  ships,  as  such.^  But  this  jurisdic- 
tion of  the  Courts  of  Admiralty  has  been  exercised  for 
the  last  two  centuries  in  England,  if  one  may  so  say,  in 
vincidls,  in  consequence  of  the  severe  penalties  imposed 
upon  the  Judges  by  statute,  if  they  should  happen  un- 
intentionally to  exceed  their  true  jurisdiction  ;  and  the 
open  hostility  and  prohibitory  interference  of  the  Courts 
of  common  law.^  The  commissions  have  thus  become 
practically  much  narrowed  in  the  import  of  their  terms, 
by  the  construction  of  these  latter  Courts,^  It  was  pos- 
itively, although  incidentally,  asserted   by  Lord    Chief 

case,  in  whicb  tbe  property  comes  to  be  mixed,  and  persons  of  botli  countries 
conc«rned  in  the  same  vessel.  Perhaps  the  course  followed  in  England 
may  be  followed  on  the  same  principles  of  equity,  which  have  recommended 
it  to  adoption  by  the  Court  of  Chancery  in  England,  as  a  measure  of  less 
harshness,  and  less  attended  with  peril,  than  the  remedy  which  we  have  long 
used."  1  Bell,  Comm.  B.  3,  P.  1,  c.  4,  §  1,  p.  503,  5th  ed.  See  also 
Jacobsen's  Sea-Laws,  by  Frick,  c.  3,  p.  40-43,  ed.  1818.  But  see  The 
Elizabeth  &  Jane,  1  W.  Rob.  278. 

'  Godolph.  Adm.  Jur.  43  ;  Laws  of  the  Sea,  p.  259,  ed.  1705  ;  De  Lovio 
V.  Boit,  2  Gall.  470,  note;  Houghton's  Articles,  Art.  1633;  Gierke's 
Praxis,  p.  145,  ed.  1798. 

2  See  De  Lovio  v.  Boit,  2  Gall.  398. 

'  The  Apollo,  1  Hagg.  Adm.  306,  309.  — The  late  Act  of  Parliament  (3d 
&  4th  Vict.  c.  65),  has  in  a  great  measure  restored  to  the  Court  of  Admiralty 
its  ancient  jurisdiction,  as  well  as  independence;  and  it  exhibits  the  com- 
plete triumph  of  principles  of  public  policy  and  convenience  over  mere 
technical  doctrines,  and  the  stern  opposition  of  the  Courts  of  common  law. 


CHAP.  XYI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       679 

Justice  Lee,  in  a  case  in  the  King's  Bench,  in  the  reign 
of  George  the  Second,  that  the  Court  of  Admiralty  has 
no  authority  to  compel  a  sale  in  any  case  of  disagree- 
ment whatever  between  part-owners.^  If  this  doctrine 
be  in  reality  established  in  the  common  law  of  England, 
it  is  a  reproach  both  to  its  equity  and  its  justice  ;  for  it 
leaves  the  part-owners  of  ships  without  any  remedy 
whatsoever,  in  cases  where  irreparable  injuries  may 
arise  from  an  equality  of  division  in  interests  and  opin- 
ions, without  any  fault  or  wrong  on  either  side.  Upon 
what  ground  it  has  been  asserted,  it  is  difficult  to  per- 
ceive. It  certainly  has  no  support  in  the  positive  mari- 
time law  of  other  countries,  or  in  the  ancient  principles 
of  maritime  jurisprudence.^  All  these  point  the  other 
way.  The  Admiralty  Courts  of  England  have  never  of 
themselves  adopted  any  such  limited  doctrine ;  but  have 
always  contended  for  the  exercise  of  the  full  jurisdic- 
tion as  rightful,  although  they  have  been  practically 
compelled  to  surrender  it  under  the  imposing  authority 
of  the  Courts  of  common  law. 

§  439.  In  America  a  strong  disposition  has  been 
manifested  to  assert  the  right  and  duty  of  Courts  of 
Admu-alty  to  decree  a  sale  of  the  ship,  in  cases  of  an 
equal  division  of  voices  and  interests,  as  to  undertak- 
ing a  particular  voyage  or  adventure.  It  has  been 
recognized  upon  several  occasions,  as  being  within  the 
true  scope  of  the  Constitution  of  the  United  States,  a 
case  of  admiralty  and  maritime  jurisdiction  ;  and  it  is 
sustained  by  reasoning  which  it  is  difficult  to  overturn,- 
unless  by  striking  out  of  the  commission  the  whole 
authority  of  the    Admiralty  in    cases    of   controversies 

»  Ouston  V.  Ilebden,  1  Wils.  101 ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  p.  73,  74, 
5th  ed.;  Jacobsen's  Sea-Laws,  by  Frick,  c.  3,  p.  43,  44,  ed.  1818;  1  Mont, 
on  P.  B.  2,  c.  1. 

"  Ante,  §435-437. 


680  PARTNERSHIP.  [cHAP.  XVI. 

between  part-owners ;  and  also  by  disregarding  the 
common  usages,  which  have  prevailed  among  mari- 
time nations  from  an  early  period,  and  which  constitute 
the  basis  of  the  general  maritime  law,  as  well  as  of  the 
positive  codes,  which  affirm  and  enforce  it.^     The  right 

^  Ante,  §  435-437,  and  note.  —  In  the  case  of  Skrine  v.  The  Sloop  Hope, 
Bee  2,  Judge  Bee  declared  a  sale  of  a  ship  upon  a  petition  of  one  part-ownei* 
af^ainst  another  part-owner.     But  the  question  was  very  elaborately  discussed 
on  both  sides,  by  very  able  counsel,  in  the  ease  of  Davis  v.  The  Brig  Seneca, 
Gilp.  10.     The  learned  Judge  of  the  District  Court  (Judge  Hopkinson)  pro- 
nounced an  opinion  against  the  jurisdiction  of  the  Court  to  decree  a  sale,  the 
case  being  that  of  the  part-owners  being  equally  divided  in  opinion,  and 
each   wishing  to  employ  the  brig  upon  a  distinct  voyage.     Upon   appeal, 
Mr.  Justice   Washington    reversed   the   decree,  and   directed   a  sale  ;    and 
the  parties   submitted   to   his   decision.      Upon  that  occasion   Mr.   Justice 
Washington   relied   upon   the   French    Ordinance,  not   as   a  mere   matter 
of  positive  regulation,  but  as  an  exposition  of  thfe  general  maritime  law ;  and 
afterwards  he  added :  "  Having  ascertained  the  true  meaning  of  this  article 
of  the  French  Marine   Ordinance,  its  authority,  or  the  influence  which  it 
should  have  in  deciding  this  cause,  is  next  to  be  considered.     It  is  insisted  by 
the  counsel  for  the  appellee,  that  this  article  is  nothing  more  than  a  part  of 
the  local  law  of  France  founded  upon  the  Roman  law  of  licitation  adopted  by 
France,  applicable  to  the  partition  of  property,  movable  and  immovable, 
■which  Is  held  in  common  by  two  or  more  persons,  -which,  without  a  sale, 
could  not  be  otherwise  conveniently  divided  between  them.     And,  in  sup- 
port of  this  argument,  it  Is  remarked,  that  the   expressions  of  the  article 
are  all  negative,  and"  must  necessarily  refer  to  some  other  code,  whenever 
the  excepted  case  shall  occur.      The  Ingenuity  and  the  Imposing  appear- 
ance of  thl^  argument   are  freely  acknowledged ;    but  It  will  not,  I  think, 
bear  a  close  examination.      For,   admitting   the   general    law  of  licitation 
to  have  formed  a  part  of  the  local  law  of  France,  It  does  not  follow,  that 
an  oi-dinance  restraining  and  qualifying  that  law  In  cases,  and  In  relation 
to  subjects  purely  maritime  In  their  nature,  should  likewise  form   a   part 
of  the  local  law  of  that  country.     It  would  rather  seem,  that,  on  account 
of  their  maritime  character,  It  was  deemed  proper  to  withdraw  such  sub- 
.jects   from   the    local,   for   the   purpose    of   Incorporating    them    into    the 
general,  marine  code  of  the   nation.      That  the   5th   article   Is  of  this  de- 
scription has  not  been  questioned.     It  was  no  doubt  copied  from  the  Roman 
maritime  code,  which,  having  also  provided  for  cases  of  disputes  between  the 
owners  of  unequal  interests,  as  well  as  between  those  having  equal  interests 
In  one  event  only,  it  would  seem  as  If  the  6th  article  had  been  introduced 
for  the  purpose  of  perfecting  the  system,  by  affording  a  remedy  in  another 
event,  for  which  the  Roman  law  had  made  no  provision.     It  Is  most  obvious, 
In  short,  that  Yalin,  as  well  as  other  jurists,  who  have  treated  of  these  arti- 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       681 

to  order  a  sale  of  property,  subjected  to  its  jurisdiction, 
is  clearly  a  matter  within  the  competency  of  a  Court 

cles,  have  considered  them,  not  as  parts  of  the  common,  but  of  the  maritime 
law  of  France ;  and  we  find  provisions  similar  to  them  in  principle  intro- 
duced into  the  commercial  code  of  that  country.  That  the  Ordinances  of 
Louis  XIV.  are  not  of  binding  authority  upon  the  maritime  Courts  of  other 
countries,  I  freely  admit ;  but  as  affordino;  evidence  of  the  general  maritime 
law  of  nations,  they  have  been  respected  by  the  maritime  Courts  of  all  nar 
tions,  and  adopted  by  most,  if  not  by  all  of  them,  on  the  continent  of  Europe. 
We  are  informed,  that  this  code  was  compiled  from  the  prevailing  maritime 
regulations  of  France,  and  of  other  nations,  as  well  as  from  the  experience 
of  the  most  respectable  commercial  men  of  France.  And  why  should  not 
such  parts  of  it  as  are  purely  of  a  general  maritime  character,  which  are 
adapted  to  the  commercial  state  of  this  country,  and  are  not  inconsistent 
with  the  municipal  regulations  by  which  our  Courts  are  governed,  be  fol- 
lowed by  the  Courts  of  the  United  States  in  questions  of  a  maritime  nature  ? 
I  leave  this  question  to  be  answered  by  those,  who  would  restrain  the  admi- 
ralty jurisdiction  of  the  District  Courts  within  the  limits  allowed  by  the 
Common  Law  Courts  of  England  to  be  exercised  by  the  High  Court  of 
Admiralty  of  that  country.  And  why,  let  me  again  ask,  shall  the  6th  article 
of  this  code  be  rejected  in  the  case  now  under  consideration  ?  Neither 
justice  nor  policy  requires  it;  for  it  is  manifest  that  the  appellants  must 
either  surrender  their  property  in  this  vessel,  or  rather  the  fruits  of  it,  to  the 
appellee,  or  their  equal  right  to  appoint  the  master,  and  to  decide  upon  her 
destination,  or  that  she  must  remain  idle  in  port,  until  the  subject  in  dispute 
is  totally  lost  to  both  the  owners.  There  is  no  other  imaginable  alternative, 
unless  it  be  the  one  which  the  appellants  ask  for ;  for  if  the  appellee  may 
now  legally  claim  the  right  to  take  this  vessel  to  sea,^and,  by  giving  security 
for  her  safe  return,  may  take  to  himself,  in  exclusion  of  the  other  part- 
owners,  all  the  earnings  of  the  voyage,  his  right  to  employ  her,  on  the 
same  terms,  as  long  as  she  shall  be  in  a  condition  to  be  navigated,  will 
continue  equally  valid,  and  the  exercise  of  it  can  no  more  be  denied 
then,  than  now.  Suppose,  for  the  purpose  of  further  illustrating  this  part 
of  the  subject,  these  parties  had  filed  cross  petitions,  setting  forth  the 
difference  between  them,  respecting  the  appointment  of  a  master,  and  each 
praying  to  be  permitted  to  take  the  vessel  to  sea  under  the  usual  stipulations ; 
since  neither  could  entitle  himself  to  a  preference,  what  could  the  Court 
do,  but  dismiss  both  petitions,  and  thus  leave  the  vessel  unemployed, 
unprofitable  to  both  parties  and  to  the  interests  of  commerce,  and  subject 
to  all  the  injury  to  which  such  a  state  of  things  would  expose  her?  Yet 
this  is  substantially  the  present  case ;  and  if  the  Court  has  no  power  to 
decree  a  sale,  it  is  clear  that  neither  of  the  parties  can  take  the  vessel 
to  sea,  without  a  decree  of  the  District  Court  authorizing  him  to  do  so. 
Upon  the  whole,  considering  the  article  of  the  French  Coile,  which  has 
so  often  been  referred  to,  as  constituting  a  part  of  the  maritime  law  of 
nations ;  that  it  is  in  itself  a  wise  and  equitable  provision ;  that  It  Is  not 


682  PARTNERSHIP.  [cHAP.  XVI. 

of  Admiralty,  and,  indeed,  is  familiar  in   practice,   in 
order    to    prevent  irreparable   mischiefs    or   impending 

inconsistent  with  the  commercial  state  of  this  country,  or  with  any  law 
which  should  govern  this  Court;  I  feel  myself  not  only  at  liberty,  but 
bound  to  adopt  and  apply  it  to  the  present  case;  and  I  shall,  therefore, 
reverse  the  sentence  of  the  District  Court,  and  decree  a  sale  of  this 
vessel.  My  opinion,  I  acknowledge,  was  very  different,  when  this  cause 
was  opened,  from  that  which  I  now  entertain.  I  had  read  that  which  was 
pronounced  in  the  District  Court  by  the  learned  Judge  of  that  Court, 
with  an  entire  conviction  of  its  correctness.  But  the  new  evidence  which 
has  been  introduced  in  this  Court,  presents,  in  at  least  one  most  essential 
particular,  a  different  case  from  that  which  was  submitted  to  the  view 
of  that  Court."  Davis  v.  The  Seneca,  18  Am.  Jurist,  p,  486,  492-494. 
The  decisions  of  the  Courts  of  Common  Law  upon  questions  of  Admiralty 
Jurisdiction  ought,  for  many  reasons,  historically  well  known,  to  be  received 
with  great  scruple  and  hesitation,  especially  when  considering  the  times 
when  these  questions  were  principally  agitated,  during  the  hostile  contro- 
versies between  these  Courts  and  the  Court  of  Admiralty.  Nor,  indeed, 
considering  the  very  slight  means  of  knowledge  then  possessed  by  the  Courts 
of  Common  Law  upon  the  doctrines  of  commercial  and  maritime  jurispru- 
dence, a  system  very  little  in  consonance  with  the  strict  doctrines  of  the 
common  law,  is  it  at  all  a  matter  of  wonder,  that  the  decisions  of  these 
Courts  upon  this  subject  should  have  little  in  them  to  commend  them  for 
adoption  in  the  present  age,  either  in  point  of  reasoning,  or  of  principle,  or 
of  learning.  How,  indeed,  it  could  be,  that  the  Admiralty  had  undoubted 
jurisdiction  in  cases  of  disputes  between  part-owners  themselves,  and  also 
between  part-owners  and  the  master,  to  dispossess  one  party  and  give  pos- 
session to  the  other,  thus  acting  in  rem,  in  order  to  prevent  irreparable 
mischief  or  ruin  to  the  joint  property ;  and  yet,  that  it  could  not,  to  prevent 
the  like  mischief  and  ruin,  direct  a  sale  thereof,  if  it  were  the  only  adequate 
means  to  attain  the  end,  is  a  matter  of  no  small  difficulty  to  understand. 
Nothing  is  more  clear  or  more  common  in  the  exercise  of  jurisdiction  by 
Courts  of  Admiralty,  than  to  decree  a  sale  of  ships  and  of  other  property 
in  their  custody,  to  prevent  loss,  or  decay,  or  ruin.  Even  Courts  of 
Equity,  although  their  jurisdiction  rarely  acts  m  rem,  will  direct  a  sale  of 
property  subjected  to  claims  within  their  cognizance,  in  order  to  adjust 
rights,  and  to  distribute  proceeds,  where  otherwise  irreparable  mischief 
might  ensue,  or  no  other  sufficient  remedy  exists.  This  is  very  common  in 
cases  of  a  dissolution  of  partnership,  and  in  cases  of  charges  upon  land, 
and  even  sometimes  in  cases  of  pledges  of  personal  property.  See  2  Story, 
Eq.  Jur.  §  1024-1028,  1033.  See  also  Stevens  v.  The  Sandwich,  1  Pet. 
Adm.  233,  note  ;  De  Lovio  v.  Boit,  2  Gall.  398,  463  ;  3  Kent,  lo3,  154,  and 
notes.  As  to  the  jurisdiction  of  Courts  of  Admiralty  in  cases  between 
part-owners,  see  the  commissions  to  the  Vice-Admiralty  Courts  in  America 
(which  in  this  respect  are  mere  copies  of  the  commission  of  the  High  Court 
of  Admiralty  in  England),  cited  in  De  Lovio  v.  Boit,  2  Gall.  470,  note; 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       683 

losses.^  Analogy,  therefore,  is  clearly  in  its  favor  ;  and 
unless  some  limitation  or  exception  can  be  asserted  to 
exist,  either  in  the  origin,  or  constitution,  or  practice 
of  the  Court  itself,  it  will  not  be  a  very  satisfactory 
mode  of  disposing  of  the  question,  for  a  Court  of  Com- 
mon Law  to  assert,  upon  its  own  mere  dictum^  without 
any  reasoning  in  support  of  it,  that  the  Court  of  Ad- 
miralty has  a  right,  in  cases  of  disputes  between  part- 
owners  of  ships,  to  take  a  stipulation,  but  not  to  order 
a  sale.  Such  language  would  seem  more  like  an  edict 
than  a  judgment,  and  to  promulgate  an  arbitrary  dis- 
tinction, rather  than  a  rational  interpretation  of  the 
jurisdiction  of  another  Court. 

§  4-40.  Having  thus  considered  the  rights,  duties, 
obligations,  and  liabilities  of  part-owners,  as  between 
themselves,  in  respect  to  the  repairs,  possession,  and 
employment  of  the  ship,  and  the  authority  of  the  ma- 
jority to  direct  and  control  the  same,  let  us  now  pro- 
ceed to  examine  some  other  rights,  duties,  obligations, 
and  liabilities,  arising  from  the  same  relation,  when 
all  the  part-owners  act  together,  by  common  consent, 
for  their  mutual  interest.  In  the  first  place,  it  may 
be  convenient,  here,  to  consider  the  rights  and  reme- 
dies, where  one  or  more  or  all  of  the  part-owners,  by 
common  consent,  are  employed  in  the  general  con- 
cerns of  the  ship,  or  of  a  part  thereof,  and  expend 
moneys,  or  contract  debts  on  account  thereof  There 
can  be  no  doubt,  that,  in  such  cases,  all  the  part-own- 
Curtis  on  Merchant  Seamen,  p.  348,  note  (3)  ;  Godolph.  Adra.  Jur.  c.  4, 
p.  43 ;  Sir  Leoline  Jenkins's  Works,  Argument  in  the  House  of  Lords  on 
the  Admiralty  Jurisdiction,  vol.  1,  p.  76,  80-84;  Id.  p.  792;  2  Bro.  Civil 
&  Adm.  Law,  p.  77,  note  (5)  ;  Id.  p.  130-133.  {In  Tunno  v.  The  Betsina, 
5  Am.  Law  Reg.  406,  the  United  States  District  Court  for  the  District  of 
South  Carolina  refused  to  order  a  sale  on  a  libel  by  a  minority  of  the  part- 
owners,  alleging  a  disagreement  as  to  the  employment. } 

»  Ibid. 


684  PARTNERSHIP.  [CHAP.  XVI. 

ers  are  bound  to  contribute  and  pay  their  respective 
shares  of  such  expenditures,  and  that  all  of  them  are 
liable  in  solido  for  the  unpaid  debts  so  properly  in- 
curred on  the  joint  account.^  But  the  question  may 
arise,  whether  this  is  a  mere  personal  charge,  or 
whether  the  respective  part-owners  have  also  a  lien 
on  the  ship  itself  for  the  expenditures,  or  charges, 
made  by  them,  which  lien  is  capable  of  being  enforced 
against  the  ship  itself,  in  cases  of  the  insolvency, 
death,  or  bankruptcy  of  a  particular  part-owner,  or  any 
other  failure  on  his  part  to  discharge  his  own  share 
thereof. 

§  441.  In  cases  of  partnership,  we  have  already 
seen  that  the  partners  respectively  have  a  specific 
lien  upon  the  partnership  property,  for  all  expenditures 
made  by  them,  and  balances  due  to  them  for  advances 
and  other  liabilities  incurred  on  account  of  the  part- 
nership, as  well  as  for  their  shares  of  the  partnership 
effects,  upon  a  dissolution  of  the  partnership.^  There 
is  as  little  doubt,  that  part-owners  of  a  ship,  who  pur- 
chase a  cargo,  and  engage  in  a  common  voyage  and 
adventure,  upon  the  joint  account  and  profit  of  all 
concerned  (and  not  merely  in  an  employment  of  the 
ship  on  freight),  have  also  a  like  lien^  for  all  disburse- 
ments and  advances,  as  well  as  for  their  share  of  the 
profits,  upon  the  property  employed  in  such  voyage  or 
adventure,  and  its  proceeds ;  for  as  to  such  voyage  or 

»  Ante,  §  419,  420;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  8,  p.  76,  5th 
ed. ;  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  811,  812,  2d  ed. ;  1  Mont,  on  P.  B.  2, 
c.  1. 

"  Ante,  §  326,  346,  347,  360,  361 ;  Coll.  on  P.  B.  5,  c.  4,  §  1,  p.  793, 
794,  2d  ed. 

'  [In  Green  v.  Briggs,  6  Hare,  395,  400,  it  was  said  that  the  use  of  the 
■word  "lien,"  in  this  connection,  did  not  properly  describe  the  right  of  a 
part-owner  to  be  reimbursed,  out  of  the  gross  freight,  the  expenses  incurred 
in  the  prior  repairs  and  outfits  of  the  ship.] 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       685 

adventure,  they  are  treated  as  partners,  and  not  merely 
as  part-owners.^ 

§  442.  But  the  question  here  propounded  is  in- 
tended to  apply  to  the  case  of  expenditures,  advances, 
and  debts,  incurred  on  account  of  the  ship,  by  the  part- 
owners,  merely  in  their  character  as  such,  as,  for  ex- 
ample, for  repairs,  or  for  outfits  for  a  voyage,  or  by  dis- 
charging existing  liens  thereon.  Upon  this  question, 
different  judicial  opinions  have  been  expressed  by  emi- 
nent judges  in  England  and  in  America.^  Lord  Hard- 
wicke,  upon  the  most  full  and  deliberate  consideration, 
held,  that  where  any  part-owner  died  without  paying 
his  portion  of  the  expenses  of  building  and  fitting  out 
the  sliip,  the  other  part-owners  had  a  specific  lien 
on  his  share  in   the  ship,  for  the  moneys  which  they 

>  Ante,  §  54-56 ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  9,  10,  p.  77-79,  oth 
ed. ;  Coll.  on  P.  B.  5,  c.  4,  §  1,  p.  794,  2d  ed. ;  Holderness  v.  Shackels, 
8  B.  &  C.  612  ;  1  Mont,  on  P.  B.  2,  c.  1.  {See  Macy  v.  De  Wolf,  3  Wood. 
&  M.  193 ;  Starbuck  v.  Shaw,  10  Gray,  492  ;  1  Pars.  Mar.  Law,  95,  101. }  — 
In  the  case  of  Holderness  v.  Shackels,  8  B.  &  C.  612,  618,  the  very  distinc- 
tion was  stated  by  Lord  Tenterden,  in  delivering  his  opinion.  "  This  is  not 
the  case  of  a  claim  of  lien  on  the  share  of  the  ship,  but  a  claim  by  persons, 
being  part-owners  of  a  ship,  engaged  together  in  an  adventure ;  and  the 
subject-matter,  in  respect  of  which  this  action  is  brought,  is  part  of  the 
proceeds  of  that  adventure,  viz.,  part  of  the  oil,  which  had  been  obtained 
on  a  fishing  voyage.  Now,  it  is  clearly  established,  as  a  general  principle 
of  law,  that  if  one  partner  becomes  a  bankrupt,  his  assignees  can  obtain  no 
share  of  the  partnership  effects  until  they  first  satisfy  all  that  is  due  from 
him  to  the  partnership.  The  case  of  Smith  v.  De  Silva,  Cowp.  469,  is  a 
very  entangled  case,  and  the  facts  stated  in  the  report  are  not  very  clear 
or  perspicuous.  It  appears  that  De  Silva  had  originally  made  advances, 
not  as  part-owner  of  the  ship,  nor  even  as  partner  in  the  adventure,  but  as 
a  person  appointed  by  all  the  part-owners  to  manage  the  adventure  for 
them,  rather  as  their  agent  than  as  their  partner.  He  afterwards  acquired 
an  interest  by  purchasing  a  part  of  the  ship,  and  so  became  a  partner  in  the 
adventure;  but  he  was  not  an  original  p.artner.  Smith  v.  De  Silva  may, 
therefore,  have  been  properly  decided,  without  breaking  in  on  the  general 
princi[)le  to  which  I  have  adverted." 

2  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  9,  10,  p.  76-80,  5th  ed. ;  Coll.  on  P.  B. 
5,  c.  4,  §  1,  p.  793,  794,  2d  ed. ;  3  Kent,  39 ;  1  Mont,  on  P.  B.  2,  c.  1,  and 
Id.  A  pp.  note  (z). 


686  PARTNERSHIP.  [cHAP.  XVI. 

had  laid  out,  and  the  liabilities  they  had  incurred  on 
this  account.^     On  the  other  hand,  Lord  Eldon,  upon 

'  Doddingtonv.  Hallet,  1  Ves.  Sr.  497  ;  Abbott  onShipp.  by  Shee,  Pt.  1, 
c.  3,  §  5,  p.  94,  ed.  1840.  [In  the  late  case  of  Green  v.  Briggs,  6  Hare,  395, 
Vice-Chancellor  Wigram  observed  :  "  The  case  of  Doddington  v.  Hallet  was 
referred  to  in  argument  by  the  plaintiff's  counsel,  but  only  (as  I  understand) 
for  the  purpose  of  excluding  the  suggestion  that  the  plaintiff  relied  upon 
it,  or  upon  the  doctrine  it  contains,  for  supporting  his  claim  in  this  suit.  I 
collect  from  Story  on  Partnership,  that,  upon  principles  of  public  policy 
and  convenience,  America  has  adopted  Doddington  v.  Hallet.  But,  how- 
ever that  may  be,  it  is  certain  that  Lord  Eldon,  in  Ex  parte  Harrison,  and 
in  Ex  paHe  Young,  deliberately  overruled  it.  And  the  plaintiff  was  not 
wrong  in  reminding  me,  at  the  outset,  that  what  he  seeks  by  this  suit  is,  not 
to  affect  the  ship  or  the  proceeds  of  the  sale  of  the  ship,  but  only  to  have 
her  gross  earnings,  or  a  sufficient  part,  applied  in  paying  the  expenses 
incurred  in  making  them,  before  profits  are  divided  amongst  the  part-owners. 
From  this  point  I  shall  start  by  making  three  assumptions :  first,  by  ex- 
cluding the  repairs  of  the  hull  of  the  ship  ;  secondly,  by  supposing  the 
ship's  earnings  to  have  consisted  of  a  cargo  of  whale  oil  made  upon  a 
whaling  voyage,  and  not  to  have  arisen  in  the  shape  of  freight ;  and,  thirdly, 
by  assuming  that  the  voyage  was  simple  and  entire,  and  not  affected  by 
considerations  which  sometimes  apply  where  an  entire  voyage  out  and 
home  has,  for  some  purposes,  been  considered  as  consisting  of  several  voy- 
a""es.  After  these  assumptions,  I  need  not  dwell  long  upon  the  point  first 
contended  for  by  the  plaintiff.  Holderness  v.  Shackels  is  a  case  in  point. 
The  Court  distinguished  between  the  ship  itself,  and  her  earnings ;  and 
held  in  that  case,  that,  although  part-owners  were  tenants  in  common  of 
the  ship,  they  were  jointly  interested  in  the  use  and  emplo^Tuent  of  the 
ship,  and  that  the  law  as  to  earnings  must  follow  the  law  in  partnership 
cases.  And  in  Ex  paiie  Hill,  the  Vice-Chancellor  said  :  '  If  there  had  been 
no  sale,  the  creditors  would  have  had  no  lien  on  the  ship,  because  that  was 
not  joint  property ;  but  the  earnings  of  the  ship  would  have  been  joint 
property,  and  liable  to  the  joint  creditors,  not  from  any  doctrine  peculiar 
to  the  earnings  of  a  ship,  but  on  the  general  principle  applicable  to  the 
joint  property  of  every  partnership.'  If  in  this  case  the  '  Thames '  had 
been  employed  on  a  whaling  voyage,  and  the  money  now  at  the  bank 
represented  the  cargo,  no  dispute  could  have  arisen.  Then  is  freight,  qua 
earnings,  distinguishable  from  other  earnings  of  a  ship,  for  the  purpose 
under  consideration  ?  In  the  absence  of  authority  establishing  such  a 
distinction,  or  a  clear  principle  requiring  me  to  adopt  it,  I  will  not  admit  it. 
The  authorities,  in  fact,  as  far  as  they  go,  negative  the  distinction  instead 
of  supporting  it.  In  Ex  parte  Young,  in  which  Lord  Eldon's  mind  was 
distinctly  called  to  the  difference  between  the  ship  and  her  earnings,  he  said, 
'  I  have  no  doubt  that  freight  is  liable  to  the  joint  demand :  as  to  the  ship. 
It  stands  upon  the  nice  distinction  of  a  tenancy  In  common.'     In  Ex  parte 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       687 

great  consideration,  overruled  this  decision  of  Lord 
Hard\vi<"ke,  and  maintained  that  there  was  no  lien 
in  such  cases  by  the  part-owners  upon  the  shares  of 
each  other. ^ 

Hill,  the  earnings  of  the  ship,  with  which  the  Court  had  to  deal,  was  freight. 
In  Ex  parte  Christie,  Lord  Eldon  said,  that  what  was  coming  from  the  master 
was  joint  earnings.  The  language  of  Story  on  Partnership  is  not  opposed  to 
this  conclusion.  The  learned  author  meant  only  to  state  what  he  considered 
clearly  decided  by  authority,  and  not  to  say  that  freight  might  not  be  subject 
to  the  same  law  as  other  earnings  of  a  ship.  Does  principle  then  require  me 
to  admit  the  distinction  contended  for,  between  freight  and  cargo,  for  a 
purpose  like  the  present  ?  Suppose  a  ship,  by  the  consent  of  the  owners,  to 
be  fitted  for  a  voyage,  and  to  make  profit  partly  by  freight,  and  partly  by 
merchandise.  Holderness  v.  Shackels  furnishes  the  law  in  the  one  case.  Upon 
what  principle  is  the  mode  of  adjusting  the  account  between  the  part-owners 
to  be  split,  with  reference  only  to  the  nature  of  the  earnings  the  ship  has 
made  ?  Am  I  bound  to  hold  that  each  alteration  in  the  employment  of  a 
ship,  which  accident  or  convenience  may,  from  day  to  day,  suggest,  is  to 
affect  the  rights  of  the  part-owners  inter  se,  as  to  the  expenses  necessary 
to  prepare  the  ship  for  her  employment  ?     So  here,  in  fact  (though  it  forms 


^  Ex  parte  Young,  2  Yes.  &  B.  242  ;  Ex  parte  Harrison,  2  Rose,  76.  — 
Lord  Tenterden  (Abbott  on  Shipp.  Ft.  1,  c.  3,  §  10,  p.  79,  note  (1),  Am. 
ed.  1829),  in  his  earlier  editions,  stated  his  own  doubts  upon  the  doctrine 
of  Lord  ILardwIcke,  in  language  which  was  afterwards  adopted  by  Lord 
Eldon,  In  Ex  parteYoung,  2  Ves.  &  B.  242,  and  therefore  it  is  here  in- 
serted, although  omitted  in  the  later  editions.  He  said:  "  It  seems  tohave 
been  considered,  that  part-owners  might  have  a  lien  on  each  other's  shares 
of  a  ship,  as  partners  in  trade  have  on  each  other's  shares  of  their  merchan- 
dise. But  I  do  not  find  this  point  to  have  been  ever  decided ;  and  there  is  a 
material  difference  between  the  two  cases.  Partners  are  at  law  joint-tenants 
of  their  merchandise ;  one  may  dispose  of  the  whole  property.  But  part- 
owners  ai'e  tenants  in  common  of  a  ship.  One  cannot  sell  the  share  of 
another.  And  If  this  general  lien  exists.  It  must  prevail  against  a  purchaser, 
even  witliout  notice ;  which  does  not  seem  consistent  with  the  nature  of  the 
interest  of  a  tenant  In  common.  It  is  true,  indeed,  that,  as  long  as  the  ship 
continues  to  be  employed  by  the  same  persons,  no  one  of  them  can  be  en- 
titled to  partake  of  the  profits,  until  all  that  Is  due  In  respect  to  the  part  he 
holds  in  the  ship  has  been  discharged.  But  as  one  part-owner  cannot  compel 
another  to  sell  the  ship,  there  does  not  appear  to  be  any  mode  by  which  he 
can  enforce  against  the  other's  share  of  the  ship,  In  specie,  the  payment  of 
his  part  of  the  expenses."  See  also  1  Mont,  on  P.  B.  2,  c.  1,  and  Id.  App. 
note  (z).  Why  may  not  a  lien  be  foirly  presumed  in  such  cases  to  be  con- 
templated by  the  parties  ? 


688  '  PARTNERSHIP.  [cHAP.  XVI. 

§  443.  It  does  not  appear  that  any  distinction  was 
taken  by  Lord  Eldon,  in  the  application  of  the  doc- 
no  part  of  the  argument  on  which  I  mean  to  rely),  it  does  appear  that 
the  profits  made  were  not  exclusively  from  freight ;  that  there  was  a  cargo 
of  beer,  or  some  article  of  export  to  a  small  amount,  that  entered  into  the 
transaction.  If  a  distinction  like  that  contended  for,  —  a  distinction  which 
leads  to  manifest  injustice,  and  in  support  of  which  nothing  but  what  Lord 
Eldon  in  Young's  case  calls  a  '  nice  distinction,'  turning  upon  a  tenancy  in 
common,  be  not  already  established,  I  see  no  ground  for  it.  The  case  of 
Helme  v.  Smith  was  referred  to.  In  that  case  it  was  decided,  that  the  mah- 
a"-ing  owner  may  sue  each  shareholder  for  his  proportion  of  the  expenses 
before  the  adventure  ends,  which  it  was  said  in  an  ordinary  partnership  he 
could  not  do.  Other  cases  to  the  same  effect  were  cited.  But  there  is  no 
reason  why  that  right  should  preclude  the  partner,  who  made  an  advance  for 
his  copartner  for  joint  purposes,  from  insisting,  where  joint  property  comes 
to  be  divided,  that  in  making  the  division,  each  partner,  before  he  receives 
his  proportion  of  profits,  shall  be  charged  with  his  due  proportion  of  the 
expenses  of  making  them.  The  observations  of  Mr.  Justice  Bosanquet,  in 
Helme  v.  Smith,  apply  to  that  view  of  the  case.  Moreover,  the  objection 
would  apply  as  strongly  to  Holderness  v.  Shackels  as  to  any  case.  A  form 
of  expression  found  in  numerous  cases  was  next  relied  upon  ;  namely,  that 
•  freight  follows  the  ownership  in  a  ship,  as  an  incident ;  '  and  Case  v.  David- 
son, and  other  cases  to  the  same  effect,  were  referred  to.  This  law  I  do  not 
doubt,  but  it  is  plain  that  those  cases  have  no  bearing  upon  the  principal 
case.  The  question  in  those  cases  has  been,  who  was  the  rightful  party  to 
receive  such  freight  as  was  payable  ;  and  not  whether  the  freight  to  be  paid 
was  gross  or  net  freight,  which  is  the  only  question  here.  Here  there  is  no 
dispute  that  Briggs  &  Co.  are  entitled  to  such  freight  as  is  coming  in  re- 
spect of  Acraman's  share,  and  the  only  question  is,  whether  the  expenses  of 
earning  the  freight  are  not,  as  between  the  part-owners,  to  be  first  paid  in 
ascertaining  what  freight  is  coming.  Excluding  then  the  expense  of  the 
repairs  of  the  ship,  I  hold  that  the  plaintiff  has  a  right  to  have  the  gross 
freight  applied  in  paying  the  expenses  of  the  refitting  and  outfit  of  the  ship, 
before  any  divi^iion  amongst  the  part-owners  shall  be  made.  The  argument 
against  the  plaintifFs  claim  to  have  the  expenses  of  repairs  protected  in  the 
same  way,  was  in  substance  this :  that  the  repairs  to  the  hull  of  the  ship 
were  inseparable  from  it ;  that  they  were,  in  effect,  improvements  of  the 
chattel  held  in  common,  and  must  be  governed  by  the  same  law  which  regu- 
lates the  rights  of  the  shareholders  i7iter  se  respecting  the  ship  itself.  Now 
I  will  not  deny,  that  a  case  may  exist  in  which  the  question  of  repairs  would 
necessarily  be  so  dealt  with.  Nor  will  I  say  that  any  rule  of  logic  would 
be  violated  by  applying  that  reasoning  to  all  cases  of  repairs.  Nor,  if  I 
found  authority  supporting  that  reasoning  in  its  application  to  repairs,  do  I 
say  that  my  individual  opinion  is  so  strong  against  it,  that  I  should  feel 
justified  in  opposing  that  opinion  to  any  distinct  authority.     But  that  is  not 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       689 

trine,  whether  the  party  making  the  advances  and  ex- 
penditures was  the  ship's  husband  or  not,  or  whether 
the  ship's  husband  was  a  part-owner  or  not.     The  hen 

the  question  here.  I  am  satisfied  there  is  nothing,  in  point  of  authority, 
to  prevent  my  holding  that  repairs  necessarily  and  properly  done,  with  a 
view  to  a  particular  adventure,  —  repairs  without  which  the  particular  ad- 
venture could  not  be  undertaken,  —  should  be  governed  by  the  same  consider- 
ations which  apply  to  such  parts  of  the  refitting  and  outfit  as  are  inseparable 
from,  and  not  part  of  the  ship.  And,  if  that  be  so,  I  cannot  hesitate  in  pre- 
ferring a  conclusion  which  (without  possible  injury  to  any  one)  excludes  the 
technical  distinction  upon  which  Lord  Eldon  overruled  Doddington  v.  Hal- 
let,  and  applies  to  this  case  the  equitable  rules  by  which  the  rights  of  part- 
ners inter  se  are  regulated.  I  say  without  possible  injury  to  any  one,  be- 
cause if,  at  the  expiration  of  the  adventure,  the  ship  be  of  increased  value, 
each  tenant  in  common  will,  in  that  character,  have  the  benefit  of  the  im- 
provement. The  question,  however,  is  whether,  upon  legal  principles,  this 
is  the  right  conclusion.  For  the  purpose  of  trying  this  I  will  first  suppose, 
that  the  repairs  are  strictly  necessary  for  the  purposes  of  the  adventure,  and 
such  as  would  be  exhausted  in  the  adventure.  Why  are  the  expenses  of 
such  repairs  not  to  be  treated  as  part  of  the  capital  employed  by  the  adven- 
turers on  joint  account  ?  All  expenditure  for  the  purjjose  of,  and  necessary  to 
the  joint  adventure,  must,  jvimn  facie,  be  taken  to  be  the  capital  embarked  in 
the  adventure.  The  circumstance  that  the  ship  (held  in  common)  is,  during 
the  adventure,  improved  In  value,  cannot  by  any  logical  rule  alter  the  char- 
acter of  the  expenditure  which  was  made  with  a  view  to  the  adventure ; 
and  if  that  be  admitted,  the  case  Is  ended,  for  a  partner  who  has  not  paid  up 
his  share  of  the  capital,  cannot  entitle  himself  to  a  share  of  the  profits,  with- 
out giving  credit  for  the  share  of  capital  which  he  ought  to  have  supplied. 
It  would  not  be  difficult  to  suggest  a  case  In  which  tenants  In  common 
of  land,  agreeing  to  be  partners  In  farming  It  for  experimental,  as  distin- 
guished from  ordinary  agricultural  purposes,  and  incurring  extraordinary 
expenses  In  so  doing,  by  which  the  land  itself  Is  Improved  during  the 
partnership,  would,  as  between  each  other,  have  a  right  similar  to  that  which 
I  hold  to  exist  In  this  case.  "Would,  then,  the  circumstance  (If  it  existed), 
that  the  expenditure  in  repairs  was  not  exhausted  with  the  adventure,  al- 
ter the  case  ?  If  expenditure  were  necessary  or  proper  for  a  specific  pur- 
pose, why  should  this  Incidental  consequence  alter  the  case  ?  I  have  al- 
ready said,  that  no  Injury  could  posslblv  result  to  any  party  from  it.  The 
utmost  consequence,  however,  would  be  the  apportionment  of  the  expenses 
of  the  repairs.  In  this  case,  the  evidence  Is,  that  the  repairs  were  neces- 
sary for  the  adventure.  The  ship,  at  the  end  of  the  voyage,  was  In  fact 
broken  up,  and  the  defendant  has  made  no  case  for  apportionment.  Whore 
the  reasoning  upon  which  Lord  Eldon  overruled  Doddington  v.  Hallet,  ap- 
plies. It  must  be  acted  upon ;  where  it  does  not,  the  princij)le  upon  which 
Doddington  v.  Hallet  proceeded  will,  I  conceive,  be  followed."] 

44 


690  PARTNEESHIP.  [cHAP.  XVI. 

seems  equally  to  have  been  denied  by  him  in  each  case. 
The  ship's  husband,  indeed,  will  be  entitled,  if  a  part- 
owner,  to  a  lien  for  his  disbursements  and  outfits  upon 
the  proceeds  and  profits  of  the  voyage  or  adventure, 
undertaken  upon  joint  account  and  for  joint  profit,  as 
a  sort  of  partnership  for  the  voyage  or  adventure.  And 
if  the  ship's  husband  be  a  mere  stranger,  and  he  has 
regularly  come  to  the  possession  of  the  proceeds  of  the 
voyage,  or  of  the  ship  itself,  if  sold,  or  of  the  ship's  doc- 
uments and  freight,  he  will  be  entitled  to  a  lien  thereon 
for  his  reimbursement  and  indemnity.  But  beyond 
this,  the  ship's  husband  does  not  seem  to  be  recognized 
as  having  any  peculiar  lien,  or  at  least  not  any  upon  the 
ship  or  its  proceeds.^  There  seems  no  little  hardship 
in  this  strict  doctrine  ;  and  it  forms  a  marked  contrast 
with  that  liberal  policy,  with  which  the  Court  of  Admi- 
ralty, following  out  the  precepts  of  the  general  maritime 
law,  was  accustomed  to  act,  when  allowed  the  free  ex- 
ercise of  its  own  jurisdiction,  by  giving  a  lien  on  the 
ship  for  all  supplies  and  expenditures  thereon.^ 

§  414.  In  America,  the  same  question  has  occurred, 
and  the  doctrine  of  Lord  Hardwicke  has  been  affirmed, 
as  best   founded  in    principle,  and    public   policy,  and 


'  1  Bell,  Comm.  B.  3,  Ft.  1,  c.  4,  §  1,  p.  503-505,  5tli  ed. ;  Coll.  on  P. 
B.  5,  c.  4,  §  4,  p.  810,  2d  ed. ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  8-10,  p.  76- 
78,  5th  ed. ;  Ex  parte  Young,  2  Rose,  78,  note ;  s.  c.  2  Ves.  &  B.  242. 

^  See  on  this  subject  the  resolutions  of  the  Privy  Council  of  England  of 
the  18th  of  February,  1632,  assented  to  by  all  the  Judges,  expressly  affirm- 
ing the  jurisdiction  of  the  Admiralty,  in  the  following  terms  :  "  If  a  suit  be 
in  the  Court  of  Admiralty,  for  building,  mending,  saving,  or  necessary 
.victualling  of  a  ship,  against  the  ship  itself,  and  not  against  any  party  by 
name,  but  such  as  for  his  interest  makes  himself  a  party ;  no  prohibition  is 
to  be  granted,  though  this  be  done  within  the  realm."  Godolph.  Adm.  Jur. 
159;  Zouch,  Adm.  Jur.  122,  123;  2  Bro.  Civil  &  Adm.  Law,  p.  78,  79; 
Sir  Leoline  Jenkins's  Works,  Vol.  2,  p.  76,  80-84,  Argument  on  Admiralty 
Jurisdiction.  See  also  1  Bell,  Comm.  B.  3,  Pt.  1,  c.  4,  §  5,  p.  525-527, 
5th  ed. 


CHAP.  XVI.]    RIGHTS  AND  IN'TERESTS  OF  PART-OWNERS.       691 

convenience.^     In  short,  cases  of  this  sort  are  treated 
as  constituting  a  quasi  partnership,  with  reference  to 

*  Mumford  v.  Nicoll,  20  Johns.  611,  overruling  the  derision  in  the  same 
case  in  the  Court  of  Chancery,  4  Johns.  Ch.  522 ;  Dunham  v.  Jarvis,  8  Barb. 
88,  94;  {Stewart  v.  Rogers,  19  Md.  98,  118.  But  see  Merrill  v.  Bartlett, 
6  Pick.  46 ;  Macy  v.  De  Wolf,  3  Wood.  &  M.  193,  1  Pars.  Mar.  Law,  95, 
101.}  The  reasoning  of  Lord  Hardwicke  was  to  this  effect:  "  No  pur- 
chaser or  assignee  of  any  share  of  this  ship  is  now  before  me,  but  merely 
the  representative  of  Thomas  Hall,  who  was  part-owner  with  others  in  the 
trade  of  this  ship ;  and  his  representative  is  just  in  the  same  case  as  he 
would  be  himself;  and  these  general  creditors  are  in  the  same  case,  having 
no  assignment  or  specific  lien  on  his  share  in  the  ship ;  and  the  rule  of 
determination  must  be  exactly  the  same  as  if  Thomas  Hall  himself  had  been 
before  the  Court,  and  an  account  prayed  against  him.  It  must  be  admitted, 
the  ship  may  be  the  subject  of  partnership,  as  well  as  any  thing  else  ;  the 
use  and  earnings  thereof  being  proper  subject  of  trade,  and  the  letting  a 
ship  to  freight  as  much  a  trade  as  any  other.  Then  it  appears  plainly  to  be 
a  partnership  among  them,  and  the  ship  itself  to  be  part  of  the  subject 
thereof,  which  was  to  be  let  to  freight  to  the  company,  it  being  their  method 
of  trading.  The  foundation  of  this  partnership  stock  is  the  ship  itself, 
which  mu?t  be  employed,  and  the  earnings  and  profits  to  arise.  Undoubt- 
edly all  these  persons  subject  to  this  agreement,  are  liable  in  solido  to  the 
tradesmen  who  fitted  it  out;  and  this  agreement  for  proportional  shares  is  as 
between  themselves;  which  is  the  case  of  aU  partnerships.  But  as  to  all 
persons  furnishing  goods  or  merchandise,  or  employed  in  work,  each  is 
liable  in  solido."  The  opinion  of  Lord  Eldon  is  ver}^  brief,  and  almost 
without  reasoning.  He  observed,  in  Ex  parte  Young,  2  Ves.  &  B.  242, 
"The  difficulty  in  this  case  arises  upon  the  decision  of  Doddington  v.  Hal- 
let,  by  Lord  Hardwicke,  Avhich  is  directly  in  point.  That  case  is  questioned 
by  Mr.  Abbott,  who  doubts  what  would  be  done  with  it  at  this  day ;  and  I 
adopt  that  doubt.  The  case,  which  is  given  by  Mr.  Abbott,  from  the  Reg- 
ister's Book,  is  a  clear  decision  by  Lord  Hardwicke,  that  part-owners  of  a 
ship,  being  tenants  in  common,  and  not  joint-tenants,  have  a  right,  notwith- 
standing, to  consider  that  as  a  chattel  used  in  partnership,  and  liable,  as 
partnership  effects,  to  pay  all  debts  whatever,  to  Avhich  any  of  them  are 
liable  on  account  of  the  ship.  His  opinion  went  the  length,  that  the  tenant 
in  common  had  a  right  to  a  sale.  There  is  great  difficulty  upon  that  case  ; 
and  the  inclination  of  my  judgment  is  against  it.  But  it  would  be  a  very 
strong  act  for  me,  by  an  order  in  bankruptcy,  from  which  there  is  no 
appeal,  to  reverse  a  decree  made  by  Lord  Hardwicke  in  a  cause.  Froni  a 
manuscript  note  I  know  it  was  his  most  solemn  and  deliberate  opinion,  after 
great  consideration,  that  the  contrary  could  not  be  maintained  ;  and  there  is 
no  decision  in  equity  conti-adicting  that."  In  the  note  of  Lord  Eldon's 
judgment  in  2  Rose,  78,  note,  the  language  attributed  to  him  is  :  "  Dodding- 
ton V.  Hallet,  I  know,  from  a  MS.  note,  to  have  been  Lord  Hardwicke's 


692  PARTNERSHIP.  [CHAP.  XVI. 

the   intended   voyage    or    adventure,   upon    which    the 
ship   is   to   be    employed  ;    and,  therefore,  the   repairs, 

deliberate  judgment.  In  a  case  of  joint  property,  I  admit  there  cannot  be 
much  difficulty.  It  is  different  in  a  tenancy  in  common,  and  in  an  un- 
divisible  personal  chattel.  I  certainly  differ  from  Lord  Hardwicke  ;  but  I 
hesitate  to  decide  against  his  deliberate  judgment  in  a  cause  upon  a  petition 
in  bankruptcy.  The  better  way  will  be,  at  present,  to  intimate  my  opinion 
to  be  against  this  lien,  leaving  the  parties,  if  dissatisfied,  to  apply  for 
a  rehearing.  I  have  no  doubt,  that  freight  is  liable  to  the  joint  demands. 
As  to  the  ship,  it  stands  upon  the  nice  distinction  of  a  tenancy  in  common." 
In  Mumford  v.  Nicoll,  20  Johns.  611,  Mr.  Ch.  Justice  Spencer  considered 
the  subject  very  much  at  large,  and  his  opinion  was  adopted  by  the  Court 
of  Errors.  Upon  that  occasion  he  said:  "The  decree  appealed  from  con- 
siders the  appellant  and  Stilwell  to  have  been  owners  as  tenants  in  common, 
in  equal  moieties,  of  the  brig  Phcenix,  and  that  they  were  special  partners, 
and  had  a  joint  interest  in  the  cargo  and  voyage ;  and  that  that  partnership 
was  one  entire  and  distinct  concern,  unconnected  with  any  former  partner- 
ship, in  any  former  voyage,  in  any  other  vessel ;  and  it  was  decreed,  that  a 
master  should  state  an  account  between  the  respondents,  as  assignees  of 
Stilwell  and  the  appellant,  in  respect  to  the  brig  Phoenix,  and  her  cargo  and 
voyage,  and  that  the  appellant  be  charged  with  a  moiety  of  the  net  pro- 
ceeds of  the  brig  sold  at  Havana,  and  with  a  moiety  of  the  net  proceeds  of 
the  freight  and  cargo  of  the  brig  on  the  voyage,  or  so  much,  if  any,  of  the 
net  proceeds  of  the  moiety  of  the  freight  and  cargo,  as  shall  appear  due  ,to 
the  respondents,  as  such  assignees,  after  deducting  the  balance,  if  any  found 
due  to  the  appellant  from  Stilwell,  or  an  account  to  be  taken  and  stated 
between  them,  in  respect  to  their  joint  concern  in  the  said  freight,  and  cargo, 
and  adventure,  afler  all  just  allowances  between  them,  in  respect  to  such 
joint  concern,  are  made.  In  other  words,  the  decree  considers  the  appel- 
lant and  Stilwell  as  joint  owners  and  partners,  in  regard  to  the  cargo  and 
freight,  and  directs  the  amount  to  be  stated  on  that  principle,  confining  that, 
however,  to  the  particular  voyage  and  concern  of  the  brig  Phoenix ;  and  it 
considers  them  tenants  in  common  of  the  vessel  itself,  and  renders  the 
appellant  liable  for  the  net  proceeds  of  the  sale  of  the  brig,  denying  to  the 
appellant  a  right  to  reimburse  himself  out  of  those  proceeds,  however  the 
accounts  between  the  appellant  and  Stilwell  may  stand,  either  as  regards 
that  voyage,  or  other  concerns  and  voyages  in  other  vessels.  I  put  out  of 
consideration,  at  once,  the  inquiry,  whether  the  appellant  knew  of  the 
assignment  to  the  respondents,  of  Stilwell's  interest  in  the  brig,  when  he 
requested  Captain  Green  to  consign  to  him  the  proceeds  of  the  brig  and  cargo, 
because  there  is  no  complaint  of  the  sale  of  the  brig,  which  was  made  in 
pursuance  of  instructions  originally  given,  and  which  never  were  revoked ; 
and  because  the  appellant's  riglit  depends  on  legal  principles,  and  not  upon 
the  circumstance  that  he  has  those  proceeds  in  his  possession.  The  ques- 
tion  simply  is.  Has  he  a  right  to  hold  them  subject  to  the  inquiry  into 


CHAP.  XYI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       G93 

outfits,  and  other  expenses  incurred  to  accomplish  the 
enterprise,  are  deemed  to  be  made  on  joint  account,  and 

the  general  balance  of  his  account,  either  in  relation  to  that  particular 
adventure,  or  in  relation  to  other  and  similar  adventures  ?  In  short, 
under  the  flicts  and  circumstances  of  this  case,  are  the  proceeds  of  the 
vessel  to  be  regarded  as  partnership  property,  either  as  regards  the  voyage 
of  the  Phoenix,  or  other  and  similar  voyages  in  other  vessels?  I  understand 
the  Chancellor  as  admitting,  that  the  case  of  Doddington  v.  Hallet,  1  Ves. 
Sr.  497,  is  directly  opposed  to  the  decision  he  has  made,  and  that  he  con- 
siders that  case  as  not  only  not  having  been  acted  upon,  but  as  overruled  by 
the  cases  to  which  he  has  referred.  We  will  see  what  Lord  Hardwicke  de- 
cided in  that  case.  The  bill  was  founded  on  an  agreement  between  the 
plaintiffs  and  one  Hall,  authorizing  the  latter  to  contract  for  the  building  of 
a  ship,  and  for  fittinj;  out,  manasrinjr,  and  victualling  her,  with  an  ajrreement 
to  pay  proportional  shares,  according  to  their  interests.  The  part-owners 
claimed,  against  Hall's  representatives,  a  specific  lien,  upon  what  was  due 
to  Hall  for  his  share,  on  account  of  the  money  the  plaintiffs  had  paid  to  the 
tradesmen,  in  fitting,  (fee,  the  ship,  and  that  tlie  administrators  should  not  run 
away  with  it,  as  part  of  the  general  assets  for  all  the  creditors.  Lord  Hard- 
wicke, after  premising,  that  the  case  stood  as  though  Hall  himself  was  before 
the  Court,  no  one  having  a  specific  lien  on  Hall's  share  in  the  ship,  went  on 
to  say  that  it  must  be  admitted,  that  a  ship  might  be  a  subject  of  partnership, 
as  well  as  any  thing  else,  the  use  and  earnings  thereof  being  a  proper  sub- 
ject of  trade.  He  said,  it  was  a  partnership  among  them,  and  the  t^hip  itself 
to  be  part  of  the  subject  thereof,  which  was  to  be  let  to  freight  to  the  com- 
pany, it  being  their  method  of  trading.  The  foundation  of  this  partnership 
stock  was  the  ship  itself,  which  must  be  employed,  and  the  earnings  and 
profits  to  arise.  That,  undoubtedly,  all  the  persons  subject  to  the  agreement 
are  liable  in  solido  to  the  tradesmen  who  fitted  it  out,  and  the  agreement  for 
the  proportional  shtires  Is  as  between  themselves,  which  is  the  case  of  all 
partnerships.  He  said,  if  it  had  been  agreed,  that  a  brewhouse  should  be 
part  of  the  partnership  stock  (which  often  happened) ,  the  case  of  the  brew- 
house  being  used  in  the  partnership  trade,  If  workmen  do  work  in  the  brew- 
house,  every  partner  would  be  liable  to  that,  and  that  brewhouse  must  be 
brought  into  the  partnership  account ;  and  if  more  was  due  to  one  partner 
than  another,  all  the  shares  of  the  partnership  stock,  consisting  of  the  lease 
of  the  brewhouse,  as  well  as  the  other  effects,  are  liable  to  that  account. 
He  went  on  to  observe,  that  if  the  share  of  one  partner  had  been  assigned, 
if  it  stood  on  the  head  of  general  equity,  he  should  be  of  opinion,  that  if 
the  purchaser  had  notice  of  the  partnership,  he  would  be  subject  to  It;  and 
he  decreed  for  the  plaintiffs.  Lord  Hardwicke  perfectly  understood  the 
distinction  between  a  tenancy  In  common,  such  as  owners  of  different 
shares  in  a  ship  have  among  themselves,  and  a  joint-tenancy,  as  between 
partners  of  the  goods  and  stock  in  trade.  He  meant  to  decide,  and  did 
decide,  that  a  subject,  which  ordinarily  may  be  held  as  a  tenancy  in  common. 


694  PARTNERSHIP.  [cHAP.  XVT. 

intended  to  be  governed,  as  to  rights  and  liens,  by  the 
rules  of  strict  partnerships.     After  all,  there  would  seem 

may,  by  the  acts  of  the  parties,  become  to  be  held  in  joint-tenancy.  And 
the  facts  of  the  ac^reement  to  build  the  ship  at  their  joint  exjDense,  in  pro- 
portion to  their  shares,  and  the  agreement  to  fit  her  out,  manage,  and 
victual  her,  for  the  East  India  Company,  formed,  in  his  judgment,  such  a 
community  of  interest,  as  to  constitute  that  a  partnership  transaction,  in 
relation  to  those  subjects ;  and  thus  a  specific  lien  was  acquired,  by  those 
who  contributed  more  than  their  shares,  against  the  share  of  the  one  who 
contributed  less  than  his  proportion.  This  case  derives  strong  confirmation 
from  the  case  of  Smith  v.  De  Silva,  Cowp.  469,  in  which  it  was  decided, 
upon  an  issue  out  of  Chancery,  that  the  interest  of  part-owners  in  a  ship, 
and  in  the  profits  and  loss  of  an  adventure,  undertaken  by  their  mutual 
consent,  is  not  affected  by  the  bankruptcy  of  one  of  them  taking  place  after 
the  commencement  of  the  voyage,  although  he  has  not  paid  his  full  share  of 
the  outfit.  Lord  Mansfield,  in  giving  the  opinion  of  the  Court,  held,  that 
if  the  other  partners  had  been  obliged  to  discharge  the  amount  of  the  notes, 
which  remained  unpaid  at  the  time  of  the  bankruptcy,  the  assignees 
must  have  allowed  the  other  partners  the  full  sum  paid  for  the  bankrupt, 
and  would  have  come  against  them  only  for  the  balance  due  to  him,  if  any. 
Mr.  Abbott,  in  commenting  upon  this  case,  says,  it  seems  to  have  been 
considered  the  part-owners  of  a  ship  might  have  a  lien  on  each  other's 
shares  of  a  ship,  as  partners  in  trade  have  on  each  other's  shares  of  their 
merchandise.  And  in  the  third  edition  of  his  Treatise  (p.  94),  he  says: 
'  It  is  true,  indeed,  that  as  long  as  the  ship  continues  to  be  employed  by  the 
same  persons,  no  one  of  them  can  be  entitled  to  partake  of  the  profits, 
until  all  that  is  due,  in  respect  to  the  part  he  holds  in  the  ship,  has  been 
discharged.'  And  again,  after  citing  the  case  of  Doddington  v.  Hallet, 
without  a  word  of  disapprobation,  in  p.  96,  he  says  :  '  This  usage,  or  course 
of  trade,  I  apprehend  to  be,  to  charge  the  assignee  or  purchaser  in  account, 
for  the  outfit  and  other  expenses  incurred,  in  respect  of  the  voyage,  of 
which  he  is  entitled,  in  consequence  of  his  purchase,  to  share  the  profits, 
which  can  only  be  the  voyage  in  prosecution  at  the  time  of  the  purchase ; 
but  not  to  carry  back  the  charge,  as  against  him,  to  the  expense  of  any 
antecedent  adventure,  from  which  he  can  derive  no  profit.'  The  cases  cited 
by  the  Chancellor,  and  on  which  he  has  relied,  to  establish  a  contrary 
doctrine,  do,  undoubtedly,  strongly  impugn  the  authority  of  Doddington  v. 
Hallet,  though  I  must  be  allowed  to  say,  that  the  case  Ex  parte  Parry, 
5  Ves.  575,  is  very  distinguishable,  and  does  not  oppose  Lord  Hardwicke's 
opinion.  It  is,  however,  to  be  observed,  that  all  the  cases  on  which  the 
decree  is  founded,  are  long  since  our  revolution,  and  have  no  authoritative 
influence  here.  And  I  am  not  disposed  to  overrule  Lord  Ilardwicke, 
supported,  as  I  think  he  is,  by  Lord  Mansfield,  and  the  other  Judges  who 
sat  with  him,  in  a  case  in  which  justice  and  right  require  him  to  be  sup- 
ported.    The  statement  of  this  case  shows,  that  it  is  much  stronger  for  the 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       695 

to  be  intrinsic  equity  in  the  doctrine  maintained  by 
Lord  Hardwicke  ;  and,  as  liens  may  arise,  either  from 
express  or  implied  agreements,  it  is  but  a  reasonable 
presumption  (in  the  absence  of  all  controlling  circum- 
stances), that  part-owners  do  not  intend  to  rely  solely 
upon  the  personal  responsibility  of  each  other,  to  reim- 
burse themselves  for  expenses  and  charges,  incurred 
upon  the  common  property,  for  the  common  benefit ; 
but  that  there  is  a  mutual  understanding,  that  they 
shall  possess  a  lien  in  rem. 

§  445.  We  have  already  had  occasion  to  state,  that 
the  majority  in  interest  of  the  part-owners  have  a  right 
to  appoint  the  master  and  officers  of  the  ship.^  This 
right  necessarily  carries  with  it  the  right  to  displace 
and  dispossess  the  master  and  other  officers,  when  in 

appellant,  than  the  case  before  Lord  Hardwicke.  The  vessel  here  was 
owned  in  equal  shares,  and  was  fitted  out,  or  to  be  fitted  out,  on  a  cir- 
cuitous trading  voyage,  at  the  joint  expense  of  the  parties.  It  was,  there- 
fore, a  limited  and  special  partnership,  not  only  as  to  the  cargo,  freight, 
and  the  profits  thereon,  but  as  to  the  fitting  out  of  the  vessel.  The  appel- 
lant, after  paying  his  proportion  of  mechanics'  bills  and  ship-chandlery, 
under  the  assurance  they  had  been  paid  by  Stilwell,  is  called  upon  and 
compelled  to  pay  them  over  again.  The  respondents  are  assignees  for 
prior  debts,  and  are  chargeable  with  notice,  or,  at  all  events,  have  received 
the  subject,  liable  to  all  equities  between  the  appellant  and  Stilwell. 
Can  it  be  just  and  equitable  to  deprive  the  appellant  of  his  right  to  re- 
imburse himself  for  the  moneys  he  has  been  compelled  to  pay,  as  part- 
owner,  for  the  default  of  Stilwell,  in  whose  shoes  the  respondents  stand  ? 
I  answer,  unhesitatingly,  that  it  would  be  inequitable  and  unjust  to  do  so. 
I  must  not  be  supposed  to  overrule  the  distinction  between  partners  in 
goods  and  merchandise,  and  part-owners  of  a  ship.  The  former  are  joint- 
tenants,  and  the  latter  are,  generally  speaking,  tenants  in  common ;  and 
one  cannot  sell  the  share  of  the  other.  But  I  mean  to  say,  that  part- 
owners  of  a  ship  may,  under  the  facts  and  circumstances  of  this  case, 
become  partners  as  regards  the  proceeds  of  the  ship ;  and  if  they  are  to  be 
so  regarded,  the  right  of  one  to  retain  the  proceeds,  until  he  is  paid  what 
he  has  advanced  beyond  his  proportion,  is  unquestionable." 

*  Ante,  §  432.  {See  1  Tars.  ]\Iar.  Law,  80.  Nor  will  the  master, 
though  a  part-owner,  be  allowed,  against  the  wishes  of  the  owner  of  a  greater 
part  of  the  vessel,  to  remain  in  possession,  on  giving  security  for  the  amount 
of  his  co-owners'  interest.     The  Kent,  1  Lush.  495.}  » 


696  PARTNERSHIP.  [CHAP.  XTI. 

authority  or  possession  of  the  ship  ;  and  it  will  make 
no  difference,  in  this  respect,  whether  the  master  or 
other  officer  be  a  part-owner  or  not.  However,  when 
a  Court  of  Admiralty  is  called  upon  to  enforce  this 
right,  although  it  allows  the  authority  to  displace  and 
dispossess,  to  be  exercised  at  the  sole  pleasure  of  the 
majority,  if  the  master  or  other  officer  is  a  mere  stran- 
ger ;  yet  if  he  is  a  part-owner,  the  Court  commonly  re- 
quires some  reasonable  ground  to  be  stated  therefor.^ 

§  446.  It  often  becomes  a  matter  of  important  in- 
quiry, to  what  extent  the  implied  authority  of  one 
part-owner  extends  to  bind  the  others  in  the  concerns 
of  the  ship,  when  there  is  no  real  disagreement  among 
them  which  affects  their  respective  rights.^  As  to  this, 
we  have  seen,  that  one  part-owner  may  bind  the  others 
by  his  contract  for  repairs  and  materials  and  expenses 
of  outfits  by  implication,  when  there  is  no  known  dis- 
agreement among  them,  and  there  is  an  acquiescence 
in  what  is  done,  or  is  doing.^  But  there  are  certain 
other  authorities,  which  do  not  arise  by  implication  of 
law  under  ordinary  circumstances ;  and,  therefore,  such 
authorities,  whether  exercised  by  a  shii)'s  husband,  or 
by  a  mere  part-owner,  will  not  bind  the  other  owners, 
unless  there  is  either  direct  proof,  or  a  strong  presump- 
tion, that  they  have  been  positively  conferred  upon 
them.'*  Thus,  for  example,  neither  the  ship's  husband, 
nor  any  part-owner,  as  such,  has  a  right  to  insure  the 

1  The  New  Draper,  4  Rob.  287,  290,  291.  |The  court  will  not  generally 
interfere  in  the  ease  of  foreign  vessels.  The  Johan  &  Siegmund,  Edw. 
Adm.  242.  But  see  The  See  Renter,  1  Dods.  22.  The  court  will  not  dis- 
possess a  master  who  is  equitable  owner  of  a  moiety  of  a  vessel,  at  the 
instance  of  the  legal  owner  of  more  than  a  moiety.  The  Victoria, 
Swabey,  408.} 

«  Ante,  §  419. 

'  Ante,  §  419,  421 ;  Davis  v.  Johnston,  4  Sim.  539.    {See  post,  §  455. { 

*  { See  Chappell  v.  Bray,  30  Law  J.  x.  s.  Exch.  24 ;  Donald  v.  Hewitt, 
33  Ala.  534;  ante,  §421.} 


CHAP.  XYI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       697 

ship/  or  to  borrow  money,  on  account  of  the  owners, 
or  of  other  part-owners ;  ~  or  to  pledge  thek  shares  in 
the  ship  for  the  expenses  of  a  law  suit.^ 

§  447.  AVe  have  seen,  in  cases  of  partnership,  that 
the  dissolution  thereof  is  not,  under  all  circumstances, 
dependent  upon  the  sole  will  of  any  one  partner ;  but 
can,  in  some  cases,  be  accomplished  only  by  the  decree 
of  a  Court  of  Equity."*  The  case  is  far  otherwise 
with  respect  to  part-owners,  who  are  not  compellable 
to  maintain  their  connection  with  each  other  for  any 
period  ;  but  each  may  terminate  it  at  pleasure,  by  a 
sale  of  his  own  share,  without  the  privity  or  consent 
of  the  others.^     The  connection  may  also  be  dissolved 

^  {Foster  v.  U.  S.  Ins.  Co.  11  Pick.  85;  Sawyer  v.  Freeman,  35  Me. 
542  ;  McCready  v.  Woodhull,  34  Barb.  80.} 

^  French  v.  Backhouse,  5  Burr.  2727;  Campbell  v.  Steen,  6  Dow,  116; 
Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  811,  812,  2d  ed. ;  Abbott  on  Shipp.  Pt.  1, 
c.  3,  §  8,  p.  76,  77,  5th  ed. ;  Hooper  v.  Lusby,  4  Camp.  66 ;  Bell  v.  Hum- 
phries, 2  Stark.  345;  3  Kent,  157;  1  Bell,  Comm.  B.  3,  Pt.  1,  c.  4,  §  1, 
p.  503,  504,  5th  ed.    {Nor  purchase  a  cargo.    Hewett  v.  Buck,  17  Me.  147.} 

■''  Ibid.  {But  a  managing  owner  has  authority  to  procure  bail  for  the 
release  of  a  vessel  which  has  been  arrested  under  order  of  a  Court  of  Ad- 
miralty.    Barker  v.  Highley,  15  C.  B.  N.  s.  27 ;  s.  c.  10  Jur.  x.  s.  391.} 

*  Ante,  §  275,  282-303.' 

'  Coll.  on  P.  B.  5,  c.  4,  §  1,  p.  796,  2d  ed. ;  Id.  §  4,  p.  811 ;  MoUoy, 
de  Jure  Mar.  B.  2,  c.  1,  §  3;  Abbott  on  Shipp.  Pt.  1,  c.  1,  §  3,  p.  3 ;  Id. 
c.  3,  §  7,  p.  75,  5th  ed. — Lord  Tenterden,  in  his  work  on  Shipping 
(Abbott  on  Shipp.  Pt.  1,  c.  3,  §  7,  p.  75,  76,  5th  ed.),  has  remarked  upon 
the  difference  between  the  law  of  England  and  that  of  foreign  maritime 
nations  as  to  the  right  of  sale.  He  says  :  "  We  have  seen,  that  the  Court 
of  Admiralty  cannot,  in  any  case,  compel  any  of  the  part-owners  to  sell 
his  interest.  The  French  Ordinance  prohibits  one  part-owner  of  a  ship 
from  forcing  his  companion  to  a  sale  (which  by  the  French  laws  one  tenant 
in  common  might  in  general  do),  except  in  case  of  equality  of  opinions 
upon  the  undertaking  of  a  voyage.  But  a  part-owner  may  by  our  law  dis- 
pose of  his  interest  to  another  person  at  any  time ;  a  rule  better  adapted  to 
the  present  state  of  commerce,  than  that  which  formerly  prevailed  among 
some  of  the  nations  of  the  continent,  and  which  did  not  permit  the  sale  of 
a  ship  until  after  a  possession  of  three  or  more  years ;  or  at  least  not  till 
after  the  performance  of  one  voyage  at  the  charge  and  risk  of  the  part- 
owners.     The  old  rule  appears  to  have  been  framed  with  a  view  to  the 


698  PARTNERSHIP.  [CHAP.  XVI. 

by  the  death  or  bankruptcy  of  any  one  part-owner ;  for 
then  his  share  passes  by  operation  of  law  to  the  repre- 
sentative or  assignee  of  such  part-owner.  The  absolute 
destruction  of  the  ship,  also,  amounts  to  a  complete 
dissolution  thereof. 

§  448.  MoUoy  has  put  some  curious  cases  of  the 
constructive  ownership,  as  well  as  of  the  constructive 
destruction  of  a  ship,  which  it  may  be  well  to  state  in 
his  own  words.  "  If  a  ship  be  broken  up  or  taken  in 
pieces,  with  an  intent  to  convert  the  same  to  other 
uses ;  if  afterwards,  upon  advice  or  change  of  mind, 
she  be  rebuilt  with  the  same  materials ;  yet  this  is  now 
another,  and  not  the  same  ship ;  especially  if  the  keel 
be  ript  up  or  changed,  and  the  whole  ship  be  once  all 
taken  asunder  and  rebuilt,  there  determines  the  part- 
nership, quoad  the  ship.  But  if  a  ship  be  ript  up  in 
parts,  and  taken  asunder  in  parts,  and  repaired  in  parts, 
yet  she  remains  still  the  same  vessel,  and  not  another ; 
nay,  though  she  hath  been  so  often  repaired,  that  there 
remains  not  one  stick  of  the  original  fabric.  If  a  man 
shall  repair  his  ship  with  plank  or  other  materials  be- 
longing to  another,  yet  the  ship  maintains  and  keeps 
her  first  owners.  But  if  a  man  take  plank  and  materi- 
als belonging  to  another,  and  prepared  for  the  use  of 
shipping,  and  with  them  build  a  ship,  the  property  of 
the  vessel  follows  the  owners  of  the  materials,  and  not 
the  builder.  But  if  a  man  cut  down  the  trees  of  an- 
other, or  takes  timber  or  planks  prepared  for  the  erect- 
ing or  repairing  of  a  dwelhng-house,  nay,  though  some 

interest  of  the  master,  who  in  former  times  was  a  principal  owner,  and  was 
the  person,  who,  with  the  pecuniary  assistance  of  the  other  owners,  gen- 
erally caused  the  ship  to  be  built  in  the  expectation  of  being  employed  in 
the  command ;  an  expectation  that  might  be  defeated,  if  the  others  could 
sell  their  shares  to  strangers,  who,  acquiring  a  majority  of  interest,  might 
appoint  a  friend  of  their  own." 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  TART-OWNERS.       699 

of  them  are  for  shipping,  and  builds  a  ship,  the  prop- 
erty follows  not  the  owners,  but  the  builders."  ^ 

§  449.  Part-owners  being  tenants  in  common,  one  or 
more  of  them  cannot  maintain  any  action  at  the  com- 
mon law  against  the  others  for  detaining,  or  even  for 
forcibly  carrying  away  the  ship ;  ^  but  they  may  for 
the  destruction  of  the  ship ;  and,  by  parity  of  reason- 
ing, probably  for  a  sale  of  the  entirety  of  the  ship  with- 
out their  consent.^  The  right,  also,  to  an  account  of  all 
the  earnings  and  profits  of  the  ship  by  all  the  part-own- 
ers, is  clear  and  indisputable.  But  at  law,  there  is  no 
small  embarrassment  in  their  proceeding  to  compel  an 
account  of  the  earnings  and  profits,  which  have  been 
received  by  some  of  the  part-owners,  who  refuse  to 
render  any  account.^"    The  ordinary  remedy  in  cases  of 

>  Molloy,  de  Jure  Mar.  B.  2,  c.  1,  §  6,  7. 

*  Molloy,  de  Jure  Mar.  B.  2,  c.  1,  §  2;  Abbott  on  Shipp,  Pt.  1,  c.  3, 
§  4,  p.  70,  71,  5th  ed. ;  3  Kent,  157  ;  1  Mont,  on  P.  B.  2,  c.  1 ;  Barnardis- 
ton  V.  Chapman,  cited  4  East,  121-123;  Heath  v.  Hubbard,  4  East,  110; 
Litt.  §  323 ;  Co.  Litt.  198  b,  200  a.     {See  The  Ocean,  1  Sprague,  535.} 

^  Bloxam  v.  Hubbard,  5  East,  407,  421 ;  Wilson  v.  Reed,  3  Johns. 
175.  —  There  is  a  strong  intimation,  in  Heath  v.  Hubbard,  ^  East,  110, 
that  the  sale  of  the  entire  ship  by  one  part-owner,  is  not  such  a  destruction 
of  the  ship  as  will  entitle  the  others  to  maintain  an  action  of  trover  against 
him.  In  the  case  of  Wilson  v.  Reed,  3  Johns.  175,  the  Court  expressly 
held,  that  trover  would  lie  by  one  tenant  in  common  against  another  for  a 
sale  by  the  latter  of  the  entirety  of  a  chattel,  j  If  a  vessel  is  forcibly  taken 
out  of  the  possession  of  one  part-owner  by  another  part-owner,  and  sent  on 
a  voyage  on  which  it  is  lost,  trover  will  lie.  Barnardiston  v.  Chapman, 
cited  in  Heath  v.  Hubbard,  4  East,  110,  121 ;  Lowthorp  v.  Smith,  1  Hayw. 
(N.  C.)  255  ;  Knight  v.  Coates,  1  Ir.  Law,  53.  The  marginal  note  in  this  last 
case  is  wrong.  Jn  Moody  v.  Buck,  1  Sand.  304,  it  was  held  that  one  part- 
owner,  having  the  exclusive  use  and  possession  of  a  ship,  was  not  liable  to 
the  other  part-owners  for  carelessness  in  his  use  of  it.  See  1  Pars.  Mar. 
Law,  84. } 

*  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  812,  813,  2d  ed. ;  Abbott  on  Shipp.  Pt. 
1,  c.  3,  §  12,  p.  80,  81,  5th  ed. ;  1  Story,  Eq.  Jur.  §  442-450.  {See  Star- 
buck  V.  Shaw,  10  Gray,  492;  but  see  Wood  v.  Merritt,  2  Bosw.  368. 
An  action  of  account  will  lie  by  one  part-owner  against  the  other  who  has 
received  the  earnings  of  the  ship  from  the  master.  Jarvis  v.  Noyes,  45 
Me.  106.     So  an  action  may  be  brought  by  one  party  to  a  contract  for 


700  PARTNERSHIP.  [CHAP.  XVI. 

this  sort  is  by  a  bill  in  equity,  to  which,  in  general,  all 
the  owners  should  be  made  parties,  either  as  plaintiffs 
or  as  defendants.^  We  say,  the  ordinary  remedy,  and 
to  which,  in  general,  all  the  parties  should  be  made 
parties ;  because  there  may  be  cases,  in  which  one  of 
the  part-owners,  or  the  ship's  husband,  or  any  other 
agent  may  have  entered  into  an  agreement,  by  which 
he  may  bind  himself  to  account  with  each  of  the  part- 
owners  severally,  for  his  separate  share  of  all  proceeds 
and  profits  in  his  hands ;  and  such  an  agreement,  under 
such  circumstances,  may  entitle  each  part-owner  to 
maintain  an  action  at  law  for  such  share ;  and  if  that 
should  fail,  or  be  found  inadequate,  it  will  entitle  him 
to  maintain  a  separate  bill  in  equity  for  an  account 
thereof,  without  making  the  other  part-owners  parties.^ 
§  450.  This  duty  to  account  for  all  the  earnings 
and  profits,  is  so  manifestly  a  dictate  of  general  jus- 
tice, that  it  must  naturally  find  a  place  in  the  juris- 
prudence of  every  civilized  country.  It  is  fully 
recognized   in   the    Roman   law ;    and   in   the   modern 

building  a  ship  against  the  other,  for  a  breach  thereof,  though  the  plaintiff 
and  defendant  are  to  be  tenants  in  common.  Ripley  v.  Crooker,  47  Me. 
370.} 

1  Story,  Eq.  Jur.  §  466 ;  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  812,  813,  2d  ed. ; 
Abbott  on  Shipp.  Pt.  1,  c.  3,  §  12,  p.  81,  82,  5th  ed. ;  Moffatt  v.  Farqu- 
harson,  2  Bro.  Ch.  338.  Story,  Eq.  PI.  §  166.  {See  Milburn  v.  Guyther, 
8  Gill,  92.} 

2  Owston  V.  Ogle,  13  East,  538 ;  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  12,  p. 
81,  82,  5th  ed. ;  Coll.  on  P.  B.  5,  c.  4,  §  4,  p.  912,  2d  ed.  The  case  of 
Owston  V.  Ogle,  13  East,  538,  was  a  case,  where  a  suit  at  law  for  a  share 
of  the  net  profits  was  brought,  under  an  agreement  of  this  sort,  by  one 
part-owner  against  the  ship's  husband,  who  was  also  a  part-owner,  and  was 
successfully  maintained.  The  case  of  Wilson  v.  Cutting,  10  Bing.  436,  and 
Servante  v.  James,  10  B.  &  C.  410,  turned  upon  similar  considerations. 
{The  admiralty  has,  in  general,  no  jurisdiction  in  matters  of  account  be- 
tween part-owners.  See  the  question  fully  treated  in  Kellum  v.  Emerson, 
2  Curt.  C.  C.  79.  See  also  The  Marengo,  (U.  S.  Dist.  Court  for  Mass.)  1 
Am.  Law  Rev.  88  ;  Tunno  v.  The  Betsiua,  (U.  S.  Dist.  Court  for  S.  C.)  5  Am. 
Law  Reg.  406.} 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       701 

jurisprudence  of  continental  Europe.^  The  Roman 
law  applies  to  all  cases  of  this  sort  the  common  rule 
of  partnership.  The  Digest  says:  Si  actor  imi^ensas 
aliquas  in  rem  communem  fecit,  sive  socius  ejus  solus 
aUquid  ex  ea  re  lucratus  est,  velut  operas  servi  merce- 
desve ;  Jioc  [communi  dimdundo']  judicio  eorum  omnium 
ratio  hahetur.  Sive  autem  locando  fundum  communem, 
sive  colendo,  de  fundo  communi  quid  socius  consecutus 
sit,  communi  dividundo  judicio  tenebitur."  Again  the 
Code  says :  Idem  eorum  etiam,  quce  vobis  permanent 
communia,  fieri  divisionem  providehit ;  tam  sumpiuum 
[si  qiiis  de  vohis  in  res  communes  fecit),  qiiam  fruc- 
tuum.^  The  reason  given  is :  Ut  in  omnibus  cjequabili- 
tas  servetur^ 

§  451.  The  Roman  law,  indeed,  seems  to  have  gone 
a  step  further  than,  perhaps,  has  as  yet  been  distinctly 
recognized  at  the  common  law,  and  that  is,  by  giving 
a  complete  remedy,  in  taking  an  account  and  making 
an  allowance  for  all  losses  occasioned  by  the  fraud  or 
negligence  of  one  part-owner,  to  the  others,  in  the  man- 
agement of  the  common  property.  Item  doll  et  cidpce 
(cum  in  communi  dividundo  judicio  hmc  omnia  venire 
non  ambigatur)  rationem,  ut  in  omnibus  cequabilitas 
servetur,  habiturus.^  And  again:  Venit  in  communi 
dividundo  judicium,  etiam  si  quis  rem  communem  dete- 
riorem  fecerit ;  forte  servum  vidnerando,  aid  animum 
ejus  corrumjmido,  aut  arbores  ex  fundo  excidendo.'^ 
Probably  our  Courts  of  Equity  would,  in  many  cases, 
act  upon  the  same  just  and  enlarged  policy ;  but  it 
would  not  be  easy  to  point  out  many  instances  of  its 
actual  exercise  and  application  in  practice. 

1  1  Valin,  Comm.  Liv.  2,  tit.  8,  art.  5,  p.  578,  ed.  1766. 

2  D.  10,  3,  11;  Id.  10,  3,  6,  2. 

"  Cod.  3,  37,  4.  *  Ibid.  ^  Ibid. 

«  D.  10,  3,  8,  2;  Poth.  de  Soc.  n.  190. 


702  PARTNERSHIP.  [CHAP.  XVI. 

§  452.  Pothier  has  enumerated,  in  a  general  way, 
some  of  the  duties  and  obligations  which  part-owners 
owe  to  each  other.  Among  others,  he  enumerates  the 
duty  of  each  part-owner  to  pay  his  share  of  the  debts 
and  charges  contracted  for  the  common  concern ;  ^  to 
account  with  the  other  part-owners  for  their  shares  of 
the  common  earnings  and  profits  in  his  hands ;  and  to 
pay  the  debts  due  by  him  to  them,  as  well  as  the 
damages  sustained  by  them  by  his  acts  or  negligences.^ 
Some  of  these  duties  and  obligations  are  so  obvious, 
and  so  analogous  to  the  like  duties  and  obligations 
between  partners,  that  it  does  not  seem  to  be  of  any 
importance  to  dwell  upon  them,  or  even  to  enumerate 
them  in  detail.  But  here,  again,  we  must  not  assume, 
as  a  matter  of  course,  that  any  one  or  more  of  the  part- 
owners  is  entitled,  at  the  common  law,  to  a  compensa- 
tion for  losses,  sustained  by  the  negligence  or  miscon- 
duct of  the  others  in  the  management  of  the  common 
property,  where  no  special  agency  has  been  assumed, 
simply  because  the  Roman  law  or  the  French  law 
would  seem,  in  the  like  cases,  to  justify  it;^  for  the 
common  law  authorities  have  not  as  yet  recognized 
any  such  general  doctrine ;  and  some  of  them  may, 
perhaps,  be  thought  to  point  to  a  different  conclusion.^ 
§  453.  We  may  conclude  this  head  with  the  con- 
sideration of  the  question,  how  far  part-owners  are 
bound  by  the  statements  or  admissions  of  each  other, 
where  neither  of  them  is  the  common  agent  of  the 
ship,  or  the  separate  agent  of  any  one  part-owner  of 
the  ship.  We  have  already  seen,  that  the  statements 
and  admissions  of  one  partner,  during  the  continuance 
of  the  partnership,  will  bind  the   others  as  evidence, 

'  Poth.  de  Soc.  n.  187-189,  191,  192.  ^  Poth.  de  Soc.  n.  189,  190. 

'  Poth.  de  Soc.  n.  190.  ♦  Ante,  §  450,  451. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       703 

according  to  the  common  law.^  But  the  same  doctrme 
has  never  been  applied  to  the  case  of  part-owners.^ 
The  reason  sometimes  assigned  for  this  distinction  is, 
that,  in  case  of  a  partnership,  every  man  knows  who 
his  partner  is.  But  when  one  part-owner  sells  his 
share,  the  remaining  part-owners,  not  being  privy  to 
the  instrument,  by  which  the  new  part-owner  is  created, 
may  be  entirely  ignorant  of  the  fact,  who  the  person  is, 
who  has  thus  become  a  part-owner  with  them.^  But 
the  truer  and  broader  ground  is,  that  there  is  no  com- 
munity of  interests,  or  of  rights,  or  of  authorities 
between  part-owners ;  and  they  are  not,  as  in  cases  of 
partnership,  agents  of  each  other  in  the  concerns  of 
the  ship,  unless  some  special  authority  is  expressly  or 
impliedly  delegated  to  them  for  the  purpose.  Part- 
owners  are  not,  therefore,  bound  by  the  acts  of  each 
other,  unless  those  acts  are  specially  authorized ;  and, 
hence,  it  follows,  a  fortiori^  that  the  mere  admissions  of 
one,  without  any  such  authority,  ought  not  to  bind  the 
others.  Even  an  act  of  one  part-owner,  which  will 
ordinarily  make  the  ship  liable  to  condemnation,  if 
done  with  the  privity  of  the  other  owners,  will  not 
produce  any  such  effect,  except  as  to  his  own  share, 
when  it  is  done  without  such  privity ;  for  that  implies 
co-operation  and  consent.^ 

§  45-i.  Let  us  in  the  next  place  proceed  to  the 
consideration  of  the  rights  and  remedies  of  part-owners 
of  ships  against  third  persons.  These  may  arise, 
either  from  contracts  made  with  such  persons,  or  from 
torts  committed  by  them  upon  the  common    property. 

•  Ante,  §  107. 

=  Coll.  on  P.  B.  4,  c.  4,  §  5,  p.  819,  820,  2d  ed. ;  Jaggers  v.  Binnings,  1 
Stark.  64. 

3  Mr.  Justice  Bailey  in  Wilson  v.  Dickson,  2  B.  &  Aid.  2,  12,  13. 

*  The  Jonge  Tobias,  1  Rob.  329 ;  Coll.  on  P.  B.  5,  c.  4,  §  5,  p.  820,  2d 
ed. ;  2  Wheat.  App.  37-40.     {See  The  William  Bagaley,  5  Wallace,  377.} 


704  PARTNERSHIP.  [CHAP.  XVI. 

In  respect  to  both,  all  the  part-owners  constitute  in 
point  of  law  but  one  owner  ;^  and,  therefore,  all  con- 
tracts made  by  them,  either  personally,  or  through  the 
instrumentality  of  an  agent,  or  ship's  husband,  with 
third  persons,  are  treated  as  entire  joint  contracts ; 
and  the  remedy  for  any  breach  thereof  must  be  in  the 
name  of  all  the  part-owners  against  the  other  contract- 
ing party.  If  the  name  of  any  one  be  omitted,  it  is 
ordinarily,  upon  the  technical  rules  of  pleading  at  the 
common  law,  fatal  to  the  maintenance  of  the  suit ;  for 
by  those  rules  all  the  contracting  parties,  who  are 
plaintiffs,  are  positively  required  to   join  in  the    suit.^ 

1  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  13,  p.  81,  5th  ed. 

2  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  14,  p.  82,  5th  ed. ;  Coll.  on  P.  B.  5,  c.  4, 
§  6,  p.  820-822,  2d  ed. ;  1  Bell,  Coram.  B.  3,  Pt.  1,  c,  4,  §  5,  p.  519,  520,  5th 
ed.;  Skmner  v.  Stocks,  4  B.  &  Aid.  437;  1  Chitty  on  PI.  p.  6-8,  3d  ed.; 
Baker  v.  Jewell,  6  Mass.  460;  Coll.  on  P.  B.  3,  c.  5,  §  1,  p.  461,  462,  2d  ed. ; 
1  Mont,  on  P.  B.  2,  c.  1.  —  There  may,  perhaps,  be  an  exception  where 
one  part-owner  has  received  his  own  share  of  the  money  due  on  the  con- 
tract, or  has  released  his  claim  to  it.  At  least,  Lord  Tenterden,  in  his 
work  on  Shipping,  puts  the  case  as  open  for  consideration  at  the  common 
law.  There  is,  however,  some  reason  to  doubt,  whether  in  such  a  case  the 
remedy  of  the  other  part-owners  is  not  exclusively  in  equity.  Lord  Ten- 
terden has  stated  the  whole  doctrine  in  the  following  terms  :  "  In  the  case, 
however,  of  an  action  for  the  freight  of  goods  conveyed  in  a  general  ship, 
all  the  part-owners  ought  to  join,  or  if  they  do  not,  the  defendant  may 
avail  himself  of  the  objection  by  evidence  at  the  trial,  and  without  plea  in 
abatement,  according  to  the  general  rule  of  law  and  the  distinction  be- 
tween contracts  and  wrongs;  unless,  perhajis,  some  one  should  have  received 
his  own  share,  or  have  released  his  claim  to  it.  The  necessity  of  all  the 
part-owners  joining  as  plaintiffs  in  the  suit,  in  this  case,  is  founded  upon  the 
consideration,  that  all  of  them  are  partners  with  respect  to  the  concerns  of 
the  ship ;  and  upon  this  consideration,  the  present  Lord  Chancellor  (Eldon), 
in  a  case  of  bankruptcy,  wherein  it  appeared  that  the  owners  of  a  ship,  upon 
a  settlement  of  accounts  with  the  master,  who  had  become  a  bankrupt,  were 
indebted  to  him,  and  that  on  the  other  hand  he  also  was  indebted  to  some  of 
them  severally  upon  separate  and  distinct  concerns,  refused  to  allow  the 
latter  to  set  off  their  respective  demands  against  the  claim  of  his  assignees  for 
their  shares  of  the  general  debt."  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  14,  p.  82, 
5th  ed.;  Ex  parte  Christie,  10  Ves.  105;  Coll.  on  P.  B.  5,  c.  4,  §  6,  p.  821, 
822.  {The  right  of  action  survives  and  the  executors  of  a  deceased  part- 
owner  need  not  be  joined.      Bucknam  v.   Brett,  35   Barb.  596;    Bond  v. 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.        705 

In  cases  of  tort,  a  more  mitigated  doctrine  prevails ; 
for  while  all  the  part-owners  are  at  the  common  law 
required  in  strictness  to  join  in  every  snit  for  any  tort, 
committed  against  the  common  property,  nevertheless, 
the  omission  to  join  any  one  or  more  of  them  can  be 
taken  advantage  of  only  in  a  preliminary  stage  of  the 
suit  by  a  plea  in  abatement ;  and  if  no  such  plea  is 
filed  in  the  cause,  it  is  a  waiver  of  the  objection,  and 
will  not  affect  the  rights  of  the  plaintiffs  upon  a  trial  of 
the  merits.^     It  is  not,  perhaps  very  easy  to  establish 

Hilton,  6  Jones,  Law,  180.  A  part-owner  may  sustain  a  petitory  suit  in  the 
admiralty  against  a  merely  fraudulent  possessor  without  joining  the  other 
part-owners.     The  Friendship,  2  Curt.  C.  C.  426. | 

'  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  13,  p.  81,  5th  ed. ;  1  Bell,  Coram.  B.  3, 
Pt.  1,  c.  4,  §  5,  p.  519,  520,  5th  ed. ;  Child  v.  Sands,  Salk.  31  ;  Addison  v. 
Overend,  6  T.  R.  766;  Sedgworth  v.  Overend,  7  T.  R.  279;  Rice  v.  Shute, 
5  Burr.  2611  ;  Eccleston  v.  Clipsham,  1  Saund.  153,  and  Williams's  note  (1), 
Id.  p.  154;  Baker  v.  Jewell,  6  Mass.  460;  Hart  v.  Fitzgerald,  2  Mass.  509; 
Converse  v.  Symmes,  10  Mass.  377;  Thompson  v.  Hoskins,  11  Mass.  419; 
Molloy,  de  Jure  Mar.  B.  2,  c.  1,  §  2;  Coll.  on  P.  B.  5,  c.  4,  §  6,  p.  820-822, 
2d  ed. ;  Heath  v.  Hubbard,  4  East,  110;  Bloxam  v.  Hubbard,  5  East,  407  ; 
Wheelwrights.  Depeyster,  1  Johns.  471,  486;  Brotherson  v.  Hodges,  6  Johns. 
108.  —  Upon  this  point  Lord  Tenterden,  in  his  work  on  Shipping,  has  given 
the  reasoning,  on  which  the  general  rule  is  founded  in  eases  of  tort.  The 
several  part-owners  of  a  ship  make  in  law  but  one  owner ;  and  in  case  of  any 
injury  done  to  their  ship  by  the  wrong  or  negligence  of  a  stranger,  they  ought 
regularly  to  join  in  one  action  at  law  for  the  recovery  of  damages,  which  are 
afterwards  to  be  divided  among  themselves  according  to  their  respective 
interests ;  for  otherwise  the  party,  who  had  committed  the  wrong,  might 
be  unnecessarily  harassed  with  the  expense  of  several  suits  to  obtain  the  same 
end,  which  might  be  as  well  effected  in  one.  But  this  rule  of  law  is  made 
for  the  ease  of  the  wrong-doer ;  and,  therefore,  the  law  requires,  that  he 
should  avail  himself  of  it  at  the  very  beginning  of  the  cause,  by  pleading  in 
abatement  of  a  suit  brought  by  one  part-owner,  that  there  are  others  living, 
who  ought  to  be  parties  to  it.  For  if  the  defendant  does  not  do  this,  the 
single  part-owner  will  recover  damages  for  the  injury  proportionate  to  his 
share  in  the  ship,  whether  the  nature  of  his  interest  is  made  to  appear  upon 
evidence  at  the  trial,  or  is  originally  stated  by  himself  in  the  allegation  of  his 
cause  of  complaint.  And  If  afterwards  another  part-owner  sues  for  his  own 
interest,  the  defendant  can  no  longer  avail  himself  of  the  objection,  because  the 
party  to  tlie  first  suit  has  no  longer  any  matter  of  complaint.  In  the  case  of 
the  death  of  any  part-owner  after  an  injury  received,  the  right  of  action  sur- 

45 


706  PARTNERSHIP.  [CHAP.  XVI. 

the  soundness  of  this  distinction  upon  any  general 
reasoning.  It  seems,  however,  to  proceed  upon  this 
ground,  that,  in  cases  of  tort,  the  tort  is  treated  as  joint 
and  several ;  whereas  in  cases  of  contract,  the  contract 
is  treated  as  an  entirety,  and  as  being  incapable  of  sep- 
aration as  to  the  plaintiffs.  And  yet  a  different  rule 
prevails,  even  in  cases  of  contract,  as  to  the  parties 
who  are  defendants  in  the  suit ;  for  in  the  latter  cases, 
the  objection  of  the  nonjoinder  of  all  the  proper  con- 
tracting parties  to  the  contract  as  defendants  can  be 
taken  advantage  of  (as  in  the  case  of  torts),  by  a 
plea  in  abatement  only,  and  not  upon  the  trial  of  the 
merits.^ 

§  455.  In  the  next  place,  as  to  the  rights  and  rem- 
edies by  third  persons  against  part-owners  of  ships. 
These  properly  are  divisible  into  those  arising  from 
contract,  or  those  arising  from  tort.  In  cases  of  con- 
tract, by  the  common  law,  all  the  part-owners  are  liable 
171  solido  to  the  other  contracting  party  for  the  entirety 
of  the  debt  or  obligation,  whether  the  contract  be 
directly  made  by  one  or  more  of  the  part-owners  with 
the  consent  of  all,  or  be  made  through  the  instrumen- 
tality of  the  master  of  the  ship,  or  of  the  ship's  hus- 
band, or  of  any  other  agent.®     There  is  an  exception, 

vives  in  general  to  the  surviving  part-owners,  who  must  afterwards  pay  to  the 
personal  representatives  of  the  deceased  the  value  of  his  share."  Abbott  on 
Shipp.  Pt.  1,  c.  3,  §  13,  p.  81,  82,  5th  ed. 

1  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  82,  83,  5th  ed.  ;  1  Mont,  on  P.  B. 
2,  c.  1;  Rice  v.  Shute,  5  Burr.  2611;  Williams's  note  (1)  to  Eccleston  v. 
CHpsham,  1  Saund.  153,  154  ;  Coll.  on  P.  B.  5,  c.  4,  §  6,  p.  822,  2d  ed. ;  Id. 
B.  3,  c.  5,  §  2,  p.  496,  497  ;  Id.  §  5,  p.  513  ;   Wright  v.  Hunter,  1  East,  20. 

^  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  83,  84,  5th  ed. ;  3  Kent,  155,  156  ; 
1  Bell,  Comm.  B.  3,  Pt.  1,  c.  4,  §  5,  p.  520,  529,  537,  5th  ed. ;  Coll.  on  P.  B. 
5,  c.  4,  §  6,  p.  817,  818,  2d  ed.  ;  Rich  v.  Coe,  Cowp.  636;  Baldney  v. 
Ritchie,  1  Stark.  338;  Westerdell  v.  Dale,  7  T.  R.  306;  1  Mont,  on  P.  B.  2, 
c.  1  ;  {Preston  v.  Tamplin,  2  H.  &  N.  363  ;  s.  c.  Id.  684.  See  ante,  §  421  ;  1 
Pars.  Mar.  Law,  89  ;  Brodie  v.  Howard,  17  C.  B.  109  ;  Myers  v.  Willis,  17 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       707 

indeed,  which  stands  entirely  in  harmony  with  the 
general  rule  ;  and  that  is,  where  an  exclusive  credit  is 
knowingly  and  intentionally  given  to  one  or  more  of 
the  part-owners,  or  to  the  master,  or  the  ship's  hus- 
band, or  any  other  agent ;  for  in  such  cases,  as  it  is 
competent  for  the  creditor  to  give  such  an  exclusive 
credit,  he  thereby  exonerates  all  the  other  parties.^ 
What  circumstances  will,  or  will  not,  amount  to  giving 
such  an  exclusive  credit,  must,  of  course,  depend  upon 
the  evidence  in  each  particular  case,  and  can  admit  of 
no  universal  exposition.^  But  it  may  be  generally 
stated,  that  merely  receiving  payment  from  one  part- 
owner  for  his  share,  or  charging  the  master,  or  ship's 
husband,  or  other  agent,  with  the  debt,  will  not,  of 
itself,  amount  to  giving  an  exclusive  credit  to  them, 
which  will  discharge  the  owners.^  A  fortiori,  it  will 
not,  where  none  of  the  owners  are  known,  or  it  is  not 
known  that  there  are  other  part-owners  ;  for,  under 
such  circumstances,  there  is  no  pretence  to  say,  that 
any  exclusive    credit    is    intended    to    be    given,  since 

C.  B.  77;  s.  c.  18  C.  B.  88-6;  Mackenzie  v.  Pooley,  11  Exch.  638;  Mitch- 
eson  V.  Oliver,  5  E.  &  B.  419;  Hardy  v.  Sproule,  29  Me.  258;  Same  v. 
Same,  31  Me.  71 ;  Stedman  v.  Feidler,  25  Barb.  605,  s.  c.  20  N.  Y.  43  7. j 

1  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  82-84,  5th  ed. ;  Story  on  Ag. 
§  288-300;  Chapman  v.  Durant,  10  Mass.  47;  Schemerhorn  v.  Loines,  7 
Johns.  311;  Muldon  v.  AVhitlock,  1  Co  wen,  290;  Cox  v.  Reid,  1  C.  &  P. 
602;  Pteed  v.  White,  5  Esp.  122;  Wyatt  v.  Marquis  of  Hertford,  3  East, 
147 ;  Ex  parte  Bland,  2  Rose,  91  ;  Coll.  on  P.  B.  5,  c.  4,  §  5,  p.  817,  2d  ed. 
{1  Pars.  Mar.  Law,  91  ;  Macy  v.  De  Wolf,  3  Wood  &  M.  193;  Elder  v. 
Larrabee,  45  Me.  590.} 

«  Story  on  Ag.  §  288-291  ;  Id.  §  293,  294,  296-298. 

3  Teed  v.  Baring,  cited  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  83,  84, 
5th  ed. ;  Ex  parte  Bland,  2  Rose,  91  ;  Stewart  v.  Hall,  2  Dow.  29  ;  James  v. 
Bixby,  11  Mass.  34;  Leonard  v.  Huntington,  15  Johns.  298;  Marquand  r. 
Webb,  16  Johns.  89  ;  Story  on  Ag.  §  288,  294-299  ;  Coll.  on  P.  B.  5,  c.  4, 
§  5,  p.  817,  818,  2d  ed. ;  Thompson  v.  Finden,  4  C.  »&  P.  158;  {Whitwell  v. 
Perrin,  4  C.  B.  N.  S.  412;  King  i\  Lowry,  20  Barb.  532;  Macy  v.  Wheeler, 
30  N.Y.  231.} 


708  PARTISERSHIP.  [CHAP.  XVI. 

there  is  no  knowledge,  or  act,  from  which  an  election 
to  give  an  exclusive  credit  can  be  inferred.^  We  have 
already  had  occasion  to  state,  that  ordinarily  all  the 
part-owners  should  be  joined  in  a  suit  brought  on  a 
joint  contract  by  the  creditor  against  them ;  but  that  if 
not  joined,  the  objection  is  not  fatal  at  the  trial  upon 
the  merits  ;  but  was  pleadable  only  in  abatement. 

§  456.  The  French  law  does  not  agree  with  the 
common  law  in  making  part-owners  liable  in  solido 
for  all  the  debts  contracted  upon  account  of  the  ship, 
or  other  common  property,  even  when  the  contract  is 
made  by  all,  or  in  the  name  of  all,  of  them.  But  it 
restricts  the  liability  of  each  part-owner  to  the  pay- 
ment of  his  own  share  or  proportion  thereof,  unless 
all  expressly  agree    to    be    bound  in  solido?     In  this 

^  Story  on  Ag.  §  290,  291,  and  note  (2),  Ibid.;  Thomson  v.  Davenport, 
9  B.  &  C.  78  ;  Paley  on  Ag.  by  Lloyd,  p.  245-250 ;  Paterson  v.  Gandese- 
qui,  15  East,  62. 

^  Poth.  de  Soc.  n.  187;  2  Emerigon,  Tralte  des  Assur.  c.  4,  §  11,  p.  456, 
ed.  1783.  —  The  law  of  Louisiana  is  the  same  as  the  law  of  France  on  this 
subject.  David  v.  Eloi,  4  La.  (Miller)  106;  3  Kent,  156;  Civil  Code  of 
Louisiana  (1825),  art.  2796.  IVIr.  Justice  Porter,  in  delivering  the  opinion  of 
the  Court  in  David  v.  Eloi,  4  La.  (Miller)  106,  referring  to  the  case  of  Kim- 
ball V.  Blanc,  said :  "  In  the  opinion  delivered  in  that  case,  the  Court  took 
occasion  to  say,  that  as  to  the  law  jjrevious  to  the  adoption  of  the  Louisiana 
Cod,e  we  were  not  left  in  doubt,  since  the  decision  in  the  suit  of  Carrol  v. 
Waters.  It  was  there  settled,  that  joint  owners  of  steamboats  were  only 
responsible  for  their  virile  share.  That  case  was  decided  on  the  definition 
given  in  the  Code  of  Louisiana  of  a  particular  partnership,  and  it  is  so  ex- 
pressly stated  in  the  opinion ;  the  majority  of  the  Court  being  unable  then, 
as  they  are  now,  to  distinguish  between  the  joint  owners  of  a  steamboat,  and 
the  joint  owners  of  a  house  or  of  a  plantation.  It  is  an  association,  which 
relates  to  a  specified  thing,  and  to  the  use  to  be  derived  therefrom.  Civil 
Code,  390,  art.  12.  The  correctness  of  the  construction  was  supposed  to  be 
forfeited  by  a  reference  to  the  rules  prevailing  in  the  greater  number  of 
commercial  countries  in  relation  to  the  responsibility  of  joint-owners.  And 
so  it  appears  to  be.  For  after  all  that  has  been  said  in  the  argument  of  this 
cause,  it  is  quite  clear  they  are  not  responsible  in  solido,  as  they  were  in  the 
Roman  law.  By  the  statutes  of  the  majority  of  the  commercial  nations  of 
Europe,  owners  of  vessels  are  discharged  from  all  responsibility  by  surren- 
dering their  interest  in  them.     This  Court  does  not  profess  to  understand 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       709 

respect  it  differs  from  its  own  rule  in  cases  of  commer- 
cial partnerships  ;  for  there  all  the  partners  are  liable 
m  solido}  And  where  the  contract  is  entered  into  by 
one  part-owner  alone  on  account  of  the  ship,  as  for  ex- 
ample, for  supplies  or  outfits  or  repairs,  that  part-owner 
is  solely  responsible  to  the  creditors  for  the  whole  amount 
of  the  debt  ;  but  he  has  his  remedy  over  against  the 
other  part-owners  for  contribution.^  In  short,  in  such  a 
case,  the  creditor  is  deemed  to  give  an  exclusive  credit 
to  the  contracting  part-owner.     By  the  law  of  Holland, 

how  the  part-owner  of  a  ship,  who  can  free  himself  from  responsibility  for  a 
debt,  which  may  be  ten  times  as  great  as  his  share  in  the  vessel,  by  abandon- 
ing that  share  to  the  creditor,  can  be  considered  as  personally  responsible  in 
solido  for  the  whole  debt.  It  thinks  with  Emerigon,  that  his  obligation  is 
more  real  than  personal ;  and  that  it  depends  on  the  amount  of  interest  he 
has  in  the  vessel,  not  on  an  obligation  in  solido  as  joint  owner,  whether  he  is 
bound  for  the  whole  amount  of  a  debt  contracted  by  the  master.  2  Emerigon, 
Traite  des  Assur.  p.  454.  It  remains  to  consider,  whether  a  change  has  been 
made  in  the  law,  as  it  stood  previous  to  the  adoption  of  the  late  amendments 
to  our  Code.  By  the  2796th  article  of  the  Louisiana  Code,  it  is  provided, 
that  an  association  for  the  purpose  of  carrying  personal  property  for  hire  in 
ships  and  other  vessels,  is  a  commercial  partnership.  In  the  case  of  Kim- 
ball V.  Blanc,  we  decided  that  the  bare  circumstance  of  persons  being  joint 
owners  of  a  boat  did  not  make  them  responsible  in  solido :  and  this  is  still 
the  opinion  of  the  Court,  because  men  may  become  joint  owners  of  a  boat  for 
other  purposes  than  carrying  personal  property  for  hire.  She  may  be  bought 
on  speculation  with  an  intention  of  selling  her  again.  She  may,  as  was  said  in 
the  opinion  delivered  in  the  case  of  Kimball  v.  Blanc,  be  chartered  out,  and 
while  she  remains  joint  property,  never  be  used  to  carry  goods.  In  these  and 
other  cases,  which  may  be  supposed,  there  Is  no  association  for  transporting  per- 
sonal property  for  hire.  From  the  argument  In  this  case,  we  suppose  it  has  been 
understood,  that  the  Court,  in  the  case  alluded  to,  settled  the  principle,  that 
joint  owners,  who  used  the  boat  In  carrying  the  goods  for  hire,  were  not  re- 
sponsible in  solido.  The  general  reasoning  in  that  opinion,  which  went  further 
than  was  necessary  for  a  decision  of  the  case,  may  have  furnished  some 
grounds  for  that  belief;  but  nothing  was  further  from  our  Intention;  so  far 
from  it,  a  contrary  intimation  was  thrown  out.  It  was  there  said :  '  Owners 
would  perhaps  be  bound  in  solido,  if  they  held  themselves  out  to  the  connnu- 
nity  as  partners  In  the  carrying  trade ;  but  the  bare  circumstance  of  their 
being  joint  owners  cannot  have  that  effect.' " 

»  Poth.  de  Soc.  n.  187 ;  ante,  §  102,  103,  109. 

*  Poth.  de  Soc.  n.  187 ;  ante,  §  420. 


710  PARTNERSHIP.  [CHAP.  XVI. 

the  several  part-owners  are  in  all  cases  chargeable  only 
according  to  their  respective  interests  in  the  ship.^ 

*  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  84,  5th  ed. ;  Vinn.  ad  Peckium, 
p.  155,  note  (a),  tit.  De  Exercit.  Act.  ed.  1647;  Van  Leeuwen,  Coram,  on 
Roman-Dutch  Law,  B.  4,  c.  2,  §  9. — Van  Leeuwen,  in  his  Commentaries, 
says :  "A  creditor,  who  had  transactions  with  any  one,  to  whom  a  ship  was 
trusted  by  an  owner,  or  who  was  placed  by  his  master  as  factor  or  manager 
of  any  merchandise  concerning  the  ship,  or  such  merchandises  alone,  such 
creditor  anciently  had  the  option,  whether  he  would  call  upon  the  owner  of 
the  ship,  or  his  substitute,  the  merchant,  or  his  manager,  for  payment,  and 
prosecute  them  at  law ;  and  if  there  were  several  owners  or  merchants,  in 
that  case  each  of  them  was  bound  for  the  whole.  But  this  usage  has  not 
been  adopted  among  us,  it  being  prejudicial  to  trade ;  and  one  is  obliged 
always  to  call  upon  the  owners,  or  the  merchants  themselves,  and  sue  them 
at  law.  Neither  is  it  in  use  in  Holland  (where  trade  is  at  present,  and  has 
for  a  long  time  since  been  prosperous),  viz.  that  where  there  are  many 
owners  and  partners,  each  shall  be  bound  for  the  whole.  But,  on  the  con- 
trary, it  was  introduced,  that  many  joint  owners  of  a  ship  together  may  not 
be  called  upon  for  payment  further  than  for  the  value  of  the  ship,  and  the 
amount  of  the  property  which  she  contains ;  and  each  is  bound  separately, 
and  no  further  than  for  his  respective  share  in  the  trade  ;  and  it  is  sufficient 
if  they  deliver  and  bring  up,  what  they  have  in  common,  in  satisfaction  of 
the  decree  for  the  whole ;  and  so  it  was  decreed  in  the  High  Court  of  Hol- 
land." Van  Leeuwen's  Coram.  B.  4,  c.  2,  §  9,  English  Translation,  London, 
1820,  p.  320.  Vinnius,  in  his  Commentaries  on  Peckius,  De  Exercit.  Act. 
(Lex.  4),  p.  155,  ed.  1647,  says:  "Si  plures  sint,  qui  navem  exerceant, 
placet  singulos  ex  contractu  magistri  in  solidum  teneri ;  idque  hac  ratione, 
ne  in  plures  adversaries  distringatur,  qui  cum  uno  contraxit.  (1.  1,  par.  ult. 
et  1.  2,  hoc  tit.  fac.  1.  et  ancillarum,  27,  §  ult.  inf.  de  pecul.)  Quippe  actio 
exercitoria,  qua  tenentur  exercitores,  ex  solius  magistri  persona  et  facto  nas- 
citur ;  utpote  cum  quo  solo,  non  cum  ipsis  exercitoribus,  contractum  est. 
Cum  igitur  in  plures  dividenda  non  sit  obligatio,  quas  in  unius  persona 
originem  habet,  ne  in  plures  distringatur,  qui  cum  uno  contraxit,  ex  eo  satis 
intelligiraus  beneficio  divisionis  hoc  casu  locura  non  esse.  (Bald,  in  rubr. 
C.  eod.  in  fin.)  Idem  est,  si  contractum  sit  cum  plurium  institore.  (1. 
habebat.  13,  par.  ult.  et  I.  seq.  inf.  de  instit.  act.)  aut  cum  servo  plurium 
voluntate  dominorura  navem  exercente.  (1.  6,  par.  1,  inf.  hoc  tit.)  Ceterum 
hoc  jus  apud  HoUandos  receptum  non  est,  apud  quos  singuli  exercitores, 
pro  sua  duntaxat  parte  exercitionis  conveniri  possunt.  Neque  enim  ut 
singuli  in  solidum  teneantur,  visum  est  aut  naturali  asquitati  convenire, 
quae  satis  habet,  si  pro  suis  singuli  portionibus  conveniantur ;  neque  publico 
utile  esse,  propterea  quod  deterrentur  homines  ab  exercendls  navibus,  si 
metuant,  ne  ex  facto  magistri  quasi  in  infinitum  teneantur.  Quin  et  hoc 
constitutum,  ne  exercitoria  etiam  universi  amjilius  teneantur,  cjuara  ad 
sestimationeni  navis  et  eorura,  qua?  in  navi  sunt,  teste  Grotio,  lib.  3,  intro- 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  TART-OWNERS.       711 

§  457.  The  Roman  law  promulgates  a  similar  doc- 
trine, where  the  contract  is  made  by  all  the  part-owners 
personally;  that  is  to  say,  that  they  are  not  liable  m 
solido  ;  but  each  is  liable  only  for  his  own  share  and 
proportion  of  the  debt,  according  to  his  interest  in  the 
ship.  On  the  other  hand,  where  one  part-owner  only 
makes  the  contract,  he  alone  is  held  responsible  to  the 
creditor  for  the  whole  debt.  But  where  the  contract  is 
made  by  the  master,  appointed  by  them,  there  all  the 
part-owners  are  liable  in  solido}  Thus,  it  is  said  by 
Ulpian  in  the  Digest:  Si  tamen  plures  per  se  navem 
exercemif,  j^'^^o  p)'>^o]yortionibus  exercitionis  conveniuntur. 
Neque  enim  invicem  sui  magistri  videntur.  Sed,  sijjlu- 
res  exerceant,  unum  autem  de  numero  suo  magistrum 
fecerint,  hujus  nomine  in  solidum  poterunt  conveniri. 
Sed  si  servus  plurium  navem  exerceat  vohintate  eoricm, 
idem  placidU  quod  in  p)luTibus  exercitorihus.  Plane  si 
unius  ex  omni  vohintate  exercuit,  in  solidum  ille  teneh- 
itur.  Et  ideo  puto^  et  in  superiore  casu.  in  solidtim 
omnes  teneri.^ 

§  458.  In  the  next  place,  as  to  the  rights  and  reme- 
dies of  third  persons  against  part-owners  of  ships  for 
torts  committed  by  them  personally,  or  by  the  im- 
proper conduct  or  negligence  of  their  agents  in  the 
management  of  the  joint  property.  They  are,  without 
question,  all  responsible  at  the  common  law,  severally, 

duct,  ad  jurisp.  Bat.  c.  1,  et  lib.  2,  de  jur.  bell,  et  pac.  c.  11,  n.  13.  Cete- 
rum  Hevia,  p.  2,  Cur.  Phil.  lib.  3,  c.  4,  n.  22,  simpliciter  sequitur  disposi- 
tionem  juris  communis."  See  also  the  Commentaries  of  Peckius  upon  the 
same  title  and  law  of  the  Digest ;  from  which,  perhaps,  it  may  be  inferred, 
that  principles  similar  to  those  of  the  Roman  law  pervade  the  jurisprudence 
of  many  of  the  continental  nations.  The  Scottish  law  is  certainly  so.  See 
1  Bell,"Comm.  B.  3,  Pt.  1,  c  4,  §  5,  p.  519,  520,  537,  538,  5th  ed. ;  Ers- 
kine,  Inst.  B.  3,  tit.  3,  §  45. 

*  Abbott  on  Shipp.  Pt.  1,  c.  3,  §  15,  p.  84,  5th  ed.  ;  1  Bell,  Comm.  B.  3, 
Pt.  1,  c.  4,  §  5,  p.  519-525,  5th  ed. 

*  D.  14,  1,  4,  §  1,  2,  24,  25;  Poth.  Pand.  14,  1,  n.  4,  10,  13. 


712  PARTNERSHIP.  [cHAP.  XYI. 

as   well   as  jointly,   in   solido,  for   all    torts   personally 
committed   or    authorized   by   them,    or    occasioned   to 
third  persons  by  the  negligence  of  one  or  more,  or  all 
of  them,  or  by  that  of  the  master  of  the  ship,  or  ship's 
husband,  or  other  agent  thereof;  but  not  for  the  wilful 
or  malicious  acts  of  the  latter.^     The   reason  for  this 
distinction  between  negligent   and   wilful   or  malicious 
acts  is,   that   neither   the    master   nor    ship's   husband, 
nor  other  agent,  in  doing  such  wilful  or  malicious  acts, 
can  properly  be  deemed  to  be  acting  within  the  scope 
of  the  authority  confided  to  him  by  the  owners,  in  the 
management  of  the  ship  or  its  concerns  ;  but  cases  of 
negligence  may,  and  ordinarily  do    arise,  in   the  very 
course  of  such  management.^     The  doctrine  is  clearly 
illustrated  in  the  common  case  of  a  collision   or   run- 
ning down  of  ships  on  the  high  seas,  or  in  port,  whereby 
damage  or  loss  is  incurred.     If  the  tort  be  by  the  wilful 
or  malicious  act  or  design  of  the  master,  or  any  other 
officer  or  agent  of  the  ship,  the  owners  are  not  liable 
therefor ;    but  the  party  only,  who   commits   the    tort. 
But  if  it  be  by  the  negligence  of   the  master,  or  any 
other  officer  or  agent,  then  the  owners  are  liable  there- 
for in  solido,  jointly  and  severally.     On  the  other  hand, 
if  a  tort  be  committed  by  one  part-owner  of  the  ship, 
who  is  not  employed  by  the  others  about  the  concerns 
of  the    ship,  or    authorized    to    act   for   them,  but   he 
is    acting    solely,    suo  jure,    as   part-owner,    the    other 
part-owners    will    not    ordinarily    be    liable    therefor, 
whether   the    act    be    wilful    or    malicious,    or   merely 
negligent,  for  the  very  reason  that  he  is  not  intrusted 

1  Story  on  Ag.  §  308-313 ;  452-457 ;  ante,  §  167,  168 ;  1  Mont,  on  P. 
B.  2,  c.  1 ;  Low  v.  Mumford,  14  Johns.  426 ;  Patten  v.  Gurney,  17  Mass. 
182.  —  Hence  the  suit  may  be  commenced  against  all  of  them,  or  against 
any  one  or  more  of  them.     Ibid. 

*  Story  on  Ag.  §  308-313  ;  452-457. 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       713 

by   them   with   the    management   or   concerns   of    the 
ship.^ 

§  459.  The  Roman  law,  in  like  manner,  in  many 
cases,  made  the  principal  liable  for  the  torts  and  neg- 
ligences of  his  agents  and  servants.^  It  has  been  sup- 
posed, that  the  Roman  law  never  was  in  this  respect 
as  extensive  in  its  reach  as  our  law  ;  in  other  words, 
that  it  never  did  create  a  general  liability  of  principals 
for  the  wrongs  and  negligences  of  their  agents,  but 
limited  it  to  particular  classes  of  cases  ;  and  that  the 
liability  of  principals,  so  far  as  it  is  recognized  in  that 
law,  was  mainly  dependent  upon  the  Praetor's  edict ; 
and  was  not  worked  out  of  the  original  materials  of 
the  Roman  jurisprudence.  AVhether  this  supposition 
be  correct,  or  not,  it  is  certain,  that  in  certain  classes  of 
cases,  the  Praetor,  by  his  edict,  either  introduced  a  new 
and  more  rigid  liabilit}^,  or  he  gave  to  that,  which  pre- 
viously existed,  an  additional  force,  and,  in  some  re- 
spects, a  more  onerous  obligation.  Thus,  masters  and 
employers  of  ships,  innkeepers,  and  stable-keepers,  were 
made  responsible  for  the  safety  and  due  delivery  of  the 
goods  committed  to  their  charge ;  and  of  course,  if  the 
loss  or  damage  were  occasioned  by  the  negligence  or 
wrong  of  their  servants,  and  not  by  themselves,  their 
responsibility  was  not  varied.^     Alt  Prcetor ;    JVautce, 

1  Coll.  on  P.  B.  5,  c.  4,  §  5,  p.  820,  2d  ed. ;  Story  on  Ag.  §  452-474. 
{A.  and  B.  were  part-owners  of  a  ship;  A.  defrayed  all  expenses  and  had 
the  uncontrolled  management  of  the  ship.  A.  had  two-thirds  of  the  gross 
earnings  and  B.  one-third :  Held,  that  A.  was  a  hirer  of  B.'s  share,  and  not 
B.'s  agent,  and  that  B.  was  not  liable  for  damages  caused  by  A.'s  negligence. 
Bei-nard  v.  Aaron,  9  Jur.  n.  s.  470,  11  C.  B.  >'.  s.  889,  Am.  ed.} 

■  Story  on  Ag.  §  318. 

'  Story  on  Ag.  §  318  ;  Story  on  Bailm.  §  464,  465 ;  D.  4,  9,  1,  3  ;  Heinec. 
Pand.  4,  8,  §  546-548;  Poth.  Pand.'4,  9,  n.  1,  2,  8;  Domat,  1,  16,  1,  art. 
3,  5;  Id.  1,  16,  2,  art.  2;  Id.  1,  16,  3,  art.  1.  — Lord  Stair,  in  his  Insti- 
tutes (B.  1,  tit.  13,  §  3),  seems  manifestly  to  have  considered  this  edict  as 
introducing,  for  the  first  time,  the  liability  of  principals  for  the  acts  and 


714  PARTNERSHIP.  [CHAP.  XVI. 

caupo7ies,  stahularii,  quod  cujusque  salviim  fore  recepe- 

defaults  of  their  agents,  and  of  making  that  liability  more  rigid,  in  many- 
cases,  upon  the  ground  of  public  policy.  His  language  is:  "In  the  civil 
law  there  is  a  depositation  of  a  special  nature,  introduced  by  the  edict, 
'  Naut£B,  caupones,  stabularii,  quod  cujusque  salvum  fore  receperint,  nisi 
restituent,  in  eos  judicium  dabo.'  By  this  edict,  positive  law  for  utility's 
sake  hath  appointed  that  the  custody  of  the  goods  of  passengers  in  ships, 
or  strangers  in  inns,  or  in  stables,  shall  be  far  extended  beyond  the  nature 
of  depositation,  which  obliges  only  for  fraud,  or  supine  negligence,  them, 
who  have  expressly  contracted  for  their  own  fact.  But  this  edict,  for 
public  utility's  sake,  extends  it ;  first  to  the  restitution  of  the  goods  of  pas- 
sengers and  voyagers,  and  reparation  of  any  loss  or  injury  done  by  the 
mariners,  or  servants  of  the  inn  or  stable.  Whereas,  by  the  common  law, 
before  that  edict,  in  this  and  such  other  cases,  there  was  no  such  obligement ; 
much  less  are  persons  now  obliged  for  their  hired  servant's  fact  or  fault, 
except  facts,  wherein  they  are  specially  intrusted  by  them.  But,  because 
the  theft  and  loss  of  goods  is  very  ordinary  in  ships,  inns,  and  stables, 
therefore  this  edict  was  introduced  for  the  security  of  travellers.  Secondly, 
the  edict  extends  this  obligement,  even  to  the  damage  sustained  by  (the  act 
of)  other  passengers  or  strangers  In  the  ship,  inn,  or  stable,  for  the  which, 
the  master  of  the  ship,  innkeeper,  or  keeper  of  the  stable,  could  be  no 
ways  obliged,  but  by  virtue  of  this  edict.  Thirdly,  they  were  made  liable 
for  the  loss  or  theft  of  such  things  absolutely,  from  which  they  were  free  by 
no  diligence,  but  were  not  liable  for  accident  or  force ;  that  is,  sea-hazard 
must  always  be  excepted."  See  also,  1  Bell,  Comm.  §  398-402,  4th  ed. 
See  Story  on  Bailm.  §  400-402,  458,  464-466.  There  are'  certainly  pas- 
sages in  the  Digest,  which  make  principals  responsible  for  the  fiiults  and 
negligence  of  their  agents  and  servants,  beyond  those  specially  pointed 
out  in  the  Prstor's  edict.  This  responsibility  seems,  however,  to  have 
been  limited  to  cases  where  the  principal  was  guilty  of  some  negligence  in 
employing  negligent  and  Improper  agents  and  servants.  Thus,  in  the 
Digest,  the  opinion  of  Pomponius  is  approved.  Videamus,  an  et  servorum 
culpam,  et  quoscunque  Induxerit,  praestare  conductor  debeat  ?  Et  quatenus 
praestat,  utrum,  ut  servos  noxaj  dedat,  an  vero  suo  nomine  teneatur?  Et 
adversus  eos  quos  induxerit,  utrum  prsestabit  tantum  actiones,  an  quasi  ob 
proprlam  culpam  tenebltur  ?  Mihi  ita  placet,  ut  culpam  etiam  eorum,  quos 
induxit,  prsestet  suo  nomine,  etsi  nihil  convenit ;  si  tamen  culpam  in  indu- 
cendis  admittit,  quod  tales  habuerit,  vel  suos,  vel  hospites.  D.  19,  2,  11; 
Poth.  Pand.  19,  2,  n.  30,  31.  See  also  D.  9,  2,  29,  §  9,  11;  Poth.  Pand. 
19,  2,  n.  31.  See  Story  on  Bailm.  §  401;  Domat,  1,  4,  2,  art.  5,  6; 
Id.  2,  8,  1,  art.  1-9 ;  Id.  2,  8,  4,  art.  8.  Again :  Qui  columnam 
transportandam  conduxit,  si  ea  dum  toUitur,  aut  portatur,  aut  reponitur, 
fracta  sit,  ita  id  periculum  prsestat,  si  qua  ipslus  eorumque,  quorum  opera 
uteretur,  culpa  acclderit.  Culjia  autem  abest,  si  omnia  facta  sunt,  quae 
diligentissimus  quisque  observaturus  fulsset.  D,  19,  2,  25,  7 ;  Poth.  Pand. 
19,  2,  n.  32. 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       715 

rint,  nisi  restituent^  in  eos  judicium  daho}  The  reason 
assigned  is,  that  the  rule  is  well  founded  in  public  policy 
and  convenience,  and  is  the  only  means  to  prevent  losses 
by  fraud  or  connivance.^  A  fortiori^  if  the  act  was 
done  with  the  consent  of  the  principal,  he  was  liable. 
Si  ipse  alicui  e  nautis  committi  jussit,  sine  duhio  deheat 
ohligari.^  The  liability  of  the  principal  for  the  acts  and 
negligences  of  his  agents,  as  well  as  for  his  own,  is  fully 
proclaimed  in  the  comments  of  the  Roman  law.  Thus, 
for  example,  it  is  said,  as  to  the  owners  or  employers 
of  ships :  Sunt  quidam  in  navihiis,  qui  custodice  grcdia 
navihus  j^rcejwnuntur^id  est^naviimi  cusiodes  et  dietaril. 
Si  quis  igitiir  ex  his  recepei^it,  puto  in  exercitoreni  dan- 
dam  actionem  ;  quia  is,  qui  eos  hujusmodi  officio  p)^^^^- 

ponit,  committi  eis  permittit.'^  The  same  doctrine  is  also 
applied  to  innkeepers.  Caupo  prcEstat  factum  eorum, 
qui  in  ea  caup)ona  ejus  cauponce  exercendce  causa  ihi 
sunt.  Item  eoriim,  qui  hahitandi  causa  ihi  sunt.  Via- 
torem  autem  factum  non  prcestat.^  The  same  doctrine 
is  also  applied  to  stable-keepers.  Caupones  autem  et 
stabidarios  ceque  eos  accijnemus,  qui  caup)onam  vel  sta- 
hidum  exercent,  institoresve  eorum.^  Eodem  modo  te- 
nentur  cauptones  et  stcdjularii,  quo  exercentes  negotium 

^suum  recip)iunt.''  And  the  whole  doctrine  is  summed 
up  in  another  passage,  where  it  treats  of  the  liability  of 
such  principals  for  the  frauds,  deceits,  and  thefts  of 
their  agents  or  servants,  without  their  knowledge.    Item 

1  D.  4,  9,  1;  Poth.  Pand.  4,  9,  n.  1,  2;  Domat,  1,  16,  1,  art.  2,  -4,  6; 
Id.  1,  16,  2,  art.  2;  Id.  1,  16,  3,  art.  1-3;  Heinec.  ad  Pand.  4,  8,  §  546- 
648,  551. 

*  Story  on  Ag.  §  318,  and  note ;  Domat,  1,  16,  1,  art.  7. 

'  D.  4,  9,  1,  2 ;  Potb.  Pand.  4,  9,  note  (2)  ;  Story  on  Ag.  §  318,  note; 
Domat,  1,  16,  1,  art.  5. 

«  D.  4,  9,  1,  3 ;  Poth.  Pand.  4,  9,  note  (2)  ;  Domat,  1,  16,  2,  art.  1-4. 

»  D.  47,  5,  1,  6  ;  Poth.  Pand.  47,  5,  n.  3  ;  Domat,  1,  16,  1,  art.  3,  6. 

«  D.  4,  9,  1,  5  ;  Poth.  Pand.  4,  9,  n.  2 ;  Domat,  1,  16,  1,  art.  3. 

^  D.  4,  9,  3,  2 ;  Poth.  Pand.  4,  9,  n.  3. 


716  PARTNERSHIP.  [CHAP.  XYI. 

exercitor  navis,  aid  cauponce,  aut  stahuli,  de  dolo  aut 
furto,  c£iiod  in  navi,  aut  caupona,  aut  stahido^  factum 
erit,  quasi  ex  maleficio  teneri  videtur,  si  modo  ipsius 
nidlum  est  'nialeficium^  sed  alicujus  eorum^  quorum  opera 
navem,  aid  eaupoiumx^  aid  stabidum  exercet.  Cum  enim 
neque  ex  maleficio,  neque  ex  contractu,  sit  adversus  eum 
constitida  hcec  actio,  et  aliqitatetius  culpm  reus  est,  quod 
opera  malorum  hominum  ideretur  ;  ideo,  quasi  ex  male- 
ficio, teneri  videtur}  Here  we  have  the  rule  of  the 
liability  of  owners  and  employers  of  ships  and  stable- 
keepers,  and  the  reason  for  it.  They  are  responsible 
for  the  tort  and  fraud  of  their  agents  and  servants,  al- 
though they  are  not  parties  to  it,  quasi  ex  maleficio,  as 
if  they  themselves  were  wrongdoers  ;  because  they  have 
made  use  of  the  services  of  such  bad  agents  and  servants 
in  their  employment. 

§  460.  And  here,  again,  the  like  limitations  to  this 
liability  were  recognized  in  the  Roman  law,  as  exist 
in  ours.  The  principal  was  not  liable  for  the  torts  or 
negligences  of  .his  agents  or  servants,  except  in  cases 
within  the  scope  of  their  employment.  Thus,  for  ex- 
ample, the  innkeeper  was  liable  only  for  the  torts,  or 
thefts,  or  damages,  of  his  servants,  done  or  committed 
in  his  inn,  or  about  the  business  thereof;  and  not  for 

^  Inst.  4,  5,  3  ;  Domat,  1,  16,  1,  art.  7  ;  Id.  1,  16,  2,  art.  1-4.  —The  same 
rule  is  laid  down  in  the  Digest.  In  eos,  qui  naves,  caupones,  stabula  exerce- 
bunt,  si  quid  a  quoquo  eorum,  quosve  ibi  habebunt,  furtum  factum  esse  di- 
cetur,  judicium  datur ;  sive  furtum  ope,  consilio  exercitoris,  factum  sit ;  sive 
eorum  cujus,  qui  in  ea  navi  naviganda  causa  esset.  Navigandi  autem  causa 
accipere  debemus  eos,  qui  adhibentur,  ut  navis  naviget,  hoc  est,  nautas.  D. 
47,  5,  1,  Intr.  and  §  1;  Poth.  Pand.  47,  5,  n.  1,  3.  Qutecunque  de  furto 
diximus,  eadem  et  de  damno  debent  intelligi.  Non  enim  dubitari  oportet, 
quia  is,  qui  salvum  fore  recipit,  non  solum  a  furto,  sed  etiam  a  damno  reci- 
pere  videatur.  D.  4,  9,  5,  1 ;  Poth.  Pand.  4,  9,n.  8;  D.  14,  1,  1,  2  ;  Poth. 
Pand.  14,  1,  n.  6  ;  Heinec.  Pand.  Ps.  1,  Lib.  4,  tit.  8,  §  551-554;  Story 
on  Bailm.  §  464-468;  Ersk.  Inst.  B.  3,  tit.  1,  §  28,  29;  Id.  B.  3,  tit.  3,  §  43- 
45  ;  1  Bell,  Comm.  B.  3,  c.  4,  §  5,  p.  465-476,  5th  ed. ;  Domat,  1,  16,  Intr.; 
Story  on  Bailm.  §  401. 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       717 

such  torts  or  thefts  committed  in  other  places.  Eodem 
modo  tenentur  caiqjones  et  stahidarii,  quo  exercentes  necjo- 
tiwn  suum  i^eciiyiunt  Ceterum,  si  extra  neyotlmn  rece- 
perint^  non  tenebuntur}  So,  the  owner  or  employer  of 
a  ship  was  not  liable  for  the  torts,  or  thefts,  or  damages, 
of  the  mariners,  unless  done  or  committed  in  the  ship, 
or  about  the  business  thereof.  Debet  exercitor  omnium 
naidarum  suorimi,  swe  Itheri,  sive  servi,  factum  prce- 
stare.  JSfec  immerito  factum,  eorum  prcestcU,  cum  ipse 
COS  suo  periculo  adhihuerit.  Sed  non  alias  iwcestat^ 
quam  si  in  ipsa  nave  damnum  datum  sit.  Ceterum,  si 
extra  navem,  licet  a  nautls,  non  I'^rcestahit.^ 

§  461.  Similar  principles  were  applied  in  the  Eo- 
man  law  to  the  ordinary  agents  employed  in  the 
common  business  of  trade  and  commerce,  called  Insti- 
tores ;  ^  and  also  in  the  case  of  domestic  servants  and 
persons  belonging  to  the  family.  Prceter  alt  de  his,  qui 
dejecerint,  vel  effuderlnt.  Unde  in  eum  locum,  quo 
volgo  iterfiet,  vel  in  quo  consistetur,  dejectum  vel  effusum 
quid  erit,  quantum  ex  ea  re  damnum  datum  factumve 
erit,  in  eum,  qui  ihi  hahitaverit,  in  duphmi  judicium 
daho^  Si  servus,  insclente  domino,  fecisse  dlcetur,  in 
judicio  adjiciam,  aut  noxam  dedere.^  These  seem  to 
be  the  most  important  cases,  specially  and  positively 
provided  for  in  the  Roman  law.  That  law  does  not 
seem  to  have  recognized,  to  the  full  extent,  the  general 
maxim,  Respondeat  Superior,  inculcated  by  our  law.*^ 

1  D.  4,  9,  3,  2  ;  Poth.  Pand.  4,  9,  n.  3. 

=  D.  4,  9,  7  ;  Poth.  Pand.  48,  5,  n.  1  ;  Domat,  1,  16, 1,  art.  7 ;  Id.  1,  16,  2, 
art  1-4. 

»  Story  on  Ag.  §  8 ;  Domat,  1,  16,  3,  art.  1 ;  D.  14,  3,  5,  §  1-9 ;  Poth.  on 
Oblig.  n.  121,  453,  by  Evans;  Id.  in  French  ed.  n.  121,  489. 

*  D.  9,  3,  1 ;  Id.  9,  3,  27,  11  ;  1  Bl.  Comm.  431 ;  Inst.  4,  5,  1 ;  Ersk.  Inst. 
B.  3,  tit.  3,  §  46;  D.  19,  2,  11 ;  Domat,  2,  8,  1,  art.  1-9, 

^  D.  9,  3,  1 ;  Poth.  Pand.  9,  3,  n.  1 ;  Inst.  4,  5,  §  1,  2. 

8  See  1  Stair's  Inst.  B.  1,  tit.  13,  §  3  ;  Story  on  Ag.  §  454,  n.  1.  —  Mr.  Holt, 
in  a  passage  cited  in  Story  on  Ag.  §  454,  n.  1,  says,  that,  "  In  the  civil  law  the 


718  PARTNERSHIP.  [cHAP.  XTI. 

§  462.  The  modern  nations  of  continental  Europe 
have  adopted  the  doctrine  of  the  Eoman  law  to  its 
full  extent,  and  some  of  them,  at  least,  seem  to  have 
carried  it  further.  Pothier  lays  down  the  rule  in  the 
following  broad  terms:  "  Xot  only  is  the  person,  who 
has  committed  the  injury,  or  been  guilty  of  the  negli- 
gence, obliged  to  repair  the  damage,  which  it  has 
occasioned ;  those  who  have  any  person  under  their 
authority,  such  as  fathers,  mothers,  tutors,  preceptors, 
are  subject  to  this  obligation,  in  respect  of  the  acts  of 
those  who  are  under  them,  when  committed  in  their 
presence,  and  generally  when  they  could  prevent  such 
acts,  and  have  not  done  so.  But  if  they  could  not 
prevent  it,  then  they  are  not  liable :  Kullum  crimen 
patitiir  IS,  qici  noii  prohihet,  quinn  p)rohibere  non  j^otest. 
(I.  109,^.  de  reg.jur.)  Even  when  the  act  is  committed 
in  their  sight,  and  with  their  knowledge ;  CuJjki  carets 
qui  scit,  seel p)rohibere  non  p)otest.  (I.  oO,  Jf.  d.  t.)  Mas- 
ters   are  also  answerable  for  the  injury  occasioned  by 

liability  -was  narrowed  to  the  person  standing  in  the  relation  of  a  pater-familias 
to  the  wrong-doer."  It  is  also  observable,  that  Mr.  Le  Blanc  and  Mr.  Mar- 
shall, in  arguing  the  case  of  Bush  v.  Steinman  (1  B.  &  P.  404,  405),  assert, 
that,  "  the  liability  of  the  principal  to  answer  for  his  agent  is  founded  in  the 
superintendence  and  control  which  he  is  supposed  to  have  over  them  (citing 
1  Bl.  Comm.  431).  In  the  civil  law,  that  liability  was  confined  to  the  person 
standing  in  the  relation  of  pater-familias  to  the  person  doing  the  injury."  For 
•which  they  cite  Inst.  4,  5,  1,  and  D.  9,  3.  These  citations  clearly  prove,  that 
the  pater-familias  is  liable  for  the  wrongful  acts  and  negligences  of  his  domes- 
tics ;  but  they  do  not  prove,  negatively,  that  other  persons  were  not  liable,  as 
principals,  in  any  other  cases,  for  the  wrongs  and  faults  of  their  agent.  The 
text  shows,  that  in  many  other  cases,  besides  that  of  a  pater-familias,  the  prin- 
cipal was  in  the  civil  law  liable  for  such  wrongs  and  faults.  The  learned 
counsel  seem  to  have  misunderstood  the  true  meaning  of  the  text  of  Black- 
stone's  Commentaries,  which  by  no  means  insists  upon  any  such  limitations. 
Mr.  Justice  Heath,  in  the  same  case,  seems  to  have  entertained  the  notion, 
tliat  the  Roman  law  was  or  might  be  as  limited  as  the  learned  counsel  sup- 
posed. But  he  added:  "  Whatever  may  be  the  doctrine  of  the  civil  law,  it 
is  perfectly  clear,  that  our  law  carries  such  liability  much  further."  s.  c.  IB. 
&  P.  409.     See  also  Story  on  Bailm.  §  454-459. 


CHAP.  XVI.]     RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       719 

the  wrongs  and  negligences  of  tlieir  servants.  They 
are  even  so,  when  they  have  no  power  to  prevent 
them,  provided  such  wrongs  or  injuries  are  committed 
in  the  exercise  of  the  functions,  in  which  the  servants 
are  employed  by  their  masters,  although  in  the  mas- 
ter's absence.  This  has  been  established,  to  render 
masters  careful  in  the  choice  of  those  whom  they 
employ.  With  regard  to  their  wrongs,  or  neglects 
not  committed  in  these  functions,  the  masters  are  not 
responsible."  ^  The  doctrine  of  the  Roman  law  seems 
to  be  followed  with  more  scrupulous  exactness  in  the 
laws  of  Spain  ^  and  Scotland,^  where  the  specific  enu- 
merations of  the  Roman  law  are  to  be  found  followed 
out  in  treating  of  the  liability  of  principals  for  the 
acts  of  their  agents.^ 

§  463.  These  are  the  most  material  considerations, 
which  seem  necessary  to  be  presented  to  the  learned 
reader  in  order  to  illustrate  the  leading  distinctions  be- 
tween cases  of  partnership,  and  cases  of  part-ownership. 
And,  here,  these  Commentaries,  according  to  their  orig- 
inal design,  are  brought  to  their  appropriate  conclusion. 
In  reviewing  the  whole  subject  of  partnership,  it  cannot 
escape  the  attention  of  any  careful  observer,  how  many 
of  the  doctrines  of  the  jurisprudence  of  the  common  law 
are  coincident  with  those  of  the  Roman  law,  and  those 
of  the  modern  commercial  nations  of  continental  Europe. 
This  circumstance  aiffords  no  slight  proof,  that  they  are 

1  roth,  on  Oblig.  by  Evans,  n.  121,  453  ;  in  the  French  ed.  n.  121,  489. 

2  2  Moreau  &  Carleton,  Partidas  5,  tit.  8,  1.  26,  p.  743  ;  Story  on  Bailm. 
§  465-408. 

^  Ersk.  Inst.  B.  3,  tit.  3,  §  43-46;  2  Bell,  Comm.  §  398-406,  4th  ed.;  1 
Stair,  Inst.  B.  1,  tit.  13,  §  3. 

*  These  last  four  sections  are  copied  literally  from  Story  on  Ag.  §  458-461. 
The  object  in  re-inserting  them  here  is  the  desire  to  make  each  work  inde- 
pendent of  the  other ;  and  it  seems  indispensable  to  a  full  exposition  of  this 
branch  of  the  subject,  to  present  the  Roman  and  foreign  law  with  fulness  and 
exactness. 


720  PARTNERSHIP.  [cHAP.  XVI. 

essentially  founded  in  the  principles  of  general  justice, 
sound  policy,  and  public  convenience.  If  it  should  be 
objected,  that  the  common  law  on  this  subject  contains 
some  very  subtle,  artificial,  and  even  arbitrary  doctrines, 
having  no  just  foundation  in  an  enlarged  and  liberal 
equity,  and  not  susceptible  of  any  satisfactory  vindica- 
tion, except  as  mere  positive  or  technical  rules,  the  same 
objection  lies,  at  least  to  an  equal  extent,  against  the 
system  of  the  Roman  law  upon  the  same  subject,  and 
the  jurisprudence  of  modern  Europe,  built  upon  it.  In 
truth,  it  is  impracticable  to  establish  any  universal  rules, 
which  shall  equally  suit  the  habits  and  institutions,  the 
policy,  and  the  various  employments  of  all  commercial 
nations.  Every  branch  of  municipal  law  must  have  a 
close  affinity  to  all  others,  belonging  to  the  same  com- 
mon system,  which  attempts  to  regulate  and  enforce  the 
rights,  the  liabilities,  and  the  remedies  by  and  against 
particular  persons  in  their  various  social  relations.  The 
positive  and  technical  rules,  applicable  to  one  branch, 
must  in  a  great  measure  pervade  the  whole,  in  order  to 
make  the  administration  of  justice  by  the  public  tribu- 
nals at  once  safe,  easy,  certain,  and  satisfactory.  It 
would,  therefore,  be  a  matter  of  wonder,  if  in  the  diver- 
sities of  pursuits,  of  occupations,  of  interests,  and  even 
of  political  arrangements,  in  different  countries,  we 
should  not  find  ingrafted  upon  each  system  some  pecu- 
liarities, which,  in  a  philosophical  sense,  might  seem  to 
be  either  incongruities  or  defects.  Human  wisdom 
never  yet  has  achieved  any  thing  perfect ;  and  the  most, 
that  can  be  expected  from  the  most  enlightened  juris- 
prudence, is,  that  it  shall  contain  within  itself  near  ap- 
proximations to  the  soundest  equity  and  moral  justice, 
and  in  its  adaptations  be  fitted  to  the  wants,  the  spirit, 
and  the  policy  of  the  age.  In  this  respect  the  common 
law,  especially  in  the  department  of  commercial  juris- 


CHAP.  XVI.]    RIGHTS  AND  INTERESTS  OF  PART-OWNERS.       721 

prudence,  which  has  grown  up  and  expanded  with  the 
increasing  intercourse  between  different  nations,  and  the 
enterprise,  and  skill,  and  necessities  of  navigation  and 
trade,  may  justly  challenge  competition  with  any  other 
system  in  ancient  or  in  modern  times.  It  has  been 
nourished  by  the  genius,  and  learning,  and  independ- 
ence of  Judges,  whose  labors,  like  those  of  Ulpian,  and 
Gains,  and  Paul,  and  Papinian,  are  destined  to  the  same 
immortality  as  the  Law  itself.  Its  highest  praise  is, 
that  its  principles  receive  an  almost  universal  homage, 
not  as  the  positive  dictates  of  authority,  but  as  the  per- 
suasive and  irresistible  influence  of  reason.  Valent  j)ro 
ratlone^  non  pro  introducto  jure. 


46 


INDEX. 


A. 

Section 

ABATEMEXT  OF  SUIT. 

in  cases  of  contract 239 

nonjoinder  of  all  contractors  defendants     .     .      160,  454 
nonjoinder  of  all  plaintiffs  fatal  on  trial  as  ■well  as 

in  abatement 235,  236,  244,  245,  454 

in  cases  of  tort 167 

nonjoinder  of  all  plaintiffs 167,  454 

nonjoinder  of  all  defendants 167 

(See  Partxers  —  Fraud.) 
ABSENCE  FROM  THE  COUNTRY. 

■when  a  good  cause  of  dissolution  of  partnership  or  not      .     .     298 
ACCEPTANCE. 

of  separate  security  of  one  partner,  ■when  debt  of 

firm  extinguished  by  or  not      ....  155,  166,  157,  254,  255 
ACCOUNT. 

annual,  under  articles,  effect  of 206,  207,  208 

all  profits  to  be  accounted  for  in 175,  181,  349 

ho^w  taken  on  dissolution 344-354 

bet-ween  part-owners,  how  and  when  taken     ....       449,  451 

by  suit  at  law 449,  450 

by  bill  in  equity 449,451 

when  running  account  with  new  firm  discharges  the  old 

or  not 154-158 

will  be  compelled  of  fraudulent  gains  by  partner      .     .       175-180 

each  partner  bound  to  keep  proper  accounts 181 

whether   account  decreed  between    partners  ■without  a 

prayer  for  dissolution 334 

ACCOUNTS. 

win  not  be  taken  generally  in  equity  pending  the  part- 
nership or  the  balance  set  right 229,  349 

ACKNOWLEDGMENT  OF  PARTNERS. 

when  it  binds  the  firm  or  not 107 

of  debt 107,  323,  324,  824  a,  324  6 


724  INDEX. 

Section 

ACKNOWLEDGiNIENT  OF  ONE   PART-OWNER. 

when  it  binds  the  other  owners  or  not 453 

ACT  OF  BANKRUPTCY. 

eflEects  and  consequences  of 313,  314,  374-408 

(See  Bankruptcy.) 

ACTIONS  BY  PART-OWNERS 454 

against  part-owners 455-462 

effect  of  nonjoinder  as  plaintiffs        235,  236,  244 

effect  of  nonjoinder  as  defendants 235 

ACTIONS  BY  PARTNERS. 

all  must  join  in 235,  236,  244 

against  partners,  all  should  be  joined 235 

ACTIONS  BY  AND  AGAINST  PARTNERS. 

(See  Partners  and  Partnership.) 

between  partners 216-228  232 

against  third  persons 234-264 

ADMINISTRATION  OF  PARTNERSHIP. 

who  have  a  right  to,  generally 181 

who  under  articles 204 

equity  will  enforce  and  protect  the  right  of 204 

ADMIRALTY,  COURT  OF. 

jurisdiction  in  cases  of  part-owners 428 

in  case  of  an  equal  division  of  interests  and  opinions    ,     .  435-439 

ADlVnSSION  OF  PARTNER. 

when  it  binds  the  firm  or  not        107 

of  debt       107 

whether  it  binds  after  dissolution  or  not 323,  324 

of  part-owner,  when  it  binds  others        453 

ADVANCES. 

by  partner,  how  considered 219,  328 

AGENT. 

every  partner  agent  of  the  firm        1 

when  agent,  sharing  profit  as  a  compensation,  a  part- 
ner or  not    32,  33,  34,  35-52 

distinction  between  sharing  of  gross  and  net  profits     .     .       35-80 
part-owner  when  agent  or  not,  and  how 

far 89,  412-414,  419-422,  440,  446 

AGREEMENT  TO  FORM  PARTNERSHIP. 

when  forced  in  equity 188,  189 

articles  of  partnership,  when  and  how  enforced  .     .     .       188,  189 
((See  Articles.) 

ALIENS. 

when  they  may  be  partners  or  not 9 

friends  may  be 9 

alien  enemies  not        9,  240 

dissolution  of  partnership  by  war 9 


INDEX.  725 

Section 

ALLOWANCE  TO  PARTNER  FOR  SERVICES. 

when  allowed  or  not 182,  185,  18G 

ANNUITY. 

when  receiving  an  annuity  makes  a  person  a  partner  or  not       66-69 

APPROPRIATION  OF  PAYMENTS. 

effect  of  upon  and  after  change  of  firm      ....    lo7,  253,  254 
how  made 157 

ARBITRATION.     (See  Partners  — Partnership.) 

one  partner  cannot  bind  firm  by 114 

articles  to  refef  to,  cannot  be  enforced  in  equity      ....     215 
when  arbitrators  may  award  a  dissolution  on  an  arbitra- 
tion      215,  299,  300,  301 

ARTICLES  OF  PARTNERSHIP.     (See  P.utTNERSHiP.) 

construction  of,  generally 187-215 

construction  of  special  articles 198-202 

duties  under 172-185 

partners  bound  to  conform  to 173 

when  courts  of  equity  will  decree  specific  articles  to  form 

a  partnership 188,  189 

what  articles  after  partnership  will  be  specifically  decreed 

to  be  performed 187,  189 

how  and  when  waived,  controlled,  or  "varied 192, 199 

ASSETS  PARTNERSHLP,  what  are 92,  93 

(See  Partners  and  Partnership.) 
distribution  of,  on  dissolution 350,  355 

ASSIGNEES  IN  BANKRUPTCY. 

rights,  powers,  and  interests  of 375 

ASSIGNMENT  OF  PARTNERSHIP  PROPERTY. 

when  and  what  assignment  good  by  one  partner     .    101,  309,  310 

to  pay  partnership  debts 101,  309,  310 

whether  general  assignment  by  one  partner  good  without 

consent  of  all 101 

when  one  partner  may  assign  his  interest  in  partnership  or 

not 183,307,308 

dissolution  of  partnership,  when  by 307,  308,  309 

when  assignment  to  partner  good  or  not    .     .     .  358,  372,  373,  396 
involuntary,  effect  of.     (See  Bankriiptcy.)  ' 

involuntary,  effect  of  by  seizure  in  execution  of.     .     .     .  311,  312 
assignment  to  one  partner  in  cases  of  bankruptcy,  when 
valid  or  not 396 

ASSUMPSIT.     (See  Action  — Remedies.) 

ATTAINDER  OF  FELONY,  OR  TREASON. 

dissolution  of  partnership  by 304,  305 

AUTHORITY  AND  POWERS  OF  PARTNERS 

to  bind  each  other 101-125 

AWARD.     (See  Arbitration.) 114,215,299,301 


726  INDEX. 

B. 

Section 

BANKRUPTCY.     {See  Partners  and  Partnership.) 

effects  and  consequences  of 313,  374-396 

dissolution  of  partnership  by 313 

from  what  time 314 

rights  of  joint  creditors  on 374-409 

rights  of  several  creditors  on 374-409 

reputed  ownership  in  cases  of,  what  is 397-404,  407,  408 

rights  of  creditors  in  respect  to  dormant  partners  in  cases 

of 393 

rights  and  powers  of  solvent  partners  in  cases  of    .  338,  339,  407, 

408 
rights  of  creditors  having  a  security 389 

BILLS  AND  NOTES.     {See  Promissory  Notes.) 

when  partners  may  make  or  indorse  in  name  of  firm    .  102,  102  a, 

126,  127 
when  partnership  not  bound  by 126,  127 

BOND  TO  PARTNERS. 

for  fidelity  of  clerks,  &c.,  how  and  when  extinguished  .     .  245-251 
by  one  partner,  wheti  binding  the  firm  or  not     .     .     .    117-122  a 

BOOKS  OF  PARTNERSHIP. 

effect  of  entries  in 24,  note,  191 

c. 

CAPITAL  STOCK. 

one  partner  may  supply,  and  another  labor  and  services    15, 16,  17 

community  of  interest  of  partners  in 15,  16,  17,  27 

how  and  when  partners  contribute  to 15,  16,  17 

when  community  of  interest  creates  a  pai'tner  or  not  in      .     27-29 

of  what  it  may  consist 15-58  a,  88-100 

construction  of  articles  as  to  advance  of    ...     .    203,  204,  205 

CHANGE  OF  FIRM, 

effect  of 153,  160 

notice  of,  when  necessary 159-163 

CLANDESTINE  BUSINESS  AND  PROFITS. 

every  partner  responsible  to  partnership  for 177,  178 

CLUB, 

when  exclusive  credit  given  to  or  not 144,  145 

COLLUSION  OF  ONE  PARTNER. 

when  it  binds  firm  or  not.     (See  Fraud.)  108,  109,  131,  132, 

133,  133  a,  162,  163,  164,  237,  238 

COMMANDITE. 

partnership  in,  what  is 78 

how  formed 87 


INDEX.  "^  727 

Section 

CCMMENCEMEXT  OF  PARTNERSHIP. 

when  it  takes  effect 19-4 

COMMISSIONS. 

when  participation  in,  makes  a  partnership  or  not       24,  37,  38,  41 

COMMUNITY  OF  INTEREST. 

in  profits.     {See  Profits.) 18-23 

when  it  makes  parties  partners 53-69 

when  not.     {See  Partnership.) 30-52 

COMPENSATION  OF  AGENT. 

when  sharing  profits  makes  agent  a  partner  or  not     .     .     .  33,  34 
partners  cannot  claim  unless  by  special  agreement       182, 185,  186 
allowed  to  partner  for  expenditures  and  losses  on  ac- 
count of  firm 185,  186 

COMPOUNDING  AND  COMPROMISING 

debt  of  firm  by  one  partner,  when  valid 115,  116 

COMPROMISE  AND  COMPOUNDING 

of  debt  by  one  partner  valid 115,  116 

CONCEALMENT     BY    PARTNER    INJURIOUS    TO 
PARTNTERSHIP. 

when  he  is  liable  for 172 

when  his  contracts  with  firm  voidable  for 172 

CONTINUANCE  OF  PARTNERSHIP. 

construction  of  articles  as  to 195 

after  death  of  a  partner  by  his  agreement  .     .     .      180,  199-201  a 

by  representatives  or  appointees 180,  199-201  a 

how  far  debts  contracted  after  his  death  bind  his  assets     .     .  201  a 

CONTINUING  CONTRACTS 

how  affected  by  change  of  firm 2-43,  245-251 

In  cases  of  guaranty  ....     243,  244,  245,  248,  249,  250,  251 

in  cases  of  suretyship 246,  248,  249 

in  cases  of  bonds  for  fidelity  of  clerks,  &c 249,  250 

CONTRACT. 

partnership  founded  in       2-6 

{See  Partnership.) 
what  are  deemed  partnership  contracts  or  not     134,  137,  138,  154, 

243-256 
by  what  contract  one  partner  can  bind  the  firm     102-109,  142,  143 

when  firm  not  bound 110,113,117,118,142-146 

not  unless  made  In  firm  name 102,  102  a,  142 

nor  if  by  deed 117-122  a 

exceptions  to  rule 120-122,  243,  244 

not  where  exclusive  credit  given  to  one  partner     .     .     .     134-145 
with  partners,  how  extinguished      .     .     .      154-157,253,254,255 

{See  EXTLNGCISIIMENT.) 

what  deemed  of  the  partnership  or  not 243,244 

how  sued  upon  when  one  partner  retires 244 


i2S  INDEX. 

Section 

CONTRACT  —  continued. 

continuing,  how  construed 245-251 

of  guaranty  to  or  by  firm 245-248 

of  suretj'ship  for  clerks  by  or  to  firm        245-251 

COXTRACTS 

partnership,  are  deemed  joint  and  several  in  equity  .     .     .       362 
COXTRIBUTIOXS  BETWEEX  PARTXERS. 

when  right  exists  to 169-173 

when  it  may  be  had  at  law  or  not 218,219,220,221 

when  in  equity '    .      222,  223,  224 

when  in  cases  of  tort  or  not 220 

COXVERSION  OF  DEBTS. 

(^See  ExTDfGuismrENT.) 

what  is 369,  370 

effect  and  consequences  of 369,  370,  397-404 

CONVEYAXCE  OF  PARTXERSHIP  PROPERTY. 

by  one  partner,  when  good  or  not 106, 309, 310 

{See  AssiGXJiEXT.) 
CORPORATION.  * 

whether  a,  may  be  a  partner 20 

COURTS  OF  EQUITY.     {See  Partners.) 

remedial  power  between  partners        176-183 

in  cases  of  fraud  or  clandestine  business  or  bargains    174-183,  287 
injunctions  when  granted  by     .     .     .    178,  179,  209-212,  225-233 

when  a  receiver  appointed  by 228-231 

when  a  dissolution  decreed  by       ...       176,  232,  282,  286-298 
when  the  specific  performance  of  articles  of  partner- 
ship will  be  decreed 188,  189 

when  specific  performance'of  articles  of  partnership 

decreed  or  not 204-210 

bill  in  equity  between  partners  to  account  lies  in  .     .     .     347-351 

so  between  part-owners  to  account 449 

when  equity  will  interfere  to  restrain  one   partner 
violating  the  articles  of  partnership,   the  bill  not 

praying  a  dissolution 229 

whether  and  how  far  they  will  interfere    between 
partners,  unless  a  dissolution  is  prayed  by  the  bill      .     .     .  229 
CREDIT. 

when  exclusive  credit  is  given  to  one  partner,  the 

partnership  is  not  bound 134-145,  154,  243 

what  is  exclusive  credit  or  not 134-145, 158 

when  credit  to  new  firm  discharges  old  firm      .      154-158,  253-255 
CREDITORS. 

when  persons  are  partners  as  to,  although  not  inter  sese. 

{See  Partnership.) 53-70 

when  persons  not  partners  as  to 30-52 


INDEX.  729 

_  Section 

CPEDITORS,  RIGHTS  AND  PRR^ILEGES  OF. 
(See  JoiXT  Ckeditors.) 

joint      . .     .     .  361-365,  390,  391 

several 363,  390,  391 

joint  and  several 384-386 

equities  and  quasi  lien  of 326,  357-361 

rights  of  creditors  against  partners  generally     ....   126-168 

in  cases  of  death  of  one  pai-tner 361,  362 

against  survivors 361,  362 

against  estate  of  deceased  partner 361,  362 

what  debts  are  joint  and  several 367,  373 

of  bankruptcy 376,  377,  384,  386 

D. 
DAMAGES. 

liability  of  partners  to  contribution  for     .     .      109-173,  220,  221 
when  a  partner  liable  to  firm  for 185 

DEATH. 

dissolution  of  partnership  by 317,  318,  319  a 

{See  Partners  and  Partnership.) 

from  what  time 319 

effects  and  consequences  of 342-356 

rights  of  survivors 344-347 

rights  of  representatives 342-346 

rights  of  creditors 361,362 

DEATH  OF  PARTNER. 

when  partnership  continued  by  his  agent  for  a  period  after 
his  death,  how  far  his  assets  are  liable  for  debts  con- 
tracted after  his  death 201  a 

DEBT  OF  SEPARATE  PARTNER. 

pajTnent  of,  when  misapplication  of  partnership  funds  or 

not 132,  133 

when  debt  binds  partnership,  which  is  contracted  before 

it  is  formed,  or  not 146,  147-152 

when  incoming  partner  bound  or  not 152,  153 

DEBTS  DUE  BY  PARTNERSHH*.     (See  Partnership.) 

when  joint  and  several 262 

conversion  of,  what. is,  and  when  it  takes  place   ....  369,  370 
effects  of  conversion 369,  370,  397—403 

DEBTS  OF  PARTNERSHIP  ARE  JOINT  AND  SEVERAL. 

DECLARATION  OF  PARTNER. 

when  it  binds  the  firm  or  not  .     .     .     .107,  323,  324,  324  a,  324  b 

whether  after  dissolution  or  not 323-324  6 

of  one  part-owner,  when  it  binds  others 453 

DECREE  IN  EQUITY  OF  A  DISSOLUTION. 

effects  and  consequences  of 356 


T30  INDEX. 

Section 

DECREE  m  EQUITY  OF  A  DISSOLUTION  — con^mwed. 

when  made 176,  232,  282,  286 

receiver,  when  appointed 228-231,  330 

DEED. 

one  partner  cannot  bind  the  firm  by  deed  ....  101,  117-122  a 

exceptions  to  the  rule 120-122 

DEFAMATION  OF  PARTNERSHIP. 

action  lies  for 256-258 

DELECTUS  PERSONS, 

when  essential  in  partnei'ship 5 

DILIGENCE,  DUE, 

when  required  of  every  partner  in  partnership  business  182-186 
DISCHARGE  OF  PARTNERSHIP  DEBT. 

(See  EXTINGUISHMEXT.) 

what  is  or  is  not 155-158,  253-255 

DISSOLUTION  OF  PARTNERSHIP 265-319 

(See  Partners  and  Partnership.) 

when  decreed  in  equity 232,  286,  287,  288 

when  for  fraud 232,  285-288 

when  decreed  for  gross  miscon<luct  ....      232,  233,  285-288 

when  not 286,  287,  288 

how  produced 265-319 

by  act  or  consent  of  parties 265,  268,  270,  274 

by  decree  of  court  of  equity 232,  265,  282-285,  295 

by  operation  of  law 265 

when  by  efflux  of  time 278,  279 

when  at  will 269-277 

by  extinction  of  the  thing 280 

by  accomplishment  of  the  entire  business 280 

on  account  of  the  impracticability  of  the  undertaking  .  .  .  290 
on  account  of  incapacity  of  partner     .     .     .      294,  295,  298,  304 

on  account  of  insanity  of  partner 295-297 

by  award  of  arbitrators 299,  300,  301 

by  change  of  condition  of  a  partner 302-306 

by  absence  from  the  State 298 

by  outlawry 304 

by  attainder 304,  305 

by  marriage  of  a  female  partner 306 

by  assignment  of  all  share  and  interest  in  partnership  .  .  307-310 
by  involuntary  assignment.  (See  Bankruptcy.)  .  .  .  313,  314 
by  seizure  of  partnership  property  in  execution  ....  311,  312 

by  public  war 315^  316 

by  death  of  partner 317,  318 

from  what  time 314,  319,  319  « 

effects  and  consequences  as  to  partners 320-356 

(See  Partners  and  Partnership.) 


INDEX.  731 

Section 

DISSOLUTION  OF  FART^ERSIIIP  — continued. 

effects  and  consequences  as  to  creditors  and  third  persons     357— ill 

(See  Partners  and  Partnership.) 
effects  and  consequences  of,  by  voluntary  act   ....     320-.')37 

by  bankruptcy 320,  337-341,  37Jr-306 

by  death    .    ' 320,  342-355 

by  decree  in  equity 320,  356 

when  notice  of,  necessary  or  not 334-336 

in  cases  of  voluntary  dissolution 357-361 

in  cases  of  bankruptcy 337,  374-394 

in  cases  of  death oG2 

rights  against  survivors 362 

rights  against  estate  of  deceased 362,  364 

rights  of  joint  creditors 365-395 

rights  of  several  creditors 365-395 

DISTPtlBUTION 

of  partnership  effects 350-356 

DORMANT  PARTNER.     (See  Partnership.) 80 

liability  of,  to  third  persons 63,  64 

bound  by  acts  and  contracts  of  ostensible  partners  ....     103 

not  bound  after  his  retirement  from  the  firm 159 

when  necessary  party  to  a  suit  or  not 241 

liabilities  of,  in  cases  of  banki-uptcy 393 

when  dormant  partner  should  join  or  be  joined  in  a  suit  241 

DOUBLE  PROOF, 

what  is,  and  when  allowed 384-387 

DURATION  OF  PARTNERSHIP.     (See  Partnership.)      ...       84 

at  will 84,197,201,277,297 

for  a  fixed  time 84,  195,  278,  279 

what  is  presumed  as  to 84 

when  deemed  to  be  for  life 271 

construction  of  articles  as  to        195,  196,  198-200 

in  case  of  death  of  a  partner 195 

when  deemed  to  be  renewed 197,  198 

effect  of  renewal  indefinitely        197,  278,  279 

construction  of  articles,   as  to  continuation  of,  on 

death  of  a  partner 198-200,  279 

DUTIES  AND  RIGHTS  OF  PARTNERS 169-186 

(See  Partners  and  Partnership.) 

implied 169-186 

express.     (See  Articles.) * 187-215 

E. 

EFFLUX  OF  TBIE, 

dissolution  of  partnership  by 278,  279 

(See  Dissolution.) 


732  INDEX. 

Section 

ELECTION  OF  CREDITORS 

to  prove  debts  iu  banki'uptcy 384-388 

of  joint  creditors 384-388,  391,  392 

of  joint  and  several  creditors 384-388,  393,  394 

of  creditors  having  a  pledge  or  security 389 

in  cases  of  domnant  partnershijJ 393 

ENTRIES  IN  BOOKS  OF  PARTNERSHIP, 

effect  of    .     .    * 24,  n.,  191 

EQUITY,  COURTS  OF.     (See  Courts  of  Equity.) 178 

whether  courts  of  equity  will  interfere  between  partners 
and  appoint  a  receiver,  except  the  bill  prays  a  dissolu- 
tion.    (See  Myl.  &  Craig,  635,  639.)      / 229 

when  specific  performance  of  articles  to  form  a  partnership 

will  be  decreed  by 188,  189 

when  specific  performance  of  articles  after  partnership 

will  be  decreed  by 204-210 

when  injunction  granted  by  or  not      178,  179,  209-213,  221-233 

receiver,  when  appointed  by 228-231 

when  dissolution  decreed  by 176,  232,  282,  286 

bill  for  account  between  part-owners,  when  it  lies  in       .     .       449- 

EVIDENCE.     (See  Admission,  Acivxowledgment,  Declaration.) 
when  and  what  acts  or  acknowledgments  of  one  partner 

bind  the  others,  or  not 107 

EXECUTION  AGAINST   PARTNERSHIP   EFFECTS   ON 
A    SEPARATE    JUDGMENT    AGAINST    ONE 
PARTNER, 
when  good  for  the  separate  debt  of  one  partner     .     .     .     261-264 

how  far  the  right  of  the  creditor  extends 261-264 

what  may  be  seized  on .     261-264 

whether  sheriiF  can  sell  on 262,  263 

when  injunction  lies  by  the  other  partners  against  sale  by 

sheriff 264 

effects  of  seizure  on,  in  dissolving  partnership       .     .     .     811,  312 

EXECUTORS  AND  ADMINISTRATORS   OF  PARTNERS. 
(See  Partners  and  Partnership.) 
rights  and  duties  of .     342-347 

EXPENDITURES  BY  PARTNER 

in  business  of  firm  to  be  allowed  him 185 

EXPIRATION  OF  PARTNERSHIP. 

[See  Dissolution  of  Partnership.) 265-319  a 

EXTINGUISHMENT.  OF  PARTNERSHIP  DEBT. 

what  is,  or  not 153-158,  251-255 

upon  change  of  firm 153-157 

upon  retirement  of  a  partner 155,156,158,159 

upon  giving  credit  to  new  firm  ....       157,158,253,264,265 
by  conversion  of  partnership  debt       .     .     .        369,  370,  397-404 


INDEX.  733 

F. 

Section 

FELONY,  ATTAINDER  OF, 

is  a  dissolution  of  partnership 304,  305 

FEME  COVERT. 

when  she  can  be  a  partner  or  not 10,11 

in  case  of  abjuration  or  exile  of  husband        10,  11 

in  case  of  special  custom 10-12 

not  without  consent  of  her  husband 10-12 

when  and  how  far  bound  as  a  partner 10,  11 

powers  of,  in  equity,  under  nuptial  contracts,  or  other 

agreements        11 

when  treated  as  a  feme  sole 11,  12 

when  a  partner  under  a  foreign  law       239 

marriage  of  a  feme  sole,  when  a  dissolution  of  prior 

partnership 306 

FIRM,  STYLE  OF. 

construction  of  articles  as  to 202 

all  the  partners  bound  to  conform  to  it 202 

use  of,  necessary  to  bind  firm  to  contracts    102,  134-136,  142, 143 
exceptions  to  the  rule 142, 143 

FISHERIES, 

when  parties  in,  partners  or  not        42 

FOREIGN  LAW. 

when  it  governs  the  rights  of  the  partnership      ....  239,  240 

FRAUD  OF  A  PARTNER. 

when  it  binds  the  other  innocent  partners  108,  109,  13V  163,  164, 

236,  237,  238 

when  not 128,  129,  131,  182 

of  retiring  partner  binds  him  to  pay  debts 162,  163 

to  injury  of  partnership,  he  is  liable  for 172,  173 

what  acts  of  a  partner  are  frauds  on  the  partnership    .       172,  175 

how  remediable  in  equity 176 

dissolution  when  decreed  for 233,  287 

FRAUDS,  STATUTE  OF. 

how  it  affects  partnership  in  lands 83,  93 

G. 

GENERAL  PARTNERSHIP. 

what  is 74 

{See  Partxersiiip.) 

GOOD-WILL  OF  A  TRADE. 

whether  it  is  partnership  property  or  not 90,  100 

what  passes  by  agreement  to  convey  it  to  one  partner      .  211,  212 
how  equity  will  enforce  right  to 212 


734  INDEX. 

GUARANTY. 

when  partnership  bound  by,  or  not Ill,  112,  127 

when  guaranty  to  partnership  extinguished  or  not    ....     243 
effect  of  change  of  firm  on  existing 245-250 

H. 

HUSBAND  AKD  WIFE.     (See  Fejie  Covert.) 10-12 

when  wife  may,  or  not,  be  a  partner 10-12 

when  husband  bound  by  acts  of  wife,  as  partner,  or  not    .      10-12 
when  they  may  sue  as  partnei-s  under  foreign  law     ....     239 


I. 

ILLEGAL  PARTNERSHIP. 

void , 6 

what  is  illegal 6 

(See  Partnership.) 

IMPRACTICABILITY  OF  THE  UNDERTAKING. 

aground  for  dissolution  of  partnership 290  • 

INCAPACITY  OF  A  PARTNER. 

{See  Dissolution  of  Partnership.) 
when  a  ground  of  dissolution  of  partnership       ....  292, 293 

INCOMING  PARTNER. 

rights  and  responsibility  of ^    .      152, 153 

INFANT. 

partnership  contract  does  not  bind 7 

partnership  by,  voidable,  not  void 7,  255 

INJUNCTION. 

when  granted  in  equity  between  partners  178,  179,  192-202, 

209-212,  222-233 
not  granted  for  fugitive  and  temporary  breaches  of 

duty 225,  286,  287,  288 

when  granted  against  third  persons 258-260 

in  cases  of  fraud    ..." 258,  259,  285-288 

in  case  of  gross  misconduct 258-260,  285-288 

in  other  cases 258-260 

in  cases  of  separate  execution  against  effects  of  firm     .       260-264 
whether  equity  will  restrain  sale  by  sheriff  on  sepa- 
rate execution 264 

INSANITY  OF  A  PARTNER. 

when  a  good  ground  of  dissolution  of  partnership    .     .     .  295-297 

INSOLVENCY  OF  A  PARTNER. 

construction  of  article  for  dissolution  of  partnership  on      214,  215 

INTEREST. 

when  allowed  between  partners 182  a 


INDEX.  735 

Section 
INTERESTS  AND  RIGHTS  OF  PARTNERS 

in  partnership  property 88-100 

(See  Paetxership.) 


J. 

JOINDER  OF  PARTNERS.     (See  Nonjoinder  op  P.ujtners.) 

all  should  join  as  plaintiffs 235,  236,  244,  245 

objection  of  nonjoinder  fatal  at  trial      .     .     .     235,  236,  244,  245 

all  should  be  joined  as  defendants 235 

but  nonjoinder  only  pleadable  in  abatement    .      235,  236,  241,  242 

JOINDER  OF  PART-OWNERS 

in  cases  of  contract 454,  455 

in  cases  of  tort 454,  455 

of  all  part-owners  as  plaintiffs  should  be  in  cases  of  con- 
tract   454,  455 

omission  of,  fatal 454,  455 

in  tort  all  should  be  joined 454 

but  the  omission  is  only  pleadable  in  abatement 167 

JOINT  ADVENTURERS, 

when  partners  or  not 33,  34 

JOINT  CREDITORS,  RIGHTS  AND  PRIVILEGES  OF. 
(See  Partners  axd  Partnership.) 

against  joint  effects 361-365,  390 

against  separate  effects 361-365 

equities  and  quasi  lien  of    .     . 97,  326,  357-361 

what  i^roperty  deemed  joint,  and  what  several     369,  370,  397-404 

JOINT  DEBTS, 

what  are 145-153,  376-387 

what  are  joint  and  several 387,  389,  391-394 

how  payable  in  cases  of  bankruptcy 376-387 

In  cases  of  dormant  partnerships 393 

JOINT  PROPERTY. 

what  deemed  joint,  and  what  several    ....  369,  370,  397-404 

JOINT  STOCK  COMPANIES, 

liability  of 164 

liable  like  common  partners 164 

rights  and  powers  of 213 

rights  of  majority  to  govern 213 


LAND, 


L. 

how  statute  of  frauds  affects  partnership  in 83 

partnership  property  in 9-.  93 


1S6  INDEX. 

T  1  ■xTT-i  Section 

LiAOT)  —  contimiecl. 

how  treated  in  equity 92,  93 

one  partner  can  transfer  only  his  own  share  therein,  un- 
less authorized  by  deed  by  other  partners    ....    117-122  a 

LEASE 

in  name  of  one  partner,  when  the  benefit  of  belongs  to 

the  firm 174 

LETTER  OF  CREDIT, 

when  partnership  bound  by,  or  not 127 

LM.BILITY  AND  EXEMPTIONS  OF  PARTNERS  ON  CON- 
TRACTS.    (See  Partnership.) 

as  between  themselves 169-186 

as  to  third  persons 126-169 

on  contracts 126-165,  168  a 

on  torts 166-168  a 

LIBEL  OF  FIRM, 

action  lies  for 256,  257 

by  firm,  action  lies  for 257 

LIEN  OF  PARTNERS 

on  partnership  property 97,  98,  360,  361 

upon  dissolution 360,  361 

LIEN  OF  CREDITORS, 

when  they  have  a  quasi  lien  or  equity,  and  what     97,  326,  357-361 

LBIITATIONS,  STATUTE  OF. 

admission  of  debt  by  a  partner  before  dissolution,  whether 

it  revives  debt  or  not 107 

whether  it  does,  when  made  after  dissolution  of 

partnership 323,  324 

in  case  of  misrepresentation 108 

when  a  bar  to  an  account  between  partners 233  a 

when  a  bar,  after  dissolution  of  partnership  to  creditors    .     .  324  c 
admission  by  one  part-owner,  when  it  binds  the  other  part- 
owners,  or  not 323,  325,  453 

LOSSES, 

when  and  how  community  in,  essential  to  partnership,  or 

not 19-22,  60-62 

when  share  of  profits  makes  a  person  a  party,  although 

he  bears  none  of  the  losses 60-62 

how  losses  borne  in  absence  of  any  special  agreement  .  .  20-27 
validity  and  eifeet  of  special  agreement,  as  to  ...  .  60-63 
by  neghgence,  when  a  partner  responsible  for  ...  .  169-173 
by  one  partner  for  the  firm  to  be  compensated  for  ....     185 

LUNACY 

of  a  partner,  when  cause  for  dissolution 7 

LUNATIC, 

whether  a,  may  become  a  partner 7 


INDEX.  737 

M. 

Section 

MAJORITY  IN  CASES  OF  PARTNERSHIP. 

rights  and  powers  of 123 

(>S'ee  P^URTXERS.) 

when  entitled  to  govern 123,  124,  125,  213 

when  not 125,  213 

construction  of  articles  as  to  rights  and  powers  of  ...     .     213 

MAJORITY  IN  CASES  OF  PART-OWNERSHIP. 

rights  and  powers  of 413,  418-426 

as  to  repairs  of  ship .'418-423 

as  to  employment  of  ship 426-434 

as  to  furnishing  cargo 433,  434 

as  to  appointing  officers 432,  445 

MARRIAGE  OF  FEME  PARTNER. 

a  dissolution  of  partnership       ■ 306 

MINING  BUSINESS. 

when  partnership  bound  by  acts  in,  or  not 126 

MINORITY  IN  CASES  OF  PART-0WNT:RSHIP. 

rights  and  powers  of 428-431 

MISAPPLICATION  OF  PARTNERSHIP  FUNDS. 

when  it  binds  partners      ....       108,  109,  130,  131,  133,  134 

when  not 128,  129,  132 

to  pay  the  separate  debt  of  one  pai'tner,  when  binding 

or  not 133,  134 

MISCONDUCT  OF  PARTNER. 

when  a  ground  for  an  injunction 226,  227 

when  for  a  dissolution 233,  287,  288 

MISREPRESENTATION  BY  PARTNER 107,  108 

when  it  binds  the  partnership,  or  not 107,  108 

when  he  is  liable  for,  to  his  partners        172,  173 

when  it  is  ground  for  a  dissolution 228-233 

MORTGAGE. 

when  one  partner  may  mortgage  paiinershlp  property,  or  not     94-96 
when  and  how  a  creditor,  holding  a  mortgage,  may  prove 

in  bankruptcy 389 


N. 
NAME  OF  FIRM. 

construction  of  articles  as  to 100,  202 

must  be  used  to  bind  partnership  102,  134,  135,  136,  142,  143 

effect  of  its  being  the  sole  name  of  one  partner    ....        139 
NEGLIGENCE. 

Avhen  partner  liable  for lGU-172 

47 


738  INDEX. 

Section 

NEGLIGENCE  —  coniinncd. 

when  partners  liable  for  inter  sese  .     .     .     ,     .  169,  173,  348,  349 

when  to  third  persons 166,  167,  168 

when  part-owners  liable  for  m^er  sese 449,  452 

when  to  third  persons 445-460 

NOMINAL  PARTNERS. 

who  are  80 

liability  of 64,  65 

(See  Partnership.) 
whether  they  must  join  and  be  joined  in  suits        .     .     .     241,  242 

NONJOINDER  OF  PARTNERS.     {See  Joinder  of  Partners.) 

effect  of,  if  plaintiffs 235,  236,  244,  245 

effect  of,  if  defendants 166,  235,  236,  240,  241 

in  cases  of  contract 240,  241,  242 

in  cases  of  torts 167 

of  dormant  partner,  effect  of 240,  241 

of  nominal  partner,  effect  of 242 

NONJOINDER  OF  PART-OWNERS. 

effect  of,  as  plaintiffs,  in  cases  of  contract 454 

as  plaintiffs,  fatal  at  trial 454 

effect  of,  as  defendants 167 

pleadable  only  in  abatement  in  cases  of  defendants    .     .     .        197 

in  cases  of  tort 167 

as  plaintiffs         454 

as  defendants 167 

NOTICE. 

when  acts  of  a  partner  in  violation  of  duty  known  to  third 

persons  will  exonerate  partnership 127-134 

of  retirement  of  partner,  when  necessary  or  not    .     159-163,  334, 

335,  336,  343 

what  is  sufficient _ 161,  162,  163 

when  necessary  on  dissolution  of  partnership    ....     159-163 

when  not 159,  160,  162,  336 

not  in  cases  of  death         162,  336,  343 

not  in  cases  of  bankruptcy 336 

when  notice  to  one  partner  binds  the  firm,  or  not       .     .     107,  108 


0. 

OSTENSIBLE  PARTNERS,  who  are 80 

liability  of 64,  65 

{See  Partnership.) 

when  bound  after  retirement 160 

when  notice  of  retirement  necessary 160 

what  notice  sufficient        161,  162 


INDEX.  739 

Section 

OUTLAWRY. 

a  dissolution  of  partnership 334 

OWNERS  OF  SHIPS. 

rights,  powers,   duties,   and  liabilities   of.     {See  Part- 

^    OAVNEiis.)        412-460 

how  ships  held  by  part-owners        416,  417 

no  right  of  survivorship  among 417 

OWNERSHIP,  REPUTED. 

in  cases  of  bankrujitey,  what  is  or  not       ....     397-404,  407 


P. 
PARTNERS. 

are  both  principals  and  agents 1 

who  may  be 7-14 

persons  sui  juris 7,  8 

alien  friends 9 

J'eme  covert  in  special  cases        10,  11,  12 

infant,  when  at  his  own  election  bound 7,8 

■who  may  not  be         7-14 

infants  generally 7,  8 

alien  enemies 9 

married  women 10,  11,  12 

special  exceptions  by  custom 12,  13,  14 

different  sorts  of 80 

ostensible  partners 80 

dormant  partners 80 

secret  partners 80 

rights  of,  in  partnership  property 88-100 

difference  between  partners  and  jiart-owners     ....       89 
whether  they  are  tenants  in  common  or  joint- 
tenants      88-91 

no  difference  of  rights  in  equity,  whether  prop- 
erty is  personal  or  real 92,  93 

powers  and  authorities  of  partners  over  partnership 

property 94-96 

power  to  sell  or  pledge  partnership  property  ....  94-96 
liens  and  rights  of  partners  on  partnership  property  .  .  97-99 
powers  and  authorities  of  partners  generally        .     .     .       101-125 

to  assign  property  generally  or  specially 101 

to  assign  property  ibr  benefit  of  creditors 101 

to  buy  or  sell  or  pledge  goods 102,  102  a,  126 

to  borrow  money  102 

to  draw  bills  and  notes 102,  102  a 

to  negotiate  and  indorse  bills  or  notes       ....     102,  102  a 
to  draw  checks        102,  102  a 


740  INDEX. 

Section 

PAETKERS  —  contimied. 

to  procure  insurance 102 

to    do    any   acts    authorized  by   usage    of   the 

trade  or  business 102,  102  a,  103, 126 

the    like   powers  exist    in    cases    of  dormant 

partners 103 

and  of  trustees  who  are  partners 105,  106 

to  do   all  acts   appropriate    to   and  within  the 

scope  of  the  partnership  business    ....  107,  108, 113, 

126,  127 
how  powers    and    authorities  are  to    be  exer- 
cised and  executed  by 102 

powers  should  be  executed  in  the  name  of  the 

firm 102 

right  of  majority  of,  to  govern 123,  213 

representations  and  admissions   of,  when  they  bind 

the  firm 107,  108,  109 

when  not 107,  108,  109 

when  notice  to  one  pai-tner  binds  the  firm 107 

when  fraud  of  one  partner  binds  the  firm 108 

release  of  one  partner  binds  the  firm 115,  116 

so  compromise  of  debt 115,  116 

so  guaranty  within  scope  of  the  trade   or  busi- 
ness       Ill,  127 

what   contracts   are    deemed  partnership  contracts, 

or  not 134,  137,  188,  154,  243 

when  the  acts  of  a  partner  do  not  bind  the  firm  110-113,  117,  142, 

145 
not,  when  in  business  beyond  scope  of  partnership  .  110,  111,  112 
not,  when   in  acts  not  incident  to   the  business  or 

•  trade 112,  113 

one  partner  cannot  bind  the  firm  in  cases  of  sale  of 

real  estate 101 

one  partner  cannot  bind  the  firm  by  submission  to 

arbitration 114 

one  partner  cannot  generally  bind  another  by  deed, 

unless  authorized  by  deed 117-122 

exceptions  to  the  rule 120-122 

one  partner  cannot  bind  the  firm  by  contract  with  a 
third  jierson,  who  linows  that  he  is  acting  in  fraud 
of  the  firm  or  without  authority      ....      110-113, 128-131 
nor  by  a  guaranty  not  within  business  of  the  firm     .     .     .  Ill,  127 
nor,   ordinarily,  by  an  appropriation  of  partnership 

property  to  his  private  debts 132,  133 

incases  of  disagi-eement  between  partners,  the  ma- 
jority governs '.     .     .     123 


INDEX.  741 

Section 

PARTNERS  —  continued. 

exceptions  to  the  rule 123,  124,  125 

liabilities  and  exemptions  of  partners  to  third  persons     .     12G-108 

when  all  are  liable  in  soUdo ...  102-109,  456 

partners  bound   only  for  acts  done  within  scope  of 

business  of  firm 106,  107,  108,  100,  126,  127 

not  bound  where  act  is  fraudulent  and  knoAvn  to  the 

other  party 110-113,  128-133 

not  hound  where  credit  is  exclusively  given  to  one 

partner 134-139,  153, 154,  243 

what   is  sufficient  evidence   of  exclusive   credit,   or 

not 138-144,  243 

not  bound,  where  debt  is  contracted  before  partner- 
ship is  formed 146-150 

not  bound  by  preliminary  steps  taken  to  form  a  part- 
nership      150, 151 

incoming  partner  not  bound  for  debts  of  the  old  firm  .     .     .     152 
unless  contract  is  changed  by  consent 152,  153 

not  bound,  where  the  credit  is  not  given  to  the  firm,  but 

to  one  partner 154,  243 

how  discharged  from  contracts  by  subsequent  acts     155,  156,  253- 

255 

by  acceptance  of  the  security  of  one  partner  in  extinguish- 
ment of  the  debt  of  the  firm 155-158,  254,  255 

when  giving  credit  to  the  firm  after  retirement  of  one  part- 
ner discharges  a  prior  debt,  or  not     .     .     .       156-158,  253-255 

how  payments  are  to  be  appropriated 157,  253 

when  partner  after  his  retirement  is  discharged  from  future 

debts,  or  not 159,  160,  162,  163 

when  and  to  whom  notice  of  retirement  is  necessary     .     .  160-163 

notice  of  dissolution  of  partnership  when  necessary  to 

discharge  partners,  or  not 160-163 

what  notice  is  sufficient  or  not 161 

,          when  partners  liable  for  new  debts,  notwithstanding  a  no- 
tice of  retirement  or  dissolution 163 

when  in  cases  of  fraud 163 

in  joint-stock  companies  liable  as  in  common  partnerships      .     164 

whether  partners  in  joint-stock  companies  can  limit  their 

liability 164,  165 

right  of,  to  govern  in  cases  of  joint-stock  companies   .     .     .     213 

when  partners  liable  for  torts  of  each  other  to  third  per- 
sons      166-168 

Rights,  Duties,  and  Obligations  of  Partners  between  them- 
selves        169-186 

duties  as  to  diligence  and  care  and  skill     .     .  169,  170,  171, 

182,  183 


742  INDEX. 

Section 
PARTNERS  —  continued. 

partners  liable  for  gross  negligence    ....    169-171,  233 

partners  liable  for  frauds 171,  172,  182 

duty  to  conform  to  stipulations  of  articles  of  partner- 
ship   173,  187 

duty  to  abstain  from  clandestine  and  secret  trade  inju- 
rious to  partnership 174-179,  209-212 

duty  to  act  for  benefit  of  partnership 175-177 

duty  to  abstain  from  improper  speculations       ....     177 
duty  not  to  be  interested  in  rival  partnerships  .     .     .  175,  180 
duty  to  keep  precise  accounts  and  disclose  all  part- 
nership transactions  to  all  the  partners 181 

duty  not  to  violate  rights  of  other  partners  ....  182-184 
duty  to   allow  and  pay  all  proper  expenditures  on 

partnership  account 185,  186 

Construction  of  Partnership  Articles 187-215 

(See  Partxersiiip.) 
specific  performance  of  articles,  when  decreed,  or  not  .     188,  189, 

193,  217-227,  232 
remedies  between  partners  at  law  and  in  equity     .     193,  217-227, 

232 
when  injunction  granted,  or  not  ....    193-202,  215,  224-227 

when  receiver  appointed,  or  not 228,  229,  331 

remedies  by  partners  against  third  persons 234-264 

when  at  law  or  not 234-241,  256-258 

when  in  equity  only 234,  235,  244,  259,  260 

all  partners  must  join  as  plaintiffs  in  a  suit,  otherwise  it  is 

a  fatal  defect 235,  236,  244 

exceptions  to  the  rule 241,  242 

all  partners  should  be  joined  as  defendants ;  but  the  ob- 
jection only  matter  of  abatement 235 

remedy  in  equity  only,  where  one  and  the  same  person  is 

partner  in  two  firms 234—236 

partners  cannot  maintain  suit  at  law  upon  a  security,  where 

there  is  a  good  bar  against  one  partner 237,  238 

or  where  there  is  fraud  or  misrepresentation  by  one 

partner 237,238 

all  partners  must  be  competent,  or  at  law  no  action  lies 

by  them 239 

what  constitutes  incompetency  to  sue 230,  240 

being  a.  feme  covert 239 

being  an  alien  enemy 240 

what  contracts  are  deemed  partnership  contracts,  or  not  .     .     243 
how  contracts  are  to  be  sued,  when  one  partner  retires      254,  255, 

356, 357 
construction  of  continuing  contracts  by  or  to      ....  245-251 


INDEX.  743 

Section 

PARTNERS  —  continued. 

contracts  to,  for  fidolity  of  clerk,  when  bindinjr,  or.  not, 

on  change  of  firm 245-250 

continuing  contracts  of  guaranty  to,  when  binding  after 

change  of  the  firm 245,  2-48-251 

remedies  by  partners  at  law  against  third  persons  for  torts    .     256 

and  for  frauds 256 

and  for  defamation  of  firm 257 

and  for  obstructions  and  injuries  to  their  business    .     258 
remedies  by  partners  in  equity  against  third  persons       .    234,  235, 

244,  259 

by  injunction :^59 

in  cases  of  execution  against  one  partner  and 

seizure  of  partnership  effects 260-264 

whether  equity  will  restrain  sale  of  the  effects 

by  sheriff  in  such  a  case 264 

Dissolution  of  Partnership 265-270 

by  act  of  parties 265,  268,  269,  279 

by  efflux  of  time 267,  278 

by  tacit  renunciation 272 

by  performance  of  business  or  voyage 280 

by  extinction  of  the  partnership  property 280 

by  a  decree  of  court  of  equity 282-285 

for  what  causes  decreed 286-298 

for  causes  at  time  of  formation  of  partnership    .     .      286,  287 
for  causes  subsequent  to  formation  of  partnership     .     .   286 

for  fraud 285,286 

for  gross  misconduct 288,  289 

for  Impracticability  In  the  undertaking 290 

for  incapacity  or  inability  of  a  partner      .     .     •     .      291-294 

for  insanity 295-297 

for  absence  from  the  State 298 

when  dissoluble  by  arbitrators,  or  not       .     .     .  215,  299,  300 
when  dissoluble  at  pleasure,  or  not       268-270,  274-277,  307, 

308 

when  deemed  to  endui'e  for  life 271 

when  deemed  to  be  prolonged  or  renewed  beyond 

original  term 84,85,271,272,279 

by  operation  of  law 302-316 

by  change  of  state  or  condition  of  party  ....      302-305 

by  marriage 306 

by  voluntary  assignment  of  all  interest  in  partner- 
ship          307-310 

by  involuntary  assignment  of  Interest 311-313 

by  execution  against  all  the  partnership  effects   .     .     311.  312 
by  bankruptcy  and  insolvency 313,  314 


"744  INDEX. 

PARTNERS  — cow^mwed.  ^^*'°" 

at  what  time  dissolved  by  bankruptcy  or  insolvency     .     .   314 

by  war  between  countries  or  partners 315,  316 

by  death  of  one  partner 317,  318 

from  what  time  dissolution  by  death  takes  place  .  .  .  319 
notice  of,  when  necessary  or  not  159-163,  334-336,  342,  343 
effects  and  consequences  of  dissolution  generally     320-411 

between  the  partners 326-356 

in  cases  of  voluntary  dissolution 320-322 

lien  of  partners  on  effects 360,  361 

what  powers  and  authorities  are  extinguished 

by  dissolution   ....     322-324,  329,  344,  445,  446 
what  power  and  authorities  remain      .     .      320-328,  331, 

344-346 

when  receiver  will  be  appointed     .     .  228,  229,  231,  330 

accounts  between  partners,  how  taken       ....      346-353 

representatives  of,  entitled  to  an  account       .     .     .      343,  361 

when  a  sale  of  partnership  effects  will  be  ordered, 

or  not 350 

all  profits  to  be  accounted  for 349 

valuation   of   partnership   effects,   when   and  how 

made 350-355,  396 

valuation  when  not  allowed 358,  359,  373 

when  effects  may  be  assigned  to  one  partner  on 

dissolution,  or  not 358,  359,  396 

assignment  not   allowed  in   cases   of   bankruptcy     ,     .  396 
effects  and  consequences  of  dissolution  by  bank- 
ruptcy           337-341 

rights  and  powers  of  partners  on  bankruptcy     .     .      337-343 

rights  of  assignees  in  bankruptcy 378 

by  death,  effects  and  consequences  of  .     .     .     .  342,  357,  358 

rights  and  powers  of  the  survivors        344-347 

rights  and  powers  of  representatives  of    ...     .      342-346 

lien  of  the  survivors 361 

by  decree  of  a  court  of  equity 356 

effects  and  consequences  of  such  a  decree 356 

sale  of  effects,  when  ordered  by  court  of  equity  350,  356 
dissolution  of  partnership,  effects  and  consequences 

as  to  third  persons 334,  337-411 

rights  of  creditors  on  dissolution 358 

equity  of  creditors  upon  partnership  effects,  when 

and  what 326,  358-360 

creditors  have  no  lien,  but  a  quasi  lien  in  certain 

cases 326,  358-360 

how  this  quasi  lien  is  enforced 326,  358-361 

rights  of  joint  creditors  of 361-365,  390 


INDEX.  745 

Section 

PARTNERS  —  continued. 

debts  of  joint  and  several  creditors 3G2 

equities   of  joint  creditors   as  to  separate  eflfeots 

3G3,  305,  390,  392 

remedies  of  joint  creditors 361,362,390-392 

against  survivors 362 

against  representatives  of  deceased  partners  ....  362 
rights  and  remedies  of  separate  creditors  363,  364,  390,  391 
remedies  of  joint  creditors  in  cases  of  death  of  one, 

asid  bankruptcy  of  the  other  partner    .     .  364-366,  367,  378 
rights  and  remedies  of  a  partner,  who  is  a  creditor  of 

the  firm 390-392,  405-407 

rights  of  creditors,  who  are  both  joint  and  several 

creditors 384,  385 

what  debts  treated  as  joint  and  several 367-373 

what  is  a  conversion  of  joint  or  of  several  debts  .  .  367-373 
what  property  is  deemed  jomt  and  what  several 

369,  370,  397-403 
rights  of  joint  creditors  in  cases  of  bankruptcy      .     .  376-378 

exceptions  to  the  general  rule 378-381,  392-394 

where  creditors  are  joint  and  several  creditors,  they 

are  bound  to  elect 384-386 

exceptions  to  the  rule 387-394 

rights  of  a  partner,  who  is  creditor  of  the  firm  in 

bankruptcy 390 

set-off  in  banki-uptcy,  what  debt  or  claim  is  good,  or 

not,  by  way  of 395 

rights  of  pledgee  and  mortgagee 389 

dissolution  by  bankruptcy,  valuation  not  allowed  on  .     .     396 
reputed  ownership  in  bankruptcy,  what  is,  or  not .     .  397-403 
PARTNERSHIP, 

what  constitutes 1,  2 

founded  in  consent 3,  4,  5,  6 

in  contract 6 

what  is  legal  or  illegal 6 

community  of  interests  in  .     .     .     .    _ 15,  16,  27 

community  of  property  in 16,  17,  27 

community  of  profits  in 16,  18,  24 

profits  how  shared 16,  24,  26 

property  how  shared 18-24,  27-29 

what  constitutes  between  the  parties 15-29 

what  constitutes  as  to  third  persons 30,  53-70 

by  sharing  profits  generally 18-24,  33,  34 

b}'  sharing  profits  as  such 33,  34,  35,  53-62 

by  sharing  net  profits  .     .     .     .33,  34,  35,  38,  39,  40,  42,  43, 

47,  53,  56-62 


"746  INDEX. 

PARTNERSHIP  — conimwec?.  ^'^°" 

by  sharing  profits  as  a  dormant  partner 63 

by  holding  out  to  the  world,  that  one  is  a  partner  .     .      64,  65 
by  receiving  a  part  of  the  profits,  as  profits,  as  an 

annuitant 66-69 

by  taking  the  profits  as  trustee  for  others 70 

when  it  does  not  exist  as  to  third  persons 30-52 

by  mere  joint  purchase 30,  31 

by  mere  joint  sale 30,  31 

by  share  of  profits  as  agent  .     .    32-34,  38,  40,  41,  42,  47-52 

by  share  of  gross  earnings 33-36,  41,  42-47 

by  share  in  fisheries 42 

by  shipment  on  half  profits 43,  44 

by  portion  of  profits  in  lieu  of  rent 43 

by  share  of  gross  earnings  instead  of  wages     .     .     .      41  17 
by  receiving  an  annuity  out  of  the  profits,   not  as 

profits,  but  as  a  fund  for  pajTuent 67,  68 

different  sorts  of. 

universal  partnership 71,  72,  73 

general  partnership 71.  74 

special  or  limited  partnership 71,  75,  408 

private  partnership 76 

public  company 76,  77,  79 

in  commandite 78 

when  deemed  at  vnll,  or  not 227 

when  deemed  to  be  continued,  or  not,  after  expiration 

of  the  original  term 271,  279 

business  of  partnership 81,  82,  83 

in  trade 81,  82 

in  purchase  and  sale  of  lands 82,  83 

in  collieries 82,  83 

how  formed 84,  85 

for  what  period 84,  85,  277 

for  life 84,  85,  271 

for  years 84,  85,  277 

indefinitely 84,  85,  271 

when  deemed  to  be  renewed 279 

in  what  mode  formed. 

by  express  or  implied  agreement    .     .     .     .     .     .     .      86,87 

by  written  articles 86,  87 

by  parol 86,  87 

right  of  majority  to  govern  in 123,  213 

rights  and  interests  to  partners  in  partnership  prop- 
erty           88-100 

(See  Pautxers.) 
partnership  property,  what  is 92 


INDEX.  747 

Section 

PARTNERSHIP  —  continued. 

no  difFerenoe  between  real  and  personal  property,  as 

to  rights  of 92,  93 

■whether  real  estate  of  partnershiji   is   deemed  dis- 
»  tribiitable  as  personal  property  or  not      ....      92,  93 

whether  good-will  of  a  trade  is  partnership  property, 

or  not 99,  100 

powers    and  authorities   of  partners  in   partnership 

property 94 

{See  Partxers.) 

liens  of  rights  and  partners  on  partnership  property  .      97-99 

powers  and  authorities  of  partners  generally    .     .     .  101-125 
(See  Partxers.) 

liabilities  and  exemptions  of  partnerships  upon  con- 
tracts     123-1G8  a 

(See  Partners  ^vxd  Partxership.) 

partnership  not  bound  for  acts  of  one  partner  not 
within  the  scope  of  the  partnership  business     106,  107,  112, 

113,  126,  127 

not  bound  for  fraudulent  acts,  known  to  be  such  by 

the  other  party 110-113,  128-131,  133 

not  bound,  where  credit  is  exclusively  given  to  one 

partner 134,  137 

what  is  proof  of  an  exclusive  credit,  or  not      .     .     .  138-144 

not  bound  for  debts  contracted  before  the  partner- 
ship is  formed 146-151 

unless  specially  agreed  to 152 

not  bound  upon  preliminary  contracts  in  contempla- 
tion of  a  future  partnership 149-151 

new  partnership  not  bound  for  debts  of  the  old  fii'm  .     .     152 
unless  specially  agreed  to 153 

when  discharged  from  a  contract  by  subsequent  acts 

or  contracts 155 

when  acceptance  of  negotiable  security  of  one  part- 
ner discharges  the  partnership 155-158 

when  giving  credit  to  a  new  firm  discharges  the  old  firm  156-159 

how  payments  made  after  dissolution  of  old  firm,  and 

new  fimi  is  formed,  are  appropriated 157 

■when  a  partner,  after  retirement,  is  discharged,  or  not, 

from  future  debts  of 159-163 

■when  notice  of  retirement  or  dissolution  necessary, 

or  not 160-162 

what  notice  of  retirement  or  dissolution  is  suflicient, 

or  not 161 

when  are  partners  liable,  after  retirement  or  dissolu- 
tion, for  new  debts,  notwithstanding  notice  .     .     .  162,  163 


7i8  INDEX. 

Section 

PARTNERSHIP  —  continued. 

when  liable  in  cases  of  fraud 162,  163 

joint-stock  companies,  liability  of  partners  in   .     .     .     .     164 
whether  shareholders  can  limit  their  liability  to  the 

funds 164,  106 

liable  for  torts  generally 166-168 

when  liable  for  torts,  or  not,  of  one  partner      ....     166 
rights,  duties,  and  obligations  of  partners  between 

themselves 179-186,  331-333 

(See  Partners.) 
duty  to  make  no  secret  or  private  gains  against  part- 
nership interests 174-186 

rights  and  duties  of  partners  under  ai-ticles  of  .    173,  187-215 

construction  of  articles  of  partnership 187-215 

specific   performance   of  articles,  when   decreed   or 

not 188,  189 

rules  of  construction  of  articles  of 190,  191 

covenants  in,  when  construed  to  be  several,  as  well 

as  joint 190,  191 

how  and  when  articles  are  superseded,  or  waived,  or 

qualified 192-199 

effect  of  entries  in  books  of  partnership  ...    24,  note,  191 
construction  of  articles  as  to  the  commencement  thereof  .     194 

debts  of  partners,  when  joint  and  several 362 

construction  of  articles  as  to  the  duration  thereof.     .  195,  196 
construction  of  articles  as  to  partnership,  continued 

after  the  stipulated  term 197 

construction  of  articles  as  to  continuance  thereof  after 
death  of  a  partner,  by  his  appointee  or  representa- 
tives       199-201  a,  275 

construction  of  articles  as  to  the  name  and  signature 

of  firm 202 

construction  of  articles  as  to  carrying  on  other  trade      .    174, 

179,  209,  210 
construction  of  articles  as  to  advance  of  capital  stock    .     203 
construction  of  articles  as  to  management  of  part- 
nership by  one  or  more  partners 204 

construction  of  articles  as  to  what  shaU  be  deemed 

partnership  property 205 

construction  of  articles  for  annual  accounts  and  set- 
tlements      206 

construction  of  articles  as  to  winding  up   concerns 

upon  a  dissolution  thereof 207 

construction  of  articles  as  to  one  partner's  taking  the 
property  at  a  valuation  on  a  dissolution    .     .     206-208,  396 
in  cases  of  a  bankruptcy 206-208,  396 


INDEX.  749 

Section 
PARTXERSHIP  —  continued. 

construction  of  articles  as  to  business  being  car- 
ried on  by  one  of"  the  partners  alone  after  dis- 
solution          210,  211, 212  • 

construction  of  articles  as  to   right  of  majority 

or  select  number  to  govern 213 

construction  of  articles  as  to  right  to  expel  a 

partner 214 

construction  of  articles  to  settle  disputes  by  arbi- 
tration   215 

remedies  to  compel  specific  perfoi'mance  of  an  agree- 
ment to  form  a  partnership 187-189,  202 

remedies  for  violation  of  articles  at  law,  or  in  equity  193,  216-228, 

232 

when  by  injunction 193,  202,  224,  225,  227 

when  not  by  injunction 215,  217,  224, 225 

when  receiver  will  be  appointed  .     .      228,  229,  231,  330,  331 
when  specific  performance  of,  decreed  .     .    187, 188,  189,  202 

dissolution  of 265-319 

by  acts  of  parties 265,  267 

by  efflux  of  time 267,  278 

by  tacit  renunciation 272 

by  jjerformance  of  voyage  on  business 280 

by  extinction  of  partnership  property 280 

by  decree  of  a  court  of  equity 282-285 

for  what  causes 232,233,286-299 

by  decree  for  causes  at  time  of  formation  of  part- 
nership            233,  286 

for  subsequent  causes 286 

for  fraud 233,  285,  286,  287 

for  gross  misconduct 233,  288 

for  impracticability  of  the  undertaking 290 

for  incapacity  or  inability  of  partner 292-294 

for  insanity 295-297 

for  absence  fi-om  the  state 298 

when  dissoluble  by  arbitration 299,  300 

when  dissoluble  at  pleasure  or  not     .    268-271,  274-277,  307,  308 

when  deemed  to  endure  for  life 271 

when  deemed  to  be  prolonged  or  renewed  beyond 

original  term 85,86,271,272,304 

when  dissolved  by  operation  of  law 302-306 

by  change  of  state  or  condition  of  party      .     .     302, 303,  305 

by  marriage        306 

by  voluntary  assignment  of  all  interest  in  part- 
nership        307-310 

by  involuntary  assignment  of  partnership  property     311-313 


750  INDEX. 

PARTNERSHIP  —  continued.  ^'"""^ 
by  execution  and  levy  on  all  partnership  prop- 
erty        311,312 

by  bankruptcy  and  insolvency 313  814 

at  what  time   dissolved  by  bankruptcy  and  in- 
solvency     314 

by  war  between  countries  of  imi-tnei's 315,316 

by  death  of  one  partner  .     .     . 317-319 

at  what  time  dissolved  by  death 319 

when  notice  of  dissolution  necessary  or  not  159-163,  335,  336 

what  notice  sufficient,  or  not 161   162 

no  notice  in  case  of  death 336   343 

or  of  bankruptcy 335 

or  to  new  customers 150 

in  cases  of  dormant  partners 159 

dissolution  of,  effects  and  consequences  of 320-411 

between  the  partners  themselves 320-356 

in  cases  of  voluntary  dissolution 320-322 

lien  of  partners  on  effects 360,  361 

what  powers  and  authorities  remain  322,  323,  324,  324  a, 

324  h,  328,  344 

what  not 322,  323, 344 

no  power  to  trade  anew 322-324  329 

what  admissions  and  acknowledgments  of  part- 
ners bind  or  not     .     .     .     .107,  323,  324,  324  a,  324  b,  333 
what  powers   over  partnership  property  remain 

after 324-328,  333 

to  pay  debts  of  partnership 324-328 

to  wind  up  the  affairs 324-328 

to  make  compositions 33 1 

when  receiver  appointed 228,  229,  231  330 

accounts  how  taken 346-349,  352,  353 

representatives  of  partner  entitled    to   account 

and  share  of  property 342^  343^  3gl 

when  sale  directed  or  not  ....     206,  207,  349,  350,  356 

all  property  to  be  accounted  for 349 

when  effects  may  be  taken  at  a  valuation  or  not     .    350,  351, 

352,  353,  354,  355,  396 
Avhen  and  how  effects  may  be  assigned  to  one 
partner  on  dissolution,  or  not      ....     357,  358,  359,  396 

not  allowed  in  cases  of  bankruptcy 396 

dissolution  of,  effects  and  consequences  of  as  to  third 

persons ^.     334,335,357-411 

when  notice   of  dissolution  necessary,   or  not,   as 

to  third  persons 159-163,  334,  335,  336,  343 

no  notice  necessary  to  new  customers 160 


INDEX.  751 

Section 

PARTNERSHIP  —  continued. 

nor  in  cases  of  bankruptcy 336 

nor  in  cases  of  death 336,  343 

dissolution  in  cases  of  bankruiitcy,  ell'ects  and  conse- 
quences of 337,  374,  375 

all  powers  of  bankrupt  gone 338,  339,  ,340 

powers  of  solvent  partners      .     .     .      338,  339,  340,  407,  408 
powers  to  settle  and  2)ay  debts,  collect  property, 

&c.,  remain 339-341 

to  wind  up  affairs 340,  341 

but  not  to  contract  new  debts 338,  339,  343 

whether  assignment  or  valuation  in  favor  of  one 

partner  in  bankruptcy  good  or  not 358,  373 

rights  and  powers  of  assignees 375 

dissolution  by  death,  effects  and  consequences  of  .     .     .      343-356 
takes   effect   from   time   of   death   without    notice 

thereof 336,  343 

no  new  contract  can  be  made 343,  344 

representatives  of  deceased  partner  entitled  to  ac- 

account       343,  361 

lien  of,  on  partnership  effects 361 

right  to  share  property  as  tenants  in  common     343,  346 

powers  and  authorities  of  survivors 344 

survivors  may  collect  and  pay  debts     .     .     .       344,  346,  347 

and  wind  up  afTairs 346,  347 

lien  of  surviving  partners        360,361 

when  sale  of  effects  decreed 349 

when  effects  taken  at  valuation,  or  not      ....      350-354 

how  accounts  taken 346-351,  352,  353 

dissolution   by  decree  of  court  of  equity,  effects   and 

consequences  of 356 

the  same  as  in  other  cases 356 

sale  of  effects  ordered  by        356 

dissolution,  effects  and  consequences  as  to  third  per- 
sons       334,  335,  357-411 

when  notice  of  dissolution  necessary  or  not,  as  to 

third  persons 159-163,  335,  336,  343 

rights  of  creditors  on  dissolution 357,  358 

when  and  what  equity  of  creditors  in  partnership 

effects 357,  358,  359 

when  creditors  have  a  lien  on  partnership  effects 

or  not 326,  358-361 

when  creditors  may  enforce  a  lien  or  claim  against 

partnership  effects  in  equity 326,  358-361 

joint  creditors,  remedy  of,  when  all  partners  are 

liviuix 361 


75.2  INDEX. 

Section 

PARTNERSHIP  —  continued. 

when  one  or  more  partners  are  dead       .     .     .     361,  362 

against  surviving  partners 346,  362 

when  they  have  a  quasi  lien      ....       326,  361,  390 
remedy  in  equity  against  deceased  partner's 

estate        361,  362 

debts  of  partnership  held  to  be  joint  and  several     .     .    362 
equities  of,  as  to  separate  elFects  of  partners, 

when  one  partner  is  a  creditor  of  partnership     .     .    390 
joint  creditors,    rights    of,  in  respect  to  separate 

creditors 363,  364 

joint  creditors  entitled  to  priority  out  of  joint  effects, 

but  not  of  separate  effects 363-366 

separate  creditors  entitled  to  priority  out  of  separate 

eflFects 363,  364,  365 

in  cases  of  death  of  one  partner  and  bankruptcy  of 
survivors,  whether  joint  creditors  compellable  to 
proceed  against  the  estate  of  deceased  partner  in 

aid  of  bankruptcy 364,  365 

partner,  who  is  a  creditor  of  firm,  cannot  come  in 
competition  with   other   joint   creditors   against 

partnership  effects ,     .      405-407 

what  property  is  deemed  joint,  and  what  several  ....  372 
what  debts  treated  as  joint,  and  what  as  several  367,  368'  369,  373 
conversion   of  joint  debts  into  several,   and  e  contra, 

what  is,  and  when  it  exists 369,  370,  391-394 

joint  creditors,  rights  of,  in  cases  of  bankruptcy  ....  376 
joint  creditors  have  a  priority  out  of  joint  estate,  and 

separate  creditors  out  of  separate  estate       ....      376-378 

foundation  of  the  rule 378 

exceptions  to  the  rule 378-381 

where   joint   creditor  is   petitioner   in   bankruptcy     .     .    379 
where  there  is  no  joint  estate  and  no  solvent  partner     378,  380 

where  there  are  no  separate  debts 378,  381 

eflFect  of   persons   being   at   once    joint   and   separate 

creditors  of  partners  in  bankruptcy 384-386 

they  can  only  elect  to  prove  against  the  joint  or  several 

estate,  and  not  against  both 384-387 

exceptions  to  this  rule 387-394 

doctrine  in  bankruptcy  as  to  creditors  holding  pledges  or 

mortgages 389 

when  and  how  a  partner,  who  is  a  creditor  of  the  firm  is 
entitled  as  against  the  joint  or  separate  effects  of  other 

partners 890,391,405-408 

whether  the  separate  creditors  of  a  partner,  who  is  cred- 
itor of  firm,  may  prove  against  the  joint  estate    ....     390 


INDEX.  753 

Section 

PARTNERSHIP  —  conthmcd. 

whether  the  joint  creditors  may  prove  against  the  sepa- 
rate estate  of  a  partner,  indebted  to  the  firm 391 

exceptions  to  the  rule,   that  creditors   cannot  prove  in 

either  case 392,  393,  394 

in  cases  of  fraud 392 

in  cases  of  dormant  partners 393 

in  cases  of  minor  partnership  constituted  of  persons 

of  a  larger  firm 394 

set-ofi  in  bankruptcy,  when  and  how  allowed 395 

not  generally  allowed  of  joint  debts  against  several 

debts,  or  the  contrary 395 

agreement  of  parties  to  take  at  a  valuation  in  cases  of 

bankruptcy  not  allowed 396 

what  in  cases  of  bankruptcy  is  treated  as  propei-ty  in  the 

reputed  ownership  of  bankrupt,  or  not 397-404 

PARTNERSHIP  PROPERTY.     {See  Partners  and  Partnership.) 

what  is  to  be  deemed  or  not 92,  93,  205 

what  property  is  deemed  joint,  and  what  several     371-373,  397-404 

when  the  good-will  of  a  trade  deemed  to  be 99,  100   , 

rights  and  powers  of  partners  in  and  over 94 

when  and  how  it  may  be  assigned  to  one  partner,  or  not  101, 

309,  314,  396 

how  distributed  on  dissolution 350-355 

reputed  ownership  in,  what  is,  or  not 397-404 

PART-OWNERS. 

rights,  powers,  and  liabilities  of,  in  general    .     .     .      89,  412-453 
when  they  may  bind  each  other,  or  not .     .     .     419,  440,  441,  446 

in  cases  of  ships 415-418 

no  right  of  survivorship  among 417 

one  part-owner  of  ship  can  sell  only  his  own  share,  and 

not  the  entirety 417 

rights  of,  as  to  possession,  use,  and  employment  of  ships  418, 

427,  428,  434,  435 

right  of  majority  to  govern 418-422,  427,  428 

rights  of  minority 427-432 

contribution  may  be  claimed  for  repairs  made  by  common 

consent 419,  420,  440,  441 

but  not  against  part-owners,  who  dissent 411-425 

rights  of  part-owners,  when  equally  divided  in  opinion  and 

interest 435 

right  of  minority  to  employ  ship,  if  majority  decline     .     .  428-439 
whether  a  sale  can  be  decreed  of  the  ship,  where  part- 
owners  are  etjually  divided 435-439 

whether  part-owners  have  a  lien  on  the  shii)  for  ex- 
penses and  advances  and  materials  furnished  for  a  voy- 
age       441-444 

48 


754  INDEX. 

Section 

PART-OWXERS  —  conUnned. 

part-owners  engaged  in  joint  adventure  are  entitled  to  the 

same  equities  and  liens  as  partners 407,  408 

part-owners  engaged  in  joint  adventure  are  treated  as 

partners,  as  to  such  adventure 75,  407,  408 

appointment  of  master  and  officers  belongs  to  majority  of 

ship-owners 432 

remedies  of  part-owners  against  each  other 449 

remedies  against  third  persons 454,  455 

right  and  duty  of,  to  account  for  ship's  earnings     .     .     .  449-452 
declarations  and  admissions  of  one  part-owner,  when  they 

bind  the  others 453 

remedies  by  part-owners  upon  contracts 454 

remedies  by  part-owners  for  torts 454 

remedies  against  part-owners  upon  contracts 455-457 

remedies  against  part-o^vners  upon  torts 458-460 

part-owners,  when  liable  in  solido  upon  contracts    .     .  '  .  445—457 

when  liable  in  solido  for  torts 458-460 

when  liable  for  torts  of  their  agents 458-462 

when  not  liable  for  torts  of  their  agents 458-462 

PART-OWNERSHIP, 

how  it  diifers  from  partnership 89,  90,  410-414 

how  it  may  be  dissolved 447,  448 

PAYMENT, 

when  good,  out  of  partnership  effects,  by  one  partner,  or 

not 132,  133 

after  dissolution  of  partnership 328 

when  payment  of  his  separate  debt  good,  or  not     .     .     .  132, 133 

how  ajjpropriated 157 

PERFORMANCE,  SPECIFIC, 

in   equity,  when   decreed   of  partnership  duties   or  ar- 
ticles       187-193,  204-210,  216-227,  232,  233 

when  of  articles  to  form  partnership 187-189 

PLEDGE. 

when  partners  have  power  to  pledge  partnership  property, 

or  not 94-96,  101 

creditor,  holding  pledge,  how  and  when  he  can  prove  in 

bankruptcy 389 

POWERS  AND  AUTHORITIES  OF  PARTNERS      .      94-97,  101-125 
(/See  Partners  a:st>  Partnerships.) 

limitations  of 126-133 

of  part-owners 89,  90,  412-453 

{See  Part-owners.) 
PRIVATE  PARTNERSHIP, 

what  is 76 

PROFITS. 

meaning  of 21 


INDEX.  755 

Section 

TROTITS  — continued. 

community  of  interest  of  partners  in 22,  23,  24,  28 

(See  Pautneus.) 
when  participation  in  profits  makes  a  person  a  partner  18,  19, 

23,  30-47,  52-69 

when  not 30-47 

distinction  between  sharing  gross  and  net  profits        24,  25,  33,  34, 

37,  38,  39,  41 
how  shared  in  absence  of  special  agreement  .  .  .  20-22,  24-27 
partner  cannot  appropriate  any  to  himself  exclusive  of  the 

partnership 174 

all  must  be  accounted  for 175,  180,  349 

PROHIBITION  TO  ENGAGE  IX  OTHER  TRADE. 

when  implied 178,179,209,210,211 

when  expressed  in  articles 210 

when  courts  of  equity  will  enforce 210,  211,  212 

PROMISSORY  NOTES. 

when  one  partner  may  bind  the  firm  by  signing,  or  in- 
dorsing  102,  102  a,  136-139,  142,  143 

when  not 110-113,  127,  129,  130,  132,  133 

PROPERTY   OF   PARTNERS    IN    PARTNERSHIP   PROP- 
ERTY.    (See  Partnership.) 88-100 

PUBLIC  PARTNERSHIP  OR  COMPANY, 

what  is 76 

PURCHASE,  BY  ONE  PARTNER, 

when  it  binds  the  firm,  or  not 102,  111,  112,  113 


E. 

REAL  ESTATE, 

partnership  property  in 95,  93 

(/See  Paktnership.) 
how  treated  in  equity 93 

RECEIVER, 

when  a  court  of  equity  ^vill  appoint  or  not      .     .     .    228-231,  330 

REFERENCE  TO  ARBITRATORS.     (See  Arbitration.) 

one  partner  cannot  bind  by  a 114 

agreement  for,  will  not  be  enforced  in  equity 215 

when  award  may  include  a  dissolution  of  partnership   .     .     .     215 

RELEASE. 

one  partner  may  in  his  own  name  release  a  debt  due  to 

the  firm 114,  115,  252 

when  release  not  binding  on  the  firm 132 

release  to  one  partner  discharges  all 168 

RE]\IEDIES  BETWEEN  PARTNERS 193,  216-233 

(See  Partners  and  Partnership.) 


756  INDEX. 

REMEDIES  BETWEEN  FARTl^iERS  —  continued.  ^'''""' 

when  at  law  or  not 218,  219,  234:-24:l,  256-258 

when  in  equity 222-233,  235,  236,  259-261 

by  partners  against  third  persons 234-264 

when  at  hiw,  or  not 234-242 

when  in  equity 234,  235,  259-261 

when  in  cases  of  tort 256,  257 

when  taken  away  by  fraud  or  misrepresentation  of 

one  partner 237,  238 

RENEWAL  OF  PARTNERSHIP.     (See  Partnership.) 

when  and  how  renewed 279 

effect  of  tacit  renewal 279 

REPAIRS, 

when  part-owners  liable  for,  or  not 419-426,  440 

REPRESENTATION  OF  PARTNER, 

when  it  binds  the  firm,  or  not 107,108,109 

REPUTED  OWNERSHIP, 

in  bankruptcy,  what  is,  and  what  is  not      .     .      397-404,  407,  408 
RETIREMENT  OF  PARTNER.     (See  RetirixXG  Partner.) 
RETIRING  PARTNER. 

when  discharged  from  old  debts,  or  not 154-161 

when  discharged  from  new  debts,  or  not 159-163 

when  notice  of  retirement  of,  discharges  from  future  debts    159-161 

what  is  due  notice  of  retirement  of 161-163 

bound  in  cases  of  fraud 162,  163 

RIGHTS  AND  DUTIES  OF  PARTNERS 

between  themselves 169-186 

(See  Partners.) 

to  third  persons 126-128 

RIGHTS    AND    INTERESTS    OF  PARTNERS    IN    PART- 

'  NERSHIP  PROPERTY 88-100,  122,  126 

(See  Partnership.) 

s. 

SALE  OF  PARTNERSHIP  PROPERTY. 

when  and  how  directed  in  equity   ,     .     .     206,  207,  349,  350,  356 

SECURITY,  SEPARATE, 

of  one  partner,  when  it  discharges  the  firm,  or  not .     ,     .  142,  143 
of  new  firm  when  it  discharges  the  old     .     .     .    134-144,  154-158 

SEPARATE  CREDITORS. 

rights  of,  in  general 376-388 

rights  of,  in  bankruptcy 370-394 

SET-OFF, 

in  partnership,  what  is  allowable  or  not 395 

in  bankruptcy 395 


INDEX.  757 

Section 

SHIPS.     (.See  Part-owners.) 412-460 

rights,  ])owers,  duties,  and  liabilities  of  owners  of     .     .      412-460 

SHIP'S  HUSBAND, 

meaning  of  the  phrase 418 

powers  and  authorities  of 418,  446 

duties  of • 418,  419 

lien  of 441,  443 

what  powers  and  authorities  he  has  not 446 

SIGNATURE  OF  FIRM, 

articles  respecting «    .     .     .     .    202 

necessary  in  general  to  bind  the  firm  in  case  of  contract 

102,  134,  135,  142,  143 

SLANDER,  ACTION  FOR. 

by  the  firm        255,  256,  257 

against  the  firm 256,  257 

SOLVENT  PARTNERS. 

rights  and  powers  of,  on  bankruptcy       .     .     .     337-341,  407,  408 

SPECIAL  PARTNERSHIP, 

what  is 75 

(See  Partnership.) 

SPECIFIC  PERFORMANCE, 

when  compelled  in  equity,  or  not,  of  partnership  duties 

or  articles      ....        187,  188,  189,  204-215,  216-228,  232 
to  form  a  partnership,  when  decreed,  or  not    .     .       187,  188,  189 

SPECULATIONS, 

partner  bound  to  abstain  from 178 

SUB-PARTNER, 

liability  of 121 

SURETYSHIP, 

how  aflfected  by  change  of  firm 243-248 

SURVIVING  PARTNERS. 

rights,  powers,  and  authorities  of 342-347 

SURVIVORSHIP, 

does  not  exist  in  cases  of  partners 88-91,  343 

nor  in  cases  of  part-owners 417 


T. 

TENANTS  IN  COMMON, 

rights  of 90 

TORTS, 

liability  of  partners  to  third  persons  for 166-168  a 

liability  for,  of  one  partner 166 

liability  of  third  persons  to  partners  for       .     .     234,  235,  256-259 

deemed  several,  as  well  as  joint 167 

when  partners  are  not  liable  for 168 


758  INDEX. 

Section 

TORTS  —  continued. 

remedies  for,  by  part-owners  against  third  persons    ....   454 
remedies  by  third  persons  against  part-owners      .     .     .      455-460 

part-owners  liable  for,  when  and  how  far 166-168  a 

partners  liable  severally,  as  well  as  jointly,  for     .        167,  458-462 
suit  for,  should,  regularly,  be  brought  by  all  the  part- 
ners       167,  454 

suit  for,  should  be   regularly  brought  against  all  the 

partners 167,  458-462 

releaseof  torts  to  one  partner  discharges  all 168 

liability  of  third  persons  to  part-owners  for 454 

by  part-owners  to  third  persons  for      ...       458,  462,  463 

of  one  part-owner  to  the  others  for 449,  450 

TROVER, 

between  part-owners,  when  it  lies,  or  not 449 

TRUSTEE  PROCESS, 

when  debt  due  a  partnership,  can  be  attached  on       ....    264 
TRUSTEES, 

when  liable  as  partners.     (/See  Partxkrship.)    ...       70,  106 


u. 

USAGE  OF  TRADE, 

effect  on  partnership        127 

when  partnership  bound  by 127 


VALUATION  OF  PARTXERSHIP  EFFECTS. 

agreement  for,  when  and  how  decreed  in  equity    207,  208,  246,  247, 

248,  358,  359,  360,  373 

when  not 208,  396 

not  in  cases  of  bankruptcy        208,  396 


w. 

WAGES. 

when  a  person  receiving  part  of  profits  in  lieu  of  wages 

is  a  partner  or  not 32-51 


WAR, 


effect  of,  on  partnership 9,  240 

when  it  dissolves  partnership 315,  316 


r77jn\\/ 


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UNIVERSITY  OF  CAUFORNIA  LIBRARY 

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This  book  is  DUE  on  the  last  date  stamped  below. 


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''"iiiiilliliiilJIili 


Ct: 


rod 


''  h 


